Overtime – Illinois Enters New Fiscal Year With No Budget

Initially, ChicagoTechNews.com planned on posting an article on the Illinois Politico Network and how it extends to the Chicago Tech Community this week.  But, the Illinois General Assembly would not let that happen.

As of today, July 1, 2009, the State of Illinois entered a new fiscal year without an operational budget.  Per the Illinois Constitution, the Governor is responsible for presenting a budget and the General Assembly is responsible for presenting and approving appropriations (via legislation) to fund that budget. 

Governor Quinn fulfilled his responsibility in his March 18, 2009 Budget Address.  But, the General Assembly came up short last night, even though Governor Quinn issued a proclamation that started a Special Session (aka OVERTIME) to resolve the budget.

The General Assembly did make some attempts to quell a potential July 15th “doomsday” when a large number of state employees are due to receive their first Fiscal Year 2010 paychecks.  The Illinois House approved a partial budget that would have kept the State running for a while.  But, Governor Quinn promised to veto it.  The Illinois House also approved a creative maneuver to borrow $2.2 billion for a pension payment that would essentially free up funding for social services.  But, that was defeated in the Senate by a bloc that opposed borrowing to pay for day-to-day expenses.

The operational budget issue is huge.  According to the Governor’s Office, the state starts Fiscal Year 2010 with a $9.2 billion budget that has dire repercussions for social/human service recipients and state operations.  But that is only part of the story.  There are other issues, through action and inaction, which have definite implications for the Chicago Tech Community.

Because there has been no resolution of the operational budget problem, the possibility of a business income tax increase is very much alive. Governor Quinn’s plan originally was going to raise the corporate income tax from 4.8% to 7.2%.  There is also the possibility that consultants with a Sole Proprietor tax status would also “get hit” if Quinn’s personal income tax rate hike proposal (from 3.0% to 4.5%) is enacted.

The operating budget deliberations will also decide the fate of HB0351 – the Emerging Technologies Investment Bill, because it has taxation and revenue implications.  It has been held in the House Rules Committee since March 13th and unfortunately, it may not come out.

There was a bright spot.   SB0265, Treasurer Alexi Giannoulias’ venture capital bill, did pass both legislative bodies on June 30th.  Pending Governor Quinn’s signature, this will definitely provide support for the Chicago Tech Community.

HB0255, aka The Capital Bill, was also approved on June 30th and awaits the Governor’s signature.  This would include components of Governor Quinn’s Illinois Jobs Now business initiative that would include funding for scientific research and small business loans.  Other areas of interest for Chicago tech companies could be the video gaming and community-based projects supported in the bill.

In terms of final thoughts, things can get crazy during OVERTIME.  If it drags out too long, concessions could be made that could harm Illinois business and the Illinois technology industry.  To prevent that, the Chicago Tech Community should closely monitor:

• The status of personal and corporate income tax increases;
• The resurrection of a software tax;
• Across the board reductions of grant funds; and
• The status of the Emerging Technology Investment Bill (HB0351)

Other blocs are looking out for their self-interest.  The Chicago Tech Community should too.