Pensions and Taxes to Dominate 2012 Session

 Legislators return to Springfield this week to begin the 2012 Spring Session of the Illinois General Assembly.  In a carry over from 2011, tax issues are likely to be front and center again in ’12.  Political fallout from last year’s massive tax increase together with legislative angst over the need to pass special incentive legislation to keep some high profile businesses from relocating to other states set the stage for what could be positive steps for business taxpayers.

The Chamber has taken the lead in drafting one issue certain to be addressed.  Chamber Tax Institute legislation creates a new, independent tax tribunal to hear taxpayer appeals of tax decisions rendered by the Department of Revenue, which currently reviews appeals of its own decisions.  Creation of the tribunal was mandated by the legislature as part of tax package included with the special incentive legislation.  The legislation will be introduced within the next two weeks.

In a change from 2011, when public pension reform never really got off the ground, it now appears the pension reform may very well pass this year.  Opposition to meaningful reform remains by public unions remains fierce, however events appear to be overtaking what would normally be viewed as a legislative brick wall.   Consider the following bad fiscal news for Illinois:

• Illinois is now confirmed to have the worst funded pension system in the nation;
• Moody’s downgraded Illinois debt to the lowest rating of any state;
• Comptroller Topinka reports that the state has $8.5 billion in unpaid bills;
• The legislature will need to put $6.9 billion into the pension systems in the next budget in order to meet its statutory requirement.

This tale of fiscal sorrow is finally starting to penetrate policy makers.  Even Governor Quinn is now stating publicly that something must be done to bring pensions under control.  The Chamber will continue to promote pension reform as part of a broad employer coalition fighting for fiscal stability in Illinois (www.illinoisisbroke.com).  A true grassroots uprising appears poised to counter union political money and put reform on the path to passage.