PI Original Matthew Blake Wednesday November 30th, 2011, 1:30pm

Give Me A Break

Lawmakers and Gov. Pat Quinn scheduled a final day of the fall veto session in order to cobble together a bill that would give CME Group, Inc. and Sears Holding Corp. juicy tax breaks. The tax break bill could not pass – but Quinn and the General Assembly did keep several state health facilities from closing down.

Lawmakers and Gov. Pat Quinn scheduled a final day of the fall veto session in order to cobble together a bill that would give CME Group, Inc. and Sears Holding Corp. juicy tax breaks. The tax break bill could not pass – but Quinn and the General Assembly did keep several state health facilities from closing down.

What these two very different pieces of legislation had in common was that both postpone unpleasant budget decisions until next year.  Another decision for next year: Whether the Illinois House will approve ratepayers subsidizing a downstate coal gasification plant. The Illinois Senate narrowly approved such a plan Tuesday.

Tax Break Bill Postponed Indefinitely

A bill with roughly $300 million in annual tax breaks failed 8-99 in a House vote Tuesday night. The measure – sponsored by Democratic Sen. Toi Hutchinson – passed the Senate 36-18.

The House balked at the fact that the Senate introduced their own tax break bill after the House Revenue and Finance Committee passed a $250 million tax break bill Monday, sponsored by Democratic Rep. John Bradley.

That the House and Senate could not agree illustrates the problematic politics and policy in giving tax breaks to highly profitable corporations.

CME Group, which controls the Chicago Board of Trade and Chicago Mercantile Exchange, made $951 million in 2010 profits, or a 31.7 percent profit margin. But Terry Duffy, executive chairman of CME, told the state legislature he wanted out of Illinois unless CME Group paid less in taxes.

Hoffman Estates-based Sears and Chicago-based CBOE Holdings, Inc., a smaller financial exchange, issued similar threats.

So Democratic and Republican House lawmakers wrote a bill that gave these three companies about $100 million total in annual tax breaks. The bill faced two obvious objections: Why single out profitable big businesses for tax breaks and how will these tax breaks be paid for?

So House lawmakers added on $100 million in tax breaks to smaller firms. And they increased the Illinois contribution to the federal earned income tax credit for working families from five percent to 7.5 percent of pay. This EITC increase would cost the state about $50 million extra each year.

As for paying for the bill, the measure decoupled Illinois from the federal “bonus depreciation credit.” The tax credit allows companies to immediately write off equipment that they purchase, instead of writing it off gradually over time.

Like House lawmakers, Gov. Pat Quinn took the threat of these companies leaving the state seriously. But Quinn would only announce his support for a bill that increased the earned income tax credit to fifteen percent of pay – a measure that the Hutchinson Senate bill slipped in.

“We supported the Senate bill because it had the higher earned income tax credit,” says Quinn spokeswoman Kelly Kraft. “If we are going to be giving tax breaks to corporations, we will also give tax breaks to families.”

Kraft gave a second reason why Quinn liked the Senate bill – it would adjust personal income taxes upward for inflation. Kraft added that Quinn might have ultimately supported the less expensive Bradley House bill.

“But,” Kraft says, “Now the Bradley bill is dead.”

Seven State Facilities Stay Open For Now

Quinn and the General Assembly did agree to keep open until the end of the fiscal year – June 30, 2012 -- seven state facilities slated for immediate closure. These include three mental health facilities, two centers for the developmentally disabled, a youth center, and a prison.

Advocates for the state spending more money on human services offered qualified praise.

“It’s a temporary victory,” says Ralph Matire, executive director for the Center for Tax and Budget Accountability. “What is of concern is that I do not see any way to keep those facilities going unless it comes at the expense of other services.”

Quinn spokeswoman Kraft says that the state has a “thirty month plan” to deal with long-term health care facility issues. “Our main goal is to move people into community care,” Kraft says.

Kraft adds that the state must ultimately close two of their mental health facilities as well as four developmentally disabled centers. She says that the governor cannot yet specify which facilities are targeted for closure.

Coal Plant Bill Reignites

The Senate voted 30-28 Tuesday to make utility ratepayers hand over $3.5 billion to Nebraska-based energy company Tenaska so the company can build and operate a coal-to-gas plant outside of Taylorville, Illinois. The measure, sponsored by Senate President John Cullerton, was previously rejected twice on the Senate floor.

A short book could be written about the politics of Tenaska’s Taylorville Energy Center, which is supported by the state AFL-CIO and the watchdog Citizens Utility Board but fiercely opposed by most state environmental groups…as well as opposed by utility giant Exelon Corp.

The Illinois House is expected to take up the Tenaska bill next year. The House approved a similar bill back in November 2010.

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