May 25, 2017

Builders Nail Home Repair Tax!

Bill Ward, Executive Vice President, HBAI

The Illinois Senate Democrats took SB09 into their own hands on Tuesday and passed the 500 page taxation bill, but not without first deleting the sales tax provision on home repair work.

Democrats had been negotiating with Senate Republicans for months on writing an agreed upon bill that would generate new state funds capable of balancing the state budget and getting the state’s financial mess cleaned up.

With less than two weeks remaining in the Spring Session, Democrats decided to trim the bill to their liking and send it to the House without the blessings of the Senate GOP and Governor Bruce Rauner.

In a flurry of events that took less than 24 hours, Senate Democrats introduced amendment 6 to SB09 on Monday evening, held a subject matter hearing on the amendment Tuesday morning in the Senate Revenue Committee, and passed the 500 page tax package to the Illinois House on Tuesday afternoon.

Of utmost concern to HBAI was the new tax on home repair for which we lobbied heavily against in the past four months.

Capitol Fax, a daily political newsletter covering Illinois politics, reported on Tuesday morning: “A new tax on services is still in the mix, but the Democrats have removed a provision negotiated with the Republicans that would tax landscape and home repair services after intense opposition from opponents.”

The “opponents” being referred to in this report is the Home Builders Association of Illinois. The HBAI Board of Directors recognized in February that extreme measures needed to be taken to wedge ourselves out of SB09. Even though home construction and remodeling were exempt, HBAI wanted nothing of the tax would be a nightmare to assess, and a hardship for home owners to pay.

At its February Board Meeting, the Board approved for an expenditure of funds beyond what was currently budgeted for the hiring of Ryan Keith PR Solutions to assist HBAI in the exposure of the home repair tax and how it would hurt Illinois home owners and home repair businesses. HBAI enlisted Ryan Keith four years ago in the defeat of the statewide Fire Sprinkler mandate.

Members of the Illinois State Senate were generally unaware of the tax in the beginning, and so was the Illinois press. An awareness campaign was launched in March by HBAI through Ryan Keith to expose the tax for what it was and what it would do to Illinoisans.

In less than three months we generated a message that the home repair tax was bad tax policy and bad politics. Our awareness campaign included a press conference at the State Capitol; numerous radio and television interviews throughout the state; coverage from dozens of Illinois newspapers; and use of social media like Facebook.

We even produced a three minute video that “premiered” at our HBAI Lobby Day that told the story of how bad of an idea the home repair tax was. That video was sent to every member of the Illinois General Assembly and every member of HBAI.

Our message must have gotten to the final framers of SB09, which turned out to be Senate Democratic Leadership. In order to make the bill light enough for passage, several items had to be trimmed from this weighty bill.

Senate Revenue Chair, Toi Hutchinson (D-Olympia Fields), explained the cuts made in Revenue Committee and on the Senate floor. Both times, she started by stating the home repair tax was out of SB09. Amendment 6 was placed on the bill along with two other amendments and then the bill was ready to be heard for final passage.

SB09 was voted favorably out of the Senate on a 32-26 vote. All 32 Yes votes were Democrats, all Republicans voted No, 4 Democrats also voted No, and one Democrat did not vote due to an excused absence.

So now what? House Speaker Madigan now has SB09 in his chamber but what he does with it is anyone’s guess. Madigan has asked several times over the past four weeks for Governor’s staff to start meeting with House Democratic Leadership, but the Governor has not acquiesced to those invitations.

SB09 will be sent to House Revenue Committee, but the bill has been picked up by a hostile sponsor, Rep. Jeanne Ives, a Republican from Wheaton. Ives has stated that she is against increased taxation, so the bill will probably not be heard unless it receives a new sponsor. Senate sponsor, Toi Hutchinson can request a new sponsor if she wishes to, but that has yet to happen.

Most likely, this issue and many others will continue into overtime which means the Illinois General Assembly will be open for business in the month of June. Bills will need a super majority to pass once they miss the May 31^st deadline.

Most insiders believe the old game will continue on and there will be no resolution for a state budget for a third year in a row. The likelihood that Rauner, Madigan, and Cullerton come to an agreement on higher taxation with economic benefits is less than 50%.

As for the Home Builders, our work is not done with the Home Repair Tax. As long as the General Assembly is in session, we need be concerned that this ridiculous idea could return in bill form.

But for now, HBAI and the home repair industry stand on higher ground today, than we did yesterday. And we can be proud of the efforts we made to keep the Illinois Service Tax out of the Illinois Home Repair Business. Way to Go, HBAI.