1. Chicago Paint & Coatings Association
February 21, 2017

3. Paint Specific Issues
PaintCare® - trying to advance in Illinois. Having issues with some retailers.
Fees for Lead Abatement, HHW Collection, Window Replacement
Spray Paint Ban in Chicago – ordinance proposed in – work continues
Chicago Area Waterways
New Ozone Standard – 70 ppb
IPC Legislative Reception & Day – April 25 & 26

4. #1 Priority
“No. 1 issue facing Illinois is our inability to adequately compete with other states for jobs and economic development. That drives everything else, economically and fiscally.”
Tim Nuding, Governor Rauner’s Former Budget Chief

5. Illinois General Assembly's Budget Research Group – January 2017
"Illinois is one of the Midwest’s weakest links, reflecting both soft job creation and the state’s descent into fiscal quicksand. The jobless rate has resumed its descent after rising late last year into early 2016, but much of the decline owes to a sharp drop in the labor force and population losses.”

6. Facts & Figures
Since the Great Recession began at the end of the fourth quarter of 2007, Illinois ranks 49th in personal income growth - a mere 0.9 percent.
Illinois is third highest, after Alaska and Hawaii, for debt and unfunded retirement costs as a share of state personal income percent.
Through January, base receipts are down $1.031 billion, or 5.9%. While sales tax revenue increased, those gains were more than erased with continued drops in both personal and corporate income taxes.
To date, gross corporate income taxes are off $444 million. Gross personal income tax is down $245 million. As mentioned, sales taxes may have done better but have still only grown $94 million or 2.0%.

10. Credit Rating Lowest Credit Rating of all 50 states
Increased Borrowing Costs
Moody’s – credit rating could reach “junk” bond status if pension and budget liabilities continue to grow
Per capita debt – twice the national average

11. Property Taxes
6,963 units of local government – most in the nation – all levy taxes in a vacuum.
Highest property taxes in nation; 7th in 2005
64 percent pays for local schools; 62 percent a decade ago
Adjusting for inflation, government expenditures per capita increased nearly 24 percent in 20 years

12. Income Taxes, Pensions
$7 billion + income tax increase in – Started to expire on January 1, 2015
$111 billion + shortfall in state-funded pensions (teachers, state, university, etc.)
40.9% funded ratio for pensions

13. No Budget
No budget – 90% being paid by court orders, consent decrees and continuing appropriations
Spending based on last enacted budget from 2014 (last year of a 4-year income tax increase);current spending outpaces revenue growth.
Receipts down billions
-$2.54 billion – reduction in personal income tax
-$714 million – reduction in corporate income tax
Current unpaid bills are $10.6 billion – may reach $47 billion by 2022 if state continues on this path.
State must pay 12% interest on late bills

14. Largest Costs @ $6 billion Structural Imbalance
Pensions – $7.83 billion
Medicaid - $9.92 billion
K-12 Education - $4.93 B; High Ed - $2.08 B
Total - Pensions, Med. & Educ. billion
Total GRF Expenditures billion
Total GRF Revenue billion

16. Largest State Tax Exemptions
$2.29 billion Retirement & Social Sec. (I)
$1.85 billion Food, Drug, Medical (S)
$1.54 Billion Standard Deduction (I)
$658 million Property Tax Credit (I)
$415 million Tax-Exempt Organizations (S)
$339 million Exemption from Trade-Ins (S)
$259 million Farm Chemical Exemption (S)
$234 million Earned Income Tax Credit (I)

17. Largest Business Tax Exemptions
$259 million Farm Chemical Exemption (S)
$169 million Non Motor Vehicle Use (MF)
$133 million Retailers’ Discount (S)
$113 million Biodiesel Discount & Exemption (S)
$110 million Gasohol Discount (S)
$108 million Manufacturing Machinery Exmpt. (S)
- 87% of all Exemptions are contained on these two pages
- 67% of all Exemptions went to individuals

18. Other Tax Incentives Targeted
Return to 3 factor income tax apportionment for non-service companies                      $70 million
Decouple from federal accelerated depreciation (one-time revenue increase)              $100 million
Include Puerto Rico and outer continental shelf in definition of U.S.                                $30 million
Require income tax withholding on gaming winnings over $1000 from non-residents    $4 million
Decouple from 2004 federal tax legislation (qualified production activities deduction) $53 million
Repeal deduction for foreign and domestic dividends received by corporations             $90 million
End deduction for company owned life insurance                                                           $9 million
Tax canned software                                                                                                        $65 million
Extend the insurance tax to industrial insurance                                                              $15 million
Repeal exemption for fuel transported to out of state destinations (Stealth Gas Tax)    $45-90 million
Limit retailers sales tax discount                                                                                  

19. Solutions Restructure and cut cost of government
Make Illinois more attractive for business and investment – Job Growth (Workers’ Compensation Reform, Property Tax Reform, Tort Reform, Tax Policy)
Increase taxes & fees
Eliminate Exemptions
Expand sales tax base to cover services