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Legislature mulls alternate revenue plans after House dashes GRT

November 17, 2010

With the Illinois legislature’s May 31 adjournment looming, lawmakers appeared to have made little progress by May 17 in the arduous task of determining a state budget for the fiscal year that begins July 1, after House members trounced the governor’s gross-receipts tax plan one week earlier. 

Until the General Assembly adjourns, the threat of a gross-receipts tax remains, perhaps with changed tax rates or greater exemptions to shield more small businesses from the tax. Dealers must continue to call their lawmakers to convey the consequences for them of any variation of a gross-receipts tax.


Blagojevich has framed the GRT as a matter of "tax fairness" against large corporations that pay little tax to the state, and said he would use the estimated $7.6 billion the tax would generate to fund schools and health care.Estimates show it would cost the state more than $1 billion more next year just to meet the growing payments on pensions, Medicaid, union contracts and other costs. But the House, after rejecting Gov. Rod Blagojevich’s $7.6 billion tax on business transactions, is left with few options for raising significant new money.



Income or sales tax increases—both of which Blagojevich has said he would veto—and expanded gambling are being discussed by the General Assembly. Trying to get by with no tax hike, and just using the projected $900 million more in revenue from economic expansion, might not be acceptable to some lawmakers. 

"We have to do more than the status quo, but there’s a lot of room between the status quo and an $8 billion tax hike," said Rep. John Fritchey (D-Chicago). "I think we’re going to be much closer to the former than the latter."


House members on May 9 unanimously rejected the gross-receipts idea, 107-0. House Speaker Michael Madigan (D-Chicago) said a tax increase is needed this spring but has declined to say what he would endorse. He has encouraged Blagojevich to close corporate tax loopholes. 

Blagojevich, Madigan and Senate President Emil Jones of Chicago are all Democrats, and Jones and Madigan have nearly total control over which pieces of legislation are considered in their chambers.


Ordinarily, a budget plan would emerge from negotiations among the three of them, but their deep divisions have prevented that this year. Madigan hasn’t made any budget proposals of his own, and he waited until the May 9 debate about a gross-receipts tax to reveal his opposition to it.  

Some speculate that Madigan intends to lay out the state’s expenses and tax options and then push House Democrats to agree on what they will support.


If a state budget cannot be reached by the May 31 scheduled adjournment, a supermajority of 61 percent of legislators in each branch would be needed to pass a bill, giving a stronger voice to Republicans.