Capitol Commentary: July 2, 2013

Tuesday, July 02, 2013


The General Assembly Conference Committee on Senate Bill 1 held its first meeting on June 17 in Chicago.  The committee has been assigned a task that has eluded the Governor and his legislative allies for years – finding a solution to the state’s growing pension debt.  The committee will work toward a solution that will not only attract enough votes to pass the legislature, but that can also pass constitutional muster.

The first hearing of the committee focused primarily on the background and financial challenges facing the state’s pension systems explained Senator Brady, who is on the committee.  Much of the day was also spent on testimony from various stakeholders including advocacy groups and employee representatives with little new ground covered.

The Committee will meet again July 3, at 9 a.m. in Chicago, although committee members were urged to exchange ideas and continue discussions amongst one another in the meantime.

While the Conference Committee was technically formed to resolve differences between the House and Senate on amendments to SB 1, the Committee also has the authority to completely rewrite the legislation and submit an entirely new proposal.

Senate Bill 1 originally contained a pension reform plan promoted by the Senate President, but was amended in the Illinois House to reflect a competing plan supported by the House Speaker. Although both chambers are controlled by Democrats, the two Democrat leaders, along with the Governor, have been unable to agree on a solution. As a result, during a Special Session held June 19, the special Conference Committee was formed to try to hash out a solution.

Much of the debate has focused on the price of annual 3% Cost of Living Adjustments (COLAs) currently promised to retired teachers and other public employees. Such guaranteed COLAs are recognized both as one of the primary drivers of rising pension costs and as an important hedge against rising costs for retired persons. Other items that have been a focus of past legislative proposals include increasing the amount employees’ pay toward their pension benefits, ending or modifying access to state subsidized health insurance, capping benefits for highly compensated public employees, and offering an alternative "defined contribution" retirement plan.


Recently Illinois Senate and House Republican Leaders Christine Radogno and Tom Cross and the Senate and House Republican Caucuses announced united opposition to recent efforts to push a graduated income tax increase on the residents and businesses of Illinois. 

The Illinois Constitution requires a flat rate tax, which assures that all residents pay an equal rate on their income taxes.

Despite Illinois’ constitution, Democrat leaders and lawmakers have introduced legislation calling for a graduated income tax. Illinois already offers generous earned income tax credits for low-income workers, but a graduated tax might mean that middle income earners would see their tax rates go from the existing temporary five percent rate to a even higher permanent rate.

The so-called temporary income tax increase was passed on a purely partisan vote during the 2011 lame duck session, with all Republicans in opposition. Individual income tax rates increased from 3 percent to 5 percent; corporate income taxes increased from 4.80 percent to 7 percent.


On June 24, Governor Quinn signed into law Senate Bill 1738, which makes clarifications to the state’s Video Gaming Act. One change allows the vendor that operates the central communications system to also manufacture and distribute gaming terminals.

Video gaming continues to gain momentum in Illinois and is bringing revenue into the state and local municipalities.  While video gambling was approved in Illinois by lawmakers in 2009, regulators did not start to approve the sites and machines until last year.  Since then, the number of video gambling machines has risen sharply, with hundreds of new video game sites and machines being approved each month.  As of June 20th, there are 1,799 live video gaming sites across Illinois and 7,536 live video gaming machines. 

For comparison purposes, in May 2013, there were 6,956 video gaming terminals.  Those terminals generated $6,923,225 in total tax revenue, with $5,769,354 going to the state and $1,153,870.99 going to municipalities. The reports, which can be found at, detail information for the past nine months. 

The Governor also signed legislation (HB 3049) moving jurisdiction of the Illinois Latino Family Commission from the Department of Public Aid to the Department of Health Care and Family Services; and signed three state budget bills, including measures that comprise the bulk of the state's education budget for elementary and secondary schools, as well as universities and community colleges.

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