The McDermed Dispatch for February 25th

Mileage Tax False Alarm?

A bill was introduced recently to impose a pay-by-the-mile tax. During his campaign, Governor Pritzker seemed to support the idea. Specifically, this bill would have established a pilot program for a 2.1-cent tax on every mile a vehicle is driven on state roads. It got a lot of media attention and prompted a lot of concerned drivers to contact my office. In what seems to be a false alarm, the lawmaker who introduced the bill has “tabled” the legislation, claiming it needs a lot of work and that he does not plan to bring it back up this session.  

The issue of a mileage tax is complicated by many factors, including drivers who frequently cross state lines; privacy concerns with GPS-tracking devices; lack of administrative infrastructure to handle the data and enforcement of the tax; and the disproportionate effects the tax would have on urban versus rural vehicles.

Inaugural Budget Address

Illinois is $3.2 billion in the hole from last year’s “balanced” budget and has an unpaid bill backlog of $8.3 billion dollars, which we paid $900 million on interest last year. Needless to say, the stakes were high for Governor Pritzker’s inaugural budget address. Unfortunately, most of the address can be summed up as more taxes and more spending. Here’s a breakdown of those elements:  

Taxes:

  • Plastic bag tax
  • Online sports gaming tax (not yet legal)
  • Recreational marijuana licenses/taxes (not yet legal)
  • Cigarette/vaping tax increase
  • Medicaid insurance tax

Spending:

  • $271 million in additional funding for various Department of Human Services projects like the Childcare Assistance Program
  • $150 million more on early childhood education
  • $375 million more on public schools, includes a five percent boost to higher education at a total increase of $52.2 million
  • $50 million to the Monetary Award Program (MAP) grants to help students in poverty afford college tuition.
  • $7.6 million to state police for new cadet classes and an extra $5 million to pay for the state’s new Gun Dealer Licensing Act
  • $25 million for the Department of Corrections to implement a new electronic medical record system to better track the healthcare of the state’s prison inmates.

Governor Pritzker was able to claim that his budget is “balanced” because he plans to sell off state assets such as Chicago’s James R. Thompson Center (a budget line tactic used by previous administrations that has yet to come to fruition), borrowing $2 billion on the bond market, and shorting scheduled pension payments by $800 million (aka “a pension holiday”).   Governor Pritzker made it clear that he plans to spend more, but he will have to wait for his biggest goal, the implementation of a graduated income tax, first. Since Illinois has a flat tax mandated in the State Constitution, it will take an amendment- a process that requires voter referendum and could take at least a year and a half.

Sports Betting on the Fast Track

Although not yet filed, you can expect to see sports betting legalization bill soon once all the stakeholders have had their say. Democratic state Rep. Mike Zalewski is expected to take the lead on this issue, which has recently become legal due to last year’s Supreme Court case. Since then, West Virginia has legalized it, Kentucky has taken its first legislative steps to do so, and Tennessee and Ohio are also considering it. Governor Pritzker listed sports betting as a revenue priority projected to bring in $212 million a year.  As this issue moves forward, and likely at breakneck speed so that the Governor can capitalize off the revenue, we need to consider what recent WBEZ/ProPublica reports have brought to light about the current state of legal gambling here in Illinois.  

Video gambling was made legal only six and a half years ago. There are now 30,000 video gaming machines in 6,800 licensed locations throughout Illinois. The first investigation claims that “The speed and lack of planning that marked the video gambling legalization created a cascading series of unintended consequences that continue to plague the state today.” Among other reasons, this is because the State started borrowing against the projected revenues of newly legal video gaming that never quite materialized as it drove down gambling in other areas like casinos, which are taxed at a higher rate.  

The second investigation found that video gambling companies specifically target chronic gamblers, while the state has failed to address this addiction. The report estimates video gamblers have lost more than $5 billion since its inception and that 217,000 residents are “problem gamblers”. I highly recommend you take a moment to read both these reports.

2019 Legislative Survey

Thank you to all those who have taken my legislative survey thus far. If you have not done so yet, you can here.   Some of you who received the physical survey in the mail have noticed that upon going online to complete the survey, two questions are slightly different. Two questions on the physical survey, #7 and #9, ask respondents to give their top two answers. Unfortunately, due to constraints in the online platform we use, you can only submit one answer online for those questions. I apologize for any inconvenience and upon completing the survey you may follow up with an email to my office elaborating on your answers to those questions.