July 6, 2017: Late this afternoon, the Illinois House of Representatives overrode Governor Rauner’s veto of the tax and budget package making it law immediately. The action came two days after the Senate narrowly overrode the veto on the 4th of July holiday.
The tax and budget package includes an FY18 spending level of $36.054 billion, representing a nearly three billion reduction from current spending that has continued unabated largely due to court orders and consent decrees. Illinois spent more than $39 billion in the last fiscal year on revenues of slightly less than $32 billion which has helped lead to our current $15 billion backlog of bills.
On the revenue side, SB 9 includes a permanent increase in the individual and corporate income tax rates. The individual rate will rise from 3.75 to 4.95 percent while the corporate rate will increase from 5.25 to 7.0 percent. Combined, the income tax hike will generate roughly $5 billion in new tax revenue. In addition, the tax bill includes a short-term, five-year extension of the Research & Development tax credit and permanent extension of the Graphic Arts sales tax exemption. It did not extend the Manufacturers Purchase Credit but it decoupled from the Qualified Production Activities deduction.
Ten Republican lawmakers joined 61 Democrats in overriding the Governor, a decrease of five Republicans who initially voted for the bill. Four Republicans flipped from a “yes” to a “no” while one was out of the country. Four Democrats who initially voted “no” switched and voted “yes.”
The IMA is disappointed that lawmakers passed a tax hike without reforms that will reduce workers’ compensation costs, lower the high cost of property taxes, or alleviate the crushing pension costs.
SB 9 – Tax bill
House Override Vote: 71-42-0
Senate Override Vote: 36-19-0
SB 6 – Budget Bill
House Override Vote: 74-37-0
Senate Override Vote: 39-15-0
SB 42 – Budget Implementation Bill
House Override Vote: 71-41-0
Senate Override Vote: 36-18-0