SPRINGFIELD — Members of an Illinois Senate committee sparred with officials from Gov. J.B. Pritzker’s administration Friday in a hearing on tax changes proposed by the governor in an effort to balance the state’s budget for the 2022 fiscal year.
The Senate Revenue and Appropriations committees held the joint hearing, questioning the directors of the Illinois Department of Revenue and the Governor’s Office of Management and Budget among others.
In his budget proposal released in February, Pritzker outlined nine changes to the corporate tax code meant to generate $932 million in revenue for the state in order to maintain a balanced budget while keeping income taxes and government spending flat for FY 22, which begins July 1.
“The governor’s budget proposal is a reasonable and balanced one,” IDOR Director David Harris told lawmakers. “Were it to be enacted as (Gov. Pritzker) proposed, there would be a $120 million surplus at the end of FY 22 by estimate.”
The largest change in terms of building revenue would be a cap on how much corporations can deduct from their taxes based on their losses in a given year. Under current tax law a corporation can take their net operating loss and reduce how much of their income is taxable in future years by that amount.
Pritzker’s proposal would cap this deduction to $100,000 annually for the next three years, which IDOR estimated would save the state $314 million in FY 22.
Harris told lawmakers that the state’s 2,800 corporate taxpayers deducted $6.4 billion in net operating losses from their taxes in 2018. Just 84 of those corporate taxpayers that year accounted for $3.5 billion in operating losses.
“My point there is the biggest percentage of (net operating losses) are enjoyed by a very small number and that means that the overwhelming majority of corporations are not going to be impacted by this,” he said.
While the Pritzker administration has referred to the changes as “closing corporate tax loopholes,” three of the nine tax codes being removed or amended as part of the proposed budget were put into place by Pritzker as part of budget negotiations with state Republicans in 2019.
A phased repeal of the corporate franchise tax, an addition to what properties qualify for the state’s machinery and equipment sales tax exemption, and a tax deduction for creating new construction jobs in the state were added to the budget proposal put forth by Pritzker in 2019 to secure Republican support.
All three provisions would be delayed or removed in the governor’s plan in order to generate approximately $102 million in savings for FY 22
That third provision, branded as the Blue Collar Jobs Act, was meant to go into effect Jan. 2021. At the time of its passage, the bill was touted by both Pritzker and Republicans as a tax credit that would bring more jobs and businesses to Illinois.
However, the construction worker tax credit had its implementation delayed by Pritzker, who cited losses in tax revenue due to the coronavirus pandemic.
Sen. Chapin Rose, R-Mahomet, questioned Sturm, the governor’s budget director, on why a program passed with bipartisan support needed to be cut if the state expected a surplus.
“Here we are at the end of COVID with Illinois as one of the top states in the nation for unemployment, people desperately needing work,” he said. “Why on earth did the administration— did Governor Pritzker— decide, he’s now going to back out, back out of, back down from, go back on, his word, his pledge, when he signed the Blue Collar Jobs Act?”
Democratic Sen. Linda Holmes, of Aurora, echoed his concerns.
“I kind of hesitate, wondering if that is almost a bit of a poison pill here, when we talk about eliminating some recent tax changes,” she said.
According to Sturm, the state’s short-term fiscal situation looked positive due to loans and an influx of funds from the federal government as part of several coronavirus relief packages passed in the last year. But for long-term stability, there were hard choices that had to be made regarding the tax code.
“Illinois has struggled with a persistent budget deficit for the last few years, many years. These are changes more permanent in nature that would go to try to address some of the underlying structural challenges of the state’s budget,” Sturm said.
Other corporate tax changes that raised concerns at the hearing are the reduction of a tax credit for individuals and businesses that contribute to private school scholarships, a cap on the reimbursement retailers receive from collecting sales tax, and the expiration of a sales tax exemption for biodiesel fuel.
Multiple business organizations submitted either oral or written testimony against the proposals, including the Illinois Manufacturers’ Association, the Taxpayers Federation of Illinois and the Illinois Retail Merchants Association.
Chicago Democratic Sen. Elgie Sims, who chaired the hearing, said he heard “a large discussion this morning as if this is a one-year solution,” and offered support for the budget’s long-term goal of financial solvency.
“If there are other proposals, we certainly look forward to see, but these are the proposals as put forth by the governor,” he said.
Greg Cox, of the Illinois Soybean Growers Association, said he appreciated the difficulty of Sturm’s position since “she was given a task to build a budget with no general tax increases and with flat spending,” but that there would be serious policy implications for cutting the exemption for biodiesel fuel.
Those implications are increased air pollution as more petrol and less biodiesel would be used in fuel blends and the potential loss of 2,000 jobs tied to the biodiesel fuel industry in Illinois, which is the nation’s largest soybean producer.
He also presented Senate Bill 2394, submitted by the Growers Association, through Essex Democrat Sen. Patrick Joyce, as a compromise that would still gradually eliminate the tax credit and save the state money.
20 outlaws and criminals with ties to Illinois
Charles E. Boles (Black Bart)
A gentleman bandit of the highest order, Charles E. Boles AKA “Black Bart” is known for leaving poetic messages at the scene of two of his robberies.
While Boles is most notorious for his stagecoach robberies in states like California and Oregon, he also served as a private in the 116th Illinois Regiment (organized in Decatur, IL) during the American Civil War.
Lester Gillis (Baby Face Nelson)
Lester Joseph Gillis, AKA “Baby Face Nelson,” was a known associate of another famous Illinois outlaw: John Dillinger.
