|
March 12 , 2010
Governor Quinn Presents FY 2011 Budget Proposal
Stating that Illinois is facing a financial crisis of epic proportions, Governor Quinn presented his proposed Fiscal Year 2011 budget on Wednesday. He called for a 1% income tax "surcharge" for education, but did not include the revenue from that surcharge in his proposed budget--which is designed to show what will happen if the General Assembly fails to increase state revenues. The recommended income tax increase, according to the Governor's Chief of Staff, Jack Lavin, would apply to both individuals and corporations and if it goes into effect July 1, 2010, would raise $3 billion for FY 2011. The proposed budget includes about $2 billion dollar in budget cuts, with education funding receiving the largest decrease at $1.3 billion--which is primarily caused by loss of federal stimulus funds. The budget proposal does call for pension reform measures, including a two-tiered pension system for state employees, but no details were provided.
The Governor proposed a $2,500 tax credit for each full time job created at businesses with 50 or fewer employees. The tax credit would be capped at $50 million and according to the Governor's office, could generate up to 20,000 new jobs.
Click on Governor Quinn's FY 2011 Budget Summary for more details on the FY 2011 budget.
Legislative Update
Today was the deadline for all House bills to pass out of their respective Committees. While many bills were posted for House Revenue & Finance Committee, very few emerged. We are waiting to see which bills may have had deadline extensions and we’ll keep you advised. Three Illinois Chamber initiatives are well positioned.
- HB 5230, the Chamber bill to reform DCEO filing requirements for EDGE credits (and related tax incentives and grants), is on second reading in the House.
- SB 1826, a bill to amend the Income Tax Act provisions relating to tax on cooperatives, passed the Senate and now goes to the House for action.
- SB 3646, our bill to repeal the replacement tax imposed on publicly traded partnerships, also passed the Senate.
Commission on Government Forecasting & Accountability Releases 2010 Economic Forecast Report
The February 2010 Economic Forecast Report prepared by Moody’s|Economy.com paints a picture of a very slow protracted economic recovery for Illinois. Compared to other U.S. markets, the report asserts that Illinois will experience a “below-average performing economy” and estimates that it may take three to four years for Illinois to return to pre-recession unemployment rates of 5%-6%. Unemployment is projected to reach a high of 11.6% sometime in late 2010.
High unemployment combined with a sharp drop in wages and personal income, have resulted in declining retail sales and consequently, declining sales tax revenues. Without directly referencing HB 174, the report suggests that Illinois could increase sales tax revenues by adopting “a broad-based services tax.” (HB 174 is the Cullerton-Meeks bill proposing both an across the board income tax increase in addition to a sales tax increase by broadening the sales tax base to include certain services.)
On a positive note, the report states that Illinois’ long-term recovery should be bolstered by a more streamlined and efficient manufacturing base, continued development of transportation and distribution hubs, and growth in the financial and professional services industries. Click here, to view the complete report.
Governor Calls for 1% Income Tax "Surcharge"
HB5230 Passes Out of House State Government Committee
House Appropriations Committee Addresses Budget Deficit
Governor Quinn's Budget Goes Online
Proposed Tax Legislation More Business- Friendly
Read these posts and much more at the Tax Institute blog
|
