The Illinois State Senate is working on a series of bills being referred to in the media as the “Grand Bargain.” Senate Bills 1 thru 13 address all the major issues that affect the state’s budget including:
1. The budget bill
2. Minimum Wage Increase
3. Local Govt. Consolidation
4. Restructure of Bonding
5. Pension Reform
6. FY17 Approps Bill
7. Gaming Expansion
9. Tax Increases
10. Home Rule Assignment of Receipts
12. Work Comp Reform
13. Property Tax Freeze.
SB9, as proposed, raised income taxes and sales tax on sugary drinks, “the soda pop tax.” Amendment 1 to SB9 was introduced this afternoon. Amendment 1 to SB9 takes out the soda pop tax and initiates a service tax on: warehouse storage, amusements, repair & maintenance of real property, landscaping, laundry and dry cleaning. The tax is 5% sales tax on the purchase of these services. Simply stated, if this passes, on January 1, 2018, the cost of a $50,000 remodeling job will increase by $2500.
SB9 is 491 pages; attached is the 23 pages regarding the repair and maintenance tax. Please read now. What is exempt is new construction, building expansion, and reconstruction.
I don’t know what the estimates are at the State Capitol regarding the fiscal impact but this I do know: NAHB stated that the home remodeling business in Illinois generates $5.2 billion in annual sales (2015). Multiplied by 5%, that could generate $260 million new dollars for the state of Illinois. Those are simple numbers and don’t take into account the amount of business lost from the tax increase. But, you can see some general numbers on what this means.
The press is reporting that the bill will be called tomorrow. How it goes is anyone’s guess. The good news is that a lot of rank and file members in the Senate don’t want to vote for a tax increase if the House doesn’t do the same and if the Governor is opposed. The other good news is that the bills are all structured so that they must all pass and be enacted in order to go into effect. If just one of the 13 bills dies, they all die.
If you are wondering where this came from; the language was taken from current law in the state of Wisconsin. I’ll be checking with them on this in the morning. I will also send this language to NAHB tonight and we will get a VoterVoice going in the morning. More to follow.
Executive Vice President
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