Legislative Action
By DIANE ROSS

Thompson's tax package — four-way relief

WITH January's State of the State address out of the way and March's budget message all but delivered, February was Gov. James R. Thompson's chance to pop this year's tax relief proposals: a $289 million package timed to goad the Illinois General Assembly into action before the March 18 primary. (Only a special session could force legislative action before the election.)

This year's proposals were much less comprehensive than the 19-bill tax relief package Thompson unveiled last year, but no less ambitious.

Top priority, among Thompson's new, four-point, tax package is a onetime, $115 million, taxpayer giveaway. Each 1978 taxpayer (a complete list of 1979 taxpayers is not yet available) would receive a $10 dividend for each exemption claimed, with each taxpayer 65 or older receiving a double dividend. However, it's unclear how the plan would account for taxpayers who have died, moved, divorced or didn't claim exemptions.

Thompson's plan called for the Republicans to introduce such a dividend bill when he unveiled the fiscal 1981 budget in March.

Point two of Thompson's new package is to remove a second penny from the state sales tax on food and non-prescription drugs effective January 1, 1981. (The first penny went off on January 1, 1980.) Last summer the governor vetoed the Democratic bill which would have phased out the tax over four years, arguing the state could not afford to be locked into an automatic phaseout. Then last fall, the governor admitted the state could afford a penny cut. Now he's saying the state can afford another penny cut. Thompson's penny-by-penny approach and the Democrats' automatic phaseout would have the same effect: each penny cut costs the state about $100 million, or about $400 million if the tax is eliminated completely. However, if the cuts take effect on January 1, the middle of the fiscal year, as Thompson proposes, the $100 million cost is split over two fiscal years.

There is a Republican bill alive to remove a second penny January 1, 1981, and presumably Thompson will use that bill. However, the Democrats went along with Thompson's penny-by-penny bill last fall only because Chicago Mayor Jane Byrne supported it over their own automatic phaseout. So the Democrats have kept alive a number of bills that would automatically phase out the tax or cut it penny-by-penny as Thompson proposes.

Point three of Thompson's new package is to expand the circuit breaker property tax relief program by increasing the maximum income to qualify from $10,000 to $12,500 annually and by increasing the maximum grant from $650 to $800 annually. Thompson said this would make another 50,000 persons over age 65 or disabled persons eligible, and it would cost the state about $12 million.

One of two Republican circuit breaker bills still alive would do nearly the same thing Thompson suggests. However, the Democrats also have several bills available. Theirs would go a step further, increasing the maximum income to qualify from $10,000 to $15,000 annually while leaving the maximum grant at $650 annually. The Democrats say their bills would make another 100,000 eligible, twice as many as Thompson proposes, and would cost the state another $16 million more than Thompson's proposal.

Point four of Thompson's new package is to limit property tax revenue (which, in essence, limits local government spending) and to limit state spending. This marks the governor's fourth attempt to limit government spending. When the General Assembly didn't pass spending limits on local government last spring, Thompson tried again during October's special session on the sales tax and again during January's emergency session on the Chicago schools crisis. The bill he apparently had in mind was S.B. 1292, sponsored by Sen. Kenneth G. McMillan (R., Bushnell), which passed the Senate 38-9 May 23 but then stalled in the House Revenue Committee and was later tabled. While Thompson's pressure in January forced a motion to untable McMillan's bill, that action failed for lack of the required 107 votes. Republicans could try again.

McMillan's bill would have tied increases in property tax revenue to increases in personal income. It would have limited this year's property tax increase to 10 percent over last year. Without such limits, property taxes would have increased 13 percent statewide, Thompson said. The 10 percent limit would have saved taxpayers $225 million this year, according to Thompson, if McMillan's bill had passed before tax bills were figured in February.

Thompson still wants to tie state spending to personal income, something he claims to have accomplished for three years without a statute or constitutional requirement. Yet, he has thwarted Republican efforts to pass the so-called "Totten Amendment" (House Joint Resolution/Constitutional Amendment 13), sponsored by Rep. Donald R. Totten (R., Hoffman Estates). The Totten Amendment would limit state spending increases to 8 percent of personal income. If approved by the General Assembly and ratified by voters statewide, specific limits would become part of the Constitution. The Totten Amendment with a 7 percent limit, had passed the House in 1977 and was reintroduced last year with an 8 percent limit. However, Thompson has refused to support it, preferring instead Senate Joint Resolution/Constitutional Amendment 36, sponsored by Sen. Prescot E. Bloom (R., Peoria), which doesn't set a specific limit. When Thompson pushed government spending limits again last fall, the House again passed the Totten Amendment, sending it to the Senate Revenue Committee where the Bloom Amendment also is pending.

24/April 1980/Illinois Issues