Nelson was born in Chicago in 1908 and following his iconic life of crime, he was killed in a shootout in Wilmette in 1934.
His story started and ended right here in Illinois.
Al Capone “Scarface”
One of the most infamous criminals in American history, Al Capone first came to Chicago at age 20 and would go on to become to head of the Chicago Mafia during the prohibition era.
Capone is buried at Mount Carmel Cemetery in Hillside, Illinois.
“Dirty” David Rudabaugh
David Rudabaugh, AKA “Dirty Dave,” was an outlaw in the American Old West. His nickname comes from a rumor that Dave was scared of water.
Although his career as an outlaw began in Arkansas, he was born on July 14, 1854 in Fulton County, Illinois.
Antonio Joseph Accardo, AKA “Joe Batters” or “Big Tuna,” was a notorious Chicago mobster who ultimately became the final boss of the Chicago Mafia in 1972.
His criminal career spanned a total of eight decades.
Accardo was born, lived, and eventually died in Chicago in 1992.
Carl Shelton, along with his brothers Earl and Bernie, was a member of the Shelton Brothers Gang – an bootlegging gang based in Southern Illinois during the prohibition era.
Bernie Shelton, along with his brothers Carl and Earl, was a member of the Shelton Brothers Gang – an bootlegging gang based in Southern Illinois during the prohibition era.
Charles “Charlie” Birger was a Russian-born bootlegger in Southern Illinois during the prohibition era.
A rival of the Shelton Brothers Gang, Birger waged war with Carl, Earl, and Bernie over the Southern Illinois territory.
Joseph Patrick “Joey the Clown” Lombardo Sr.
Joseph “Joey the Clown” Lombardo is a member of the Chicago Mafia. Although currently in prison, Lombardo is suspected to still hold a key rank within the organization.
Joey the Clown was sentenced to life in prison in 2009 after being found guilty of racketeering, extortion, and loan sharking.
John Herbert Dillinger was an iconic American Depression era gangster known for robbing banks along with his infamous Dillinger Gang.
Although Dillinger was able to evade police capture for nearly a year across four different states, he eventually returned to Chicago where he was killed at the Biograph Theater on Lincoln Avenue at the hands of federal agents.
Frank “The Enforcer” Nitti
Frank “The Enforcer” Nitti was one of Al Capone’s top henchmen during his reign over the Chicago Mafia. Nitti, as his nickname would suggest, was in charge of the “muscle” within the Chicago family.
Eventually, Nitti went on to succeed Al Capone and became boss of the Chicago Outift.
He died in North Riverside, Illinois. His death was ruled a suicide.
John “Papa Johnny” Torrio
John “Johnny” Torrio helped build the Chicago Mafia during the 1920s before it was inherited by none other than Al Capone.
According to the Chicago Crime Commission, Torrio’s “talents as an organizational genius were widely respected by the major gang bosses in the New York City area.”
Torrio died in 1957 of a heart attack.
“Diamond Joe” Esposito
Unlike most mobsters, “Diamond Joe” Esposito had success in Chicago as a politician in addition to his illustrious criminal career.
Esposito offered political protection to the bootlegging gangs of Little Italy.
After becoming a rival of Al Capone, Esposito was killed outside of his home by a drive-by shooter.
Vincent “The Schemer” Drucci
Vincent Drucci, also known as “The Schemer”, was born in Chicago in 1898. After serving in the U.S. Navy, he returned home and began his criminal career by committing small-time crimes like stealing money from pay phones.
Drucci went on to become a prominent member of the North Side Gang during the Prohibition era.
He died in Chicago at the age of 29 after being shot by a Chicago police officer.
Louis “Two Gun” Alterie
Louis Alterie, AKA “Diamond Jack Alterie”, served as a hitman for the North Side Gang in Chicago early on during the Prohibition era.
Alterie fled to Colorado at the request of one of his criminal associates, but soon attracted unwanted attention by the state authorities and had to return to Illinois.
Alterie was killed on July 18, 1935. A sniper successfully shot him as he was leaving his Chicago apartment.
Jack “Machine Gun” McGurn
In addition to being a small-time boxer, Jack “Machine Gun” McGurn was a key member of Al Capone’s Chicago Mafia.
McGurn is widely suspected to have been involved in planning the infamous St. Valentine’s Day Massacre, although this has never been proven.
After being abandoned by his fellow criminal associates, McGurn was killed by three men on February 15, 1936. Coincidentally, this was one day after the seventh anniversary of the St. Valentine’s Day Massacre.
According to the Illinois Crime Survey, Frank McErlane was “the most brutal gunman who ever pulled a trigger in Chicago.” He is even credited with introducing the now-iconic Thompson submachine gun to Chicago’s underworld.
McErlane met his end on October 8, 1932 after falling ill with pneumonia.
Giacomo “Big Jim” Colosimo
James Colosimo, AKA “Big Jim” and “Diamond Jim”, was an Italian-born immigrant who came to the United States in 1895 and went on to develop a criminal empire in Chicago, which was a precursor to Al Capone’s Chicago Mafia.
Ultimately, Colosimo’s criminal associates would betray him and gun him down in 1920. Be careful who you trust.
Known as “the only man Al Capone feared”, Hymie Weiss was the leader of the North Side Gang in Chicago during the Prohibition era.
Weiss was killed on October 11, 1926 by rival gunmen.
Paul “The Waiter” Ricca
Paul Ricca, AKA “The Waiter”, served as the leader of the Chicago Mafia for four whole decades.
Ricca died of a heart attack at age 74 on October 11, 1972.
April 23, 2021 at 08:27PM