AROUND THE DISTRICT
I was honored to attend the kick-off event of the Salvation Army’s Red Kettle bell-ringing campaign November 18 at Eastland Mall in Bloomington.
McLean County Coroner Beth Kimmerling and her husband, Bloomington Fire Chief Mike Kimmerling, are honorary co-chairs of this year’s campaign.
The Bloomington-Normal Red Kettle bell-ringing campaign has set a goal of raising $215,000 during the holiday season.
PENSION OBLIGATION TO INCREASE BY $1 BILLION
Lawmakers are scheduled to return to Springfield November 29 to discuss several outstanding issues, including ongoing budget concerns and proposed tax breaks for two major Illinois employers; however, a new report shows the state’s annual pension obligation is set to increase by $1 billion in the next fiscal year.
Medicaid expenses were already projected to grow by more than $3 billion in the coming year, and new figures released by the state’s pension systems show that Illinois’ mandated contribution to the retirement systems is expected to increase by $1 billion.
Reportedly, the state’s pension obligation will increase from $6.4 billion in Fiscal Year 2012 to $7.4 billion in Fiscal Year 2013.
HOUSE COMMITTEE DISCUSSES TAX LAWS
The state’s burgeoning Medicaid and pension obligations further undermine ongoing talks with major Illinois employers seeking state tax breaks.
Hearings began in the House of Representatives during the week on proposed changes to tax laws that are being sought to address concerns raised by two major Illinois employers. The CME Group, which maintains the Chicago Mercantile Exchange (CME), and Sears have threatened to leave the state for more business-friendly locations unless an incentive package is negotiated to ease the onerous tax burden associated with the Democrats’ January 2011 tax hike.
While state leaders work on a compromise to retain these important employers, Illinois’ budget constraints make it difficult to negotiate the important-but-costly incentive package. While the latest tax cut measure being circulated would initially save the state money, by the third year it would actually cost the state as much as $850 million.
SMALL BUSINESSES OPPOSE DEPRECIATION CHANGE
Additionally, a retroactive change in the tax code being considered by lawmakers to help cover the cost of incentives and tax breaks could create problems for other Illinois companies.
Several small-business owners testified that a proposed retroactive change in how businesses would calculate deductions on the depreciation of new equipment would be a huge fiscal blow for employers whose budgets were based on deductions outlined in the current tax code.
RESTORING UNEMPLOYMENT INSURANCE TRUST FUND
Though negotiation of a business tax-relief package faces hurdles, an important new law was passed during the fall veto session that will save businesses approximately $400 million.
Lawmakers joined business and labor representatives to negotiate Senate Bill 72, which outlines a plan to restore the Unemployment Insurance trust fund to solvency. The Governor signed the legislation November 18.
Unlike the state’s other financial challenges, the negative balance of the state’s Unemployment Insurance Fund is the direct result of the economic downturn that forced employers to reduce their workforce. The increase in people drawing unemployment has bankrupted the trust fund. Without the new law, employers would have faced new federal penalties and higher costs.
Senate Bill 72 will save Illinois employers almost $400 million and prevent the state from having to pay $240 million in interest payments to the federal government. Almost half of all Illinois employers will see a reduction in payments under the plan.
The new law also includes reforms that will allow the state to recoup improper unemployment insurance payments, and pursue those who abuse the system. It also includes incentives that will encourage both business and labor to return to the bargaining table in the future to assure continued solvency of the fund.