What was expected to be a Veto Session of monumental deals to – date has produced little of any significance. The Illinois General Assembly did not pass casino gaming, pension reform or business incentive legislation when it recessed earlier this month. But, they did decide to return to Springfield for one day this week on November 29th. The question is will they act on any of those three issues.
Governor Pat Quinn’s threat to veto expanded gaming legislation if it included slot machines at horse racing tracks once again killed Chicago’s efforts to get a casino. Unless sponsor and champion State Representative Lou Lang can tweak the bill’s structure to reconstruct the fragile coalition of downstate votes needed to pass the bill, Chicago and the state will not reap the tax revenues and jobs that would come from a casino in Illinois’ international tourism mecca.
It is also doubtful that the General Assembly will resolve the mounting pension reform crisis even though Illinois’ has a $4.9 billion public pension obligation that is expected to go up to $5.9 billion next fiscal year.. The day of reckoning is nearing for this problem which was caused by years of redirecting state employees’ retirement fund contributions into the General Revenue and other funds. It is so dire that if state governments were legally allowed to file for bankruptcy, it would be a decision the governor and the General Assembly would have to soberly consider.
The one issue of the big three that may see some action is a package of targeted business incentives. The package would be primarily for Chicago’s CME Group which owns the Chicago Mercantile Exchange and the Chicago Board of Trade. It is estimated that CME Group’s $150 million annual state income tax burden may be as much as 6 percent of the annual income tax received by the State of Illinois.
This may be hard for downstate legislators to sell to their constituents but the CME Group’s situation is unique. The company is currently taxed for trades under its auspices that do not occur in Illinois or even in the United States. In terms of stature, the CME Group is a key reason why Chicago is considered a global finance center and in terms of revenue, its relocation would have substantial direct and indirect revenue implications for the entire state.
A tentative deal has been structured in the Illinois House that would reduce CME Group’s state income tax by as much as $100 million next year and possibly $700 million over time. But, as usual, to form the voting coalition to pass the CME legislation, other companies and interests will glom onto the bill and create an even bigger budget hole for the state. For example, Sears Holdings in Hoffman Estates will probably be included in the deal, although it has been receiving state tax incentives since 1981.
A clean CME Group bill seems to be needed. But, the revenue bind Illinois is in will force the General Assembly to do what is has been accused of over and over again – spending money they don’t have. Although, reforming the public pensions and gaining new revenue from a Chicago casino would surely help the situation.