Grand Bargain on Hold until February
Bill Ward, Executive Vice President, HBAI
January 26, 2017
The Illinois State Senate just adjourned this today without taking a vote on the controversial tax proposal, SB09. SB09 is part of the first 13 bills introduced in the Senate this year that make up what is being referred to as: “The Grand Bargain.”
The Grand Bargain is a collaborative effort by Senate President John Cullerton and Senate Republican Leader Christine Radogno to place all of the major issues on the table, put them into bill form, and pass them all to the House. The deal is this; they must all pass for them to be enacted. If one bill dies, they all die.
The Grand Bargain includes the following:
- SB01 is the Budget Implementation Bill
- SB02 raises the Minimum Wage
- SB03 is for Local Government Consolidation
- SB04 restructures our State Bonds
- SB05 restructures the State School Pension Code
- SB06 is the FY2017 Appropriations Bill
- SB07 is for Gaming Expansion
- SB08 Reforms the State Procurement Code
- SB09 contains the Tax Increases
- SB10 allows Local Government Assignment of Receipts
- SB11 Creates Retirement Options for State Workers
- SB12 is for Workers Compensation Reform
- SB12 Implements a Local Property Tax Freeze.
SB09 originally contained (among other things) increases in the state’s income tax rates and a new tax on sugary soft drinks, referred to as the “Soda Pop Tax.” On Tuesday of this week, the framers of SB09 threw out the soda pop tax because the taxes on soda in Cook County were already high and legislators from Cook and Chicago heard a lot of anger from their constituents.
In place of the soda pop tax, Senate collaborators initiated two new taxes on Tuesday afternoon of this week; the Business Opportunity Tax that taxes employers based on the size of their payroll; and, the implementation of 5% sales tax on business services. Among the first services to receive this form of taxation is the business of repairing and maintaining tangible personal property that has been affixed to real estate. And, that reference includes home remodeling.
HBAI quickly set into place a number of actions intended to defeat the 5% tax on remodeling. Within hours of the amendment going public, HBAI formed an alliance with the Chicago Regional Council of Carpenters, and with the Chicago and Downstate Roofing Contractors of Illinois who both agreed to work with us on the defeat of SB09.
Next, we contacted Dr. Robert Dietz, head of the Economics Department at NAHB to have his staff analyze the language and measure the negative economic impact the tax will have on Illinois’s home remodeling industry. We expect a report back from them by the end of this week which should illustrate the amount of revenue lost in income, and the number of workers who will lose their jobs from the 5% excise tax. Simply put, if you are doing a $20,000 remodeling job, the cost of that job would increase by $1000 with the enactment of SB09.
By Wednesday morning we set into place our grassroots effort by sending out a VoterVoice Call to Action and then heading to the Statehouse with position papers declaring our opposition to SB09. Not only are we opposed to the 5% tax, but we also took opposition to the “Business Opportunity Tax.”
Today, the Senate adjourned without calling SB09 for a vote, which is to say we won the battle this week, but have a long way to go. Over 180 VoterVoice responses were sent to our State Senators and every Senator has now heard from both business and labor that SB09 is a bad idea.
But this is just the first battle in what will be a five month war to keep service taxes out of our industry. Now that we have established ourselves as stakeholders at the taxation table, we will not only need to oppose narrow-based forms of taxation that do much harm to our economy, but we will also be responsible to offer alternatives. And, this will be our burden as an association for the coming days and weeks in the Illinois General Assembly.
The weight of the Grand Bargain may be too much to bear for our Senators at this time, but something will be considered and it’s best that it is in the form of broad-based taxation shared by all Illinoisans, not just a few sectors of the Illinois economy too weak to protect themselves from the demands for new state revenue streams.
If you don’t know what VoterVoice is or how it works, write me now at billward@hbai.org and I will send directions on how you can use this communications tool to voice your opinion to your state legislators. And if you Twitter, you can follow me at Bill Ward @hbai1. I send out daily messages during session keeping you up to date on what is happening in our State Capitol.
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