State legislature, Pritzker administration saves on forecast income for the monetary yr

0
83
Alexis Sturm, director of the governor's office of administration and budget, testifies to lawmakers Friday during a joint hearing of the Senate Funds and Revenue Committees.

Members of a Senate committee in Illinois sat down with officials in the government of Governor JB Pritzker on Friday in a hearing about tax changes the governor proposed to balance the state budget for fiscal 2022.

The Senate Revenue and Funds Committees held the joint hearing and interviewed the Directors of the Illinois Department of the Treasury and the Governor’s Bureau of Administration and Budget, among others.

In his budget proposal released in February, Pritzker outlined nine changes to corporate income tax law that aim to generate $ 932 million in revenue for the state in order to maintain a balanced budget while reducing income taxes and government spending for the fiscal year beginning July 1 22 to leave unchanged.

More:Findings from the analysis of Pritzker’s budget proposal for the budget year 2022

“The governor’s budget proposal is sensible and balanced,” IDOR director David Harris told lawmakers. “If passed as suggested by (Governor Pritzker), there would be an estimated $ 120 million surplus by the end of Fiscal Year 22.”

The biggest change in building income would be a cap on how much businesses can deduct from taxes due to their losses in any given year. Under current tax law, a company can take its net operating loss and reduce by that amount the amount of its income that will be taxable in future years.

Pritzker’s proposal would cap this deduction at $ 100,000 per year for the next three years, which IDOR estimates would save the state $ 314 million in fiscal 2022.

Harris told lawmakers that the state’s 2,800 corporation taxpayers had deducted $ 6.4 billion in net operating losses from their taxes in 2018. Only 84 of those corporate taxpayers that year posted operating losses of $ 3.5 billion.

“My point is that the largest percentage (net operating losses) is borne by a very small number, and that means the vast majority of businesses will not be affected,” he said.

While the Pritzker government has described the changes as “closing corporate tax loopholes,” three of the nine tax codes removed or changed under the proposed budget were introduced by Pritzker as part of budget negotiations with state Republicans in 2019.

The budget proposal put forward by Pritzker in 2019 was augmented with a gradual abolition of corporate income tax, an addition to real estate qualifying for the state machine and equipment tax exemption, and a tax deduction for creating new jobs in construction with secure Republican support.

All three provisions would be delayed or canceled in the governor’s plan to generate savings of approximately $ 102 million for fiscal 2022.

This third provision, known as the Blue Collar Jobs Act, was due to go into effect in January. At the time of its passage, the bill was touted by both Pritzker and Republicans as a tax credit that would bring more jobs and businesses to Illinois.

Earlier:The Blue Collar Job Act in a Pandemic: What It Means for the Illinois Budget

However, implementation of the construction worker tax credit has been delayed by Pritzker, who cited losses in tax revenue due to the coronavirus pandemic.

Senator Chapin Rose, R-Mahomet, asked Alexis Sturm, the governor’s budget director, why a program approved with the support of both parties should be cut if the state expects a surplus.

“Here we are at the end of COVID with Illinois being one of the top states in the country for unemployment, people in desperate need of work,” he said. “Why on earth did the government – did Governor Pritzker – decide that he was going to step down now, back from, back from, back, his word, his promise when he signed the Blue Collar Jobs Act?”

Aurora Democratic Senator Linda Holmes reiterated his concern.

“I hesitate a little, wondering if this is almost a poison pill when we talk about getting rid of some of the recent tax changes,” she said.

According to Sturm, the state’s short-term budget situation looked positive due to loans and an inflow of funds from the federal government as part of several coronavirus aid packages passed last year. However, difficult decisions regarding tax legislation had to be made for long-term stability.

“Illinois has struggled with a persistent budget deficit for many years over the past few years. These are changes that are permanent in nature and would attempt to address some of the underlying structural budgetary challenges, ”said Sturm.

Other corporate tax changes that were of concern at the hearing include the reduction of a tax credit for individuals and businesses contributing to private school scholarships, a cap on the reimbursement retailers receive from collecting sales tax, and the expiry a sales tax exemption for biodiesel fuel.

Several business associations have submitted either oral or written statements against the proposals, including the Illinois Manufacturers’ Association, the Taxpayers Federation of Illinois, and the Illinois Retail Merchants Association.

Chicago Democratic Senator Elgie Sims, who chaired the hearing, said he had “heard a big discussion this morning as if this was a one-year fix,” and offered support for the budget’s long-term goal of solvency.

“If there are any other suggestions, we’re definitely looking forward to them, but these are the governor’s suggestions,” he said.

Greg Cox of the Illinois Soybean Growers Association said he appreciated the difficulty of Sturm’s position in that “it was tasked with building a budget with no general tax hikes and flat spending,” but that there would be serious policy implications for the cut Exception for biodiesel fuel.

Those impacts are increased air pollution as more gasoline and less biodiesel are used in fuel blends, and the potential loss of 2,000 jobs is caused by the biodiesel fuel industry in Illinois, the largest soybean producer in the country.

He also presented Senate Draft 2394, submitted by the Growers Association through Essex Democratic Senator Patrick Joyce, as a compromise that would gradually eliminate the tax credit and save state money.

Capitol News Illinois is a not for profit, impartial news service that covers the state government and is distributed to more than 400 newspapers nationwide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.