This week, the Senate Revenue Committee approved SB 1591(Sims) that will be brought back with an additional amendment in the coming week. The legislation is an initiative of the Illinois Chamber and would create a sales and use tax and electricity excise tax exemptions for data centers.  Today, 30 states (from Washington to Florida, New York to Arizona) have incentives that are specifically targeted at attracting data centers as part of expanded economic development efforts. However, 24 of these states have enacted legislation since 2012 in an effort to capture a greater percentage of the growth. Illinois is surrounded by states that offer data center incentives. The legislation is designed to compete with surrounding states and to help boost our demand for data centers and therefore strengthen our stature as a digital powerhouse.

The Illinois Chamber of Commerce backed a transportation modernization program, HB 3823, introduced Wednesday evening by Representative André M. Thapedi, D-Chicago, to raise $2 billion in annual revenue offset with pro-consumer and pro-business reforms. The bill phases out the state sales tax on motor fuel with consumers realizing a combined 15 cent per gallon Motor Fuels Tax increase. The sales tax swap eliminates a state tax on motor fuel, narrows the price gap between Illinois and neighboring states, and will create consumer savings when gas rises above $2 per gallon. While the Chamber does not take tax increases lightly, Illinois must act now to improve and invest in our infrastructure system to ensure the state remains the transportation hub of North America. The bill includes:

Annual funding of:

• $600 million for IDOT
• $240 million for local governments (a 40% increase over today’s funding)
• $672 million for transit capital expenses
• $20 million for the Grade Crossing Protection Fund to fund better rail/highway grade crossings
• $2 million for construction trades training for disadvantaged populations

Bond funding of:

• $4 billion to IDOT to accelerate bridge improvements
• $1 billion for other needs (ports, federal grant match for local governments, transit)

State Representatives Tom Demmer (R-Dixon) and Patrick Windhorst (R-Metropolis) spoke at a Capitol press conference on Wednesday to call for an end to the barrage of tax increases that earned Illinois the new title of “highest tax burden state in the nation.”

“As legislators, it is our duty and obligation to inject some realism into the debates that happen here,” Demmer said. “We can’t simply ignore that we have the highest taxpayer burden in the nation, and we can’t ignore the fact that people are leaving Illinois in record numbers. We can’t ignore that better opportunities and economic growth is occurring in states all around us. We need to get serious about making some changes to how Illinois does business, and provide meaningful tax relief to individuals. We need to provide better opportunities for families and make Illinois a place where jobs and investments grow.”

“One of the reasons I ran for office is because I’ve seen my friends, family members, neighbors, local businesses and my constituents leave Illinois for cheaper living and less regulations,” Windhorst added. “The reason people are leaving is because it is too expensive to live here and do business here. When it comes to state and local taxes, our citizens are maxed out.”

The statements from the Deputy Republican Leader from northwestern Illinois and the freshman member from southern Illinois came in reaction to a WalletHub study which found Illinois has the highest overall tax burden in the nation. Illinois’ median tax rate is 14.9%, while the national average is 10.76%. Illinois’ overall ranking in taxpayer friendliness is #49 in the nation when the cost of living adjustment is taken into consideration.

The governor’s proposed graduated income tax would only make matters worse, Demmer said. “What that does is open up the tax rates to continued interference by lawmakers. If approved, forever more, the General Assembly will no longer be bound by a flat tax mandate in the Constitution. The question isn’t ‘what is the initial rate schedule?’ The question is, ‘can Illinoisans count on politicians in Springfield to do the right thing and not overtax?’ The answer, without a doubt, is ‘no.’ With a graduated income tax, it will be too easy for lawmakers to come back year after year and take a little bit more from taxpayers until we end up with a significantly increased burden on average families.”

The report focuses on the growing cost to taxpayers of the health insurance policies purchased by the State on behalf of State employees and retirees. The State Group Health Insurance Program (SEGIP), like all facets of U.S. health care, is affected by growing American health care costs. These costs include not only new treatments and technologies, but also the growing tendency of health care providers to practice strategic cost-shifting. Conscious of their duty to provide care to all patients, including patients without means or whose care is covered by charity-care programs such as Medicaid, health care providers often move facets of the overall cost of health care around. The State of Illinois is one of the entities affected by these cost shifts.

CGFA staff estimates the cost of SEGIP to be $3.023 billion in FY19, the fiscal year that will end on June 30, 2019. With continued increases in U.S. health care costs, the cost of SEGIP is anticipated to increase to $3.130 billion in the approaching fiscal year, FY20. Continued efforts at the containment of costs upon State taxpayers from this expensive program have minimized some facets of this increase. SEGIP beneficiaries are being required to make higher copayments, and are being subjected to various care wait-times and other care features familiar to patients throughout the United States. The overall SEGIP increase from FY19 to FY20, in percentage terms, will be only 3.5%. However, because of the great size of this program, even this comparatively modest percentage increase will exact an additional cost of $107 million anticipated additional dollars upon the hard-pressed State budget.

The CGFA report on SEGIP and its costs represents one facet of the General Assembly’s ongoing nonpartisan attempt to maintain lawmaker understanding of the overall budget pressures facing Illinois.

Illinoisans could see new solicitations to bet money soon, this time on sporting events such as football and basketball games. The proposed Sports Wagering Act, introduced in the Illinois House as HB 3308, would govern the legalized and regulated bookmaking of bets on sports games and contests. Amendments to HB 3308, introduced in the Illinois House on Thursday, March 21, describe how sports betting would be legalized, regulated and taxed in Illinois. These amendments could be discussed in the Illinois House and its Committee on Revenue & Finance next week. Opponents are concerned about how sports betting could potentially spur compulsive gambling, and could entangle young adults who themselves play sports into the betting business. Other states, led by Nevada and New Jersey, have already legalized sports betting.

Tobacco 21, HB 345 (Rep. Camille Lilly, D-Chicago/ Sen. Julie Morrison, D-Deerfield), passed the House with a vote of 82-31 and the Senate by a vote 39-16. Tobacco 21 passed the Senate and narrowly passed the House last spring with 61 votes before being vetoed by Gov. Bruce Rauner. In the meantime more than 34 Illinois municipalities passed a Tobacco 21 measure.

HB 345 prohibits a licensed Illinois retailer from selling tobacco products to anyone below the age of 21, but removes the penalties for the purchase, possession, selling, or consumption of tobacco for the same individuals. It completely removes the specific prohibition of the possession of tobacco products by a minor.  And it only prohibits a minor from selling tobacco products, as an employee, at a licensed retailer. In fact, the only thing SB 21 penalizes a minor for is using a fraudulent identification.

As a result, since the Illinois statutes would no longer penalize a minor for any of the aforementioned, SB 21 makes it “legal” for a person under the age of 21 to: (1) possess tobacco, (2) consume tobacco, (3) sell tobacco, (4) buy tobacco from an unlicensed Illinois retailer or individual, or (5) buy tobacco from a licensed out-of-state retailer or online.  As such, the bill protects unlicensed, unregulated, and, untaxed individuals selling tobacco to minors while prohibiting licensed Illinois retailers from selling tobacco products to anyone below the age of 21.

The legislation has been sent to Gov. Pritzker for his signature. Part of the Governor’s budget relied on vaping and tobacco taxes. As of this writing, there has been no word on how this will impact those revenue estimates. If signed, the changes will go into effect July 1.