Federal issues will begin to heat up with a return from August recess. September will hopefully bring discussion and possible action on three key topics: Budget & Tax Reform, Debt Limit, and Government Funding. Tax Reform should be the main focus now that Health Care is kind of taking a back seat. What are the latest talking points when it comes to Tax Reform? Here are some to consider:
• Broken Tax Code needs to be fixed to better drive economic growth
• American businesses need to expand domestically and compete around the globe
• Let’s bolster our employees’ bottom lines
• Tax Code has not been updated since 1986
• Once-In-A-Generation opportunity that cannot be passed up
• President Trump has floated decreasing the tax rate on businesses from 35% to 15%
A few quick additional points on the other issues:
• Passing a budget is critical to advancing tax reform because it unlocks reconciliation to provide a fast-track through Congress
• The Federal Government reaches its borrowing limit on September 28, a clear need is to raise the limit
• The Fiscal Year also ends at the end of September. Congress will need to appropriate new funding for fiscal year 2018 to keep the Government running.
• Recent talk has centered around tying in Hurricane Harvey relief to Debt Ceiling and Gov’t Spending – possibly a three month stopgap budget
On the State side of Government Affairs, Illinois now has a school funding bill in place. SB 1947 passed the House and Senate and was signed yesterday by Governor Rauner. SB 1947 originally was voted down in the House, followed by SB 1 being called for a veto override vote in the House which failed, and then SB 1947 was re-visited and approved with 73 yes votes (needing 71) from the House and concurrence in the Senate.
Funding can now be sent out to school districts as the passed budget contained a clause that education funds couldn’t be distributed until an evidence based school funding bill was passed. Here are some of the package parts:
• $75 million in tax credits will be available to those who contribute to private school scholarships
• Credits are worth 75% of a taxpayer’s annual contribution to a scholarship fund, with a $1 million max credit annually effective with the 2018/19 school year
• Scholarships would be available to assist the tuition of students with a household income of less than $72,900 for a family of four, a figure that would rise to $97,200 the following year if a student had previously gotten a scholarship
• As much as $450 million will go to the Chicago Public Schools and CPS may now add an additional property tax of $120-145 million
• Districts with a surplus may place on referendum a tax cut, with a decrease likely limited to no more than 10 percent
• Schools can cut gym classes back to three times a week
• Schools can also hire a private company for driver education
Governor Rauner vetoed SB 81 which was to raise the minimum wage from $8.25 an hour gradually to $15 an hour by 2022. HB 2622 was vetoed in its entirety. This measure uses employer and insurer tax dollars to capitalize the creation of a state established, mutual insurance company to compete with the over 300 insurers that already provide workers’ compensation coverage. HB 162 passed both Senate and House to reinstate the state’s main job creation incentive program, EDGE, for five years. In addition, it would make several changes to enhance the program including providing credits for training new employees and for investing in underserved areas of the state.