When the Illinois Legislature convenes Monday for its fall veto session, it needs to accomplish three key tasks:
- Grant the Chicago City Council authority to impose a graduated real estate transfer tax, which Mayor Lori Lightfoot is banking on to generate $50 million for the city’s 2020 budget and twice that much in future budgets. The alternative could be a property tax hike.
- Rewrite the law for a Chicago casino, reworking the tax structure to improve the flow of revenue to Chicago. The existing plan authorized by the Legislature is so laden with fees and taxes that it won’t attract a developer, a consultant said in August. Lightfoot has proposed a casino jointly owned by a city-state commission that would generate $366 million a year for the city.
- Merge hundreds of suburban and downstate police and fire pension plans into two statewide funds, which could save taxpayers a bundle.
Lawmakers in Springfield will have other work to attend to, such as fine-tuning a bill legalizing and regulating recreational marijuana. But because Gov J.B. Pritzker vetoed only eight bills during the regular legislative session last spring, attempted veto overrides shouldn’t burn through as much time as in past years.
The Legislature’s first order of business, we would argue, is to pass the law allowing for the change in Chicago from a flat real-estate transfer tax — a single rate on the sale of properties big and small — to a progressive tax, meaning there could be higher rates on the sale of more valuable properties.
Chicago Sun-Times. SOURCES: City of Chicago, ryanhardychicago.com, www.deedclaim.com
Chicago Sun-Times. SOURCES: City of Chicago, ryanhardychicago.com, www.deedclaim.com
Although a final schedule of progressive tax rates has yet to be set by the City Council, the city is envisioning increasing the top rate by 29%.
Resistance to the proposal already is coalescing in Springfield, even though the change would affect only people buying and selling property in Chicago.
The House Republican leadership has said it won’t support the bill, and Democratic House Speaker Michael Madigan typically doesn’t like to pass tax legislation — almost always politically risky — without at least some Republican support.
Lightfoot may have to convince other Illinois cities that also could benefit from a graduated real-estate transfer tax to support the bill, broadening support.
She also could get help on the bill from lawmakers who would like to give her a single win — because they intend to oppose other items on her Springfield shopping list, such as a rewrite of the casino bill.
Whenever the subject of gambling comes up in Chicago, whether it’s slot machines in bars, horse tracks, racinos or casinos, a host of interested parties descend on Springfield, with everybody demanding their own last-minute adjustments. There is a sentiment among some lawmakers that the issue, with all its moving parts, should be pushed off until the spring legislative session.
We hope that does not happen. There’s no practical reason the Legislature can’t adjust Chicago’s part of the planned statewide casino expansion, which has taken years to hash out, without throwing everything up for grabs. Chicago is facing significant budget shortfalls in future years, and the sooner a city-based casino is up and running, the sooner the city can dig out from beneath a mountain of unfunded pension liabilities.
As for pension consolidation, the Pritzker administration is squarely behind legislation to merge the 649 suburban and downstate police and fire pension funds, which could improve investment returns and save taxpayers money. Firefighters support the consolidation, but the Illinois Fraternal Order of Police opposes it, which means we could see two separate bills.
Chicago Sun-Times. SOURCE: Illinois Municipal League
Some lawmakers complain that a proposal with such wide-ranging ramifications deserves for more time for study. But this is one of those good-government ideas that’s been around for years, yet nothing has been done, even as governments at every level have struggled with underfunded systems.
Sun-Times business columnist David Roeder recently pointed out the most compelling reason consolidation is a must: Because of their small size, the police and fire pension funds can place little money in stocks. By law, they must rely on U.S. Treasury debt, municipal bonds and bank CDs. Those are fine for safety and diversity, but for better returns, the funds need to visit the global stock markets. If they are combined, those limits are eased.
This is a reform the Legislature can and should do now.
Other lawmakers have other priorities, such as a desire to pass legislation to regulate ethylene oxide emissions and flavored vaping e-cigarettes. But given a fall veto session of just six days — Monday through Wednesday and then Nov. 12 through Nov. 14 — there likely won’t be time to get to it all.
That disappoints us, too. We had hoped the Legislature could pass the Clean Energy Jobs Act, which would do much to improve Illinois’ standing as a leader in green energy, and the fix the Firearm Owners Identification Card bill, which would close loopholes in the rules governing state-issued cards.
But so be it. If the Legislature approves a graduated real-estate transfer tax for Chicago, revises the rules for a Chicago casino and consolidates police and fire pensions, that would be quite a successful six days in Springfield.
Chicago Sun-Times. SOURCE: Illinois Pension Consolidation Feasibility Task Force
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