Page 12 - July2017

End of Session Report

By Chris Davis

The Illinois General Assembly was scheduled to adjourn reached, Senate Republican Leader Radogno withheld SB
on Wednesday, May 31. However, that date came and 12 from consideration by the full Senate. It remains on 3rd
went, yet again, without a budget in Illinois. After June 1, Reading in the Senate.
it will take supermajority votes to pass a budget, which
will absolutely require bipartisan support, particularly in Taxes
the House where Democrats maintain 67 members and 71 HB 3393 (Welch) and SB 1719 (Biss/Welch) were initiated
government
votes will be necessary to pass a budget. Illinois has gone by the Chicago Teachers Union to impose a 20% income
22 months without a budget, and the deficit exceeds $15 tax on all Partnerships and S-Corporations that are paid
Billion, as of this writing. fees on investments. HB 3393 was never called before
the full House. However, SB 1719 passed the Senate
There is little optimism that an agreement can be reached by a vote of 32-24-1. SB 1719 was then passed out of
on the budget prior to the end of the fiscal year on June 30. the House Revenue Committee and stalled. The Agent/
If a budget is not enacted by this deadline, Illinois’ bond Broker Coalition joined additional organizations, including
rating will be reduced to “junk bond” status. Therefore, the Illinois Bankers Association, and Illinois Chamber
the state will not be able to borrow in order to pay off the of Commerce in opposing the Legislation. It is widely
$15 billion in unpaid bills, resulting in a much larger tax expected that language extremely similar to HB 3393 and
increase than is already being considered. SB 1719 could be amended to any final budget tax increase
legislation. Representative Welch, the House Sponsor,
The Governor called Legislators back to Springfield starting has indicated a willingness to amend the tax increase to
on Wednesday, June 21 for a 10-day “Special Session” to more appropriately exempt small investment advisors and
address the budget, and a package of legislative measures financial planners. The Coalition of Insurance Agents and
introduced by Republicans in mid-June. Time will tell… Brokers worked extensively on the final day of Session to
obtain clarification on the applicability of the tax. We are
In other news from the Capitol: anxious to see any potential future language that may get
introduced.
Workers’ Compensation
The business community collectively called this year “one It is possible that the language could be added to SB 9,
of the worst for employers”. Workers’ Compensation was a which has long been the omnibus tax increase component
primary reason for the declaration. to the Senate budget package of legislation. SB 9 passed
the Senate 32-26. However, it was never called for
Workers’ Compensation remained a core component consideration by the full House, as Democrats were not
of the Governor’s Reform Agenda, and a source of willing to vote on any tax increases without Republican
ongoing negotiations related to any potential budget deal. support or a full agreement on a budget.
Unfortunately, while a deal was close several times, none
was ever reached. SB 9 would increase the personal income tax rate from the
current 3.75% to 4.95%, and the current corporate tax rate
Therefore, the Democrat majorities in the House and the from the current 4.8% to 7.0%. Both of those increased tax
Senate both passed to the Governor two very troubling rates would Sunset in 2024.
Workers’ Compensation measures. HB 2622 (Fine) creates
the Illinois Employers Mutual Insurance Company, a state Coalition Initiative
operated Workers’ Compensation company. HB 2622 The Independent Insurance Agents initiated SB 904,
passed the House by a strictly partisan vote of 67-51-0. sponsored by Senator Hastings (D-Tinley Park). SB 904
HB 2622 was then approved by the Senate by a vote of creates a five-person advisory council to the Department of
32-20-1. The legislation has been sent to the Governor Insurance on Continuing Education matters. The advisory
for action, and is expected to be vetoed. Additionally, the council could make recommendations to the Department
House passed HB 2525 (Hoffman) legislation mandating on a variety of delineated issues. The legislation passed
worker’s compensation insurance rate review and approval the Senate unanimously. However, the legislation was
by the Department of Insurance. Rate review is anathema opposed in the House by a major insurance company. The
to the insurance industry in Illinois. HB 2525 passed the Company hijacked the legislation in order to get support
House by a strictly partisan vote of 66-50-0 andpassed from the Agent/Broker Coalition on reducing the ethics
by the Senate by a vote of 35-19-1, after being amended. requirements in Illinois. The Company wanted to eliminate
Therefore, the legislation returned to the House where it the mandatory classroom requirement and enable any
was approved again by a vote of 64-51-0. educational delivery format for ethics C.E., including self-
study. After a series of negotiations between the Coalition,
SB 12 (Radogno) was the Senate’s Workers’ Compensation the Company, and the Department, no agreement was
legislation, as a component of the “Grand Bargain” reached on a standard for ethics education for licensed
Budget negotiations. As previously mentioned, it has been agents in Illinois. SB 904 was re-referred to the House
widely reported by business groups, that stakeholders Rules Committee.
are extremely close to an agreement on Workers’
Compensation legislation, that would be contained in SB Illinois is the only state that mandates classroom education
12. Although very close, because no agreement was ever for ethics and the Coalition was open to innovative
technology delivery methods, including webinars.

12 insight july 2017