Wednesday, May 1, 2019

IASB Legislative Alert 101-05

TAX PACKAGE APPROVED
The Illinois State Senate today (Wednesday, May 1) approved a package of tax reform provisions as part of Governor JB Pritzker's legislative platform. The measures will be sent to the House of Representatives for further consideration.

HJRCA 1 proposes to change the Illinois Constitution to allow for a graduated income tax rather than the current flat tax system. The resolution was approved by the Senate on a vote of 40-19. The proposal will need a 3/5 vote of the House of Representatives in order for it to be placed on the General Election ballot next year.

SB 687 contains the graduated income tax rates that would be put in place if HJRCA 1 is approved by the voters. The Senate passed the bill on a 36-22 vote.

Details of these two proposals can be found here.

SB 689 would repeal the estate tax that is currently imposed in Illinois. It was sent out of the Senate on a 33-24 vote.

Probably the most important component of the tax package for school districts is SB 690. The bill would, beginning in levy year 2022, place school districts in every county under the Property Tax Extension Limitation Law (PTELL).  PTELL sets an "extension limitation" at the lesser of 5% or the percentage increase in the Consumer Price Index (CPI).

Under the proposal, school districts would have their "extension limitation" set at 0% if they are not "qualified school districts".  A "qualified school district" is one that received less than 97% reimbursement for certain mandated categorical grants or "did not receive the minimum funding required for that school district under the evidence-based funding formula" in the previous school fiscal year.