Legislative Action

By DIANE ROSS

Will it be Republican or Democratic tax relief?

A WIDE OPEN session it was not. Some changes were made in worker's compensation, some tax relief was passed, but the Equal Rights Amendment failed again. The work of the 1980 Illinois General Assembly ended quietly July 2. There was a minor skirmish in the last days with approval and then rejection by legislators of a new and more liberal pension plan for themselves.

The one issue that could have held up the legislature was worker's comp (WC). A partisan battle had raged for months in the absence of an agreed bill backed by both business and labor. But a conference committee was able to agree finally on "noncosmetic" changes in WC, and in the final minutes of the session — with little debate — H.B. 3250 was passed. If the governor signs the bill, WC benefits for permanent partial disability will be frozen at the current level, some automatic benefits will be reduced by 90 percent, and WC standards will be set for hearing loss benefits (details on WC changes will be reported in next month's column).

The Illinois State Chamber of Commerce called these changes the "first essential step in reform" and cautiously predicted the changes would "partially stabilize" if not reduce Illinois' WC costs. Business claims Illinois is losing industry because the state's WC costs are not competitive with those of other midwestern states.

It was an election-year session, ostensibly limited to appropriations. Indeed, the rules committees in each chamber truly used their powers — especially in the Senate — to allow only major substantive bills to be considered this year.

In an election year, however, tax relief is a major issue, and Democrats and Republican alike want credit for tax relief as they campaign this summer. The Democrats, in control of the legislature, passed three different sales tax relief bills, all sponsored by Democrats and two going much further than what the governor proposed. All three bills go to the governor, who will be forced to make a choice.

Political credit for tax relief is especially important this election year since the party that wins control of the legislature in November will control reapportionment of the legislative and Congressional districts next year. But, if Thompson wants sales tax relief and an expanded circuit breaker, he will have to sign Democratic bills (see below for details).

Thompson's package

Thompson had led his party's tax relief effort this session, proposing a four-point package in March. His No. 1 priority was reducing the state sales tax on food and nonprescription medicine by another penny, effective January 1, 1981; and H.B. 276, one of the three Democratic bills on his desk, will do just that.

Thompson proposed expanding the circuit breaker tax relief for the elderly by increasing the maximum income to qualify from $10,00 to $12,500 and by increasing the maximum grants from $650 to $800. The Democrats went further in H.B. 3204, which passed (see below). It would increase the maximum qualifying income to $12,000 and increase the maximum grant to $700, but it also adds a new fuel grant.

Thompson dropped point three of his package — to give every 1978 income taxpayer a $10 dividend for each exemption — when proposed cuts in federal aid and a deepening recession made it clear Illinois could ill-afford a one-time giveaway estimated at $115 million.

Democrats refused to consider any of the bills to implement Thompson's fourth point: limiting increases in property tax revenue to increases in personal income.

The underlying issue for political debate this summer between Thompson and the Democrats will be: How much tax relief can Illinois afford? Thompson will claim the state cannot afford as much as the Democrats would provide. Revised estimates of state revenue announced the end of June by Thompson's Bureau of the Budget (BOB) show less growth than predicted in March. On the other side of the ledger, BOB said state public aid costs may increase substantially more than projected in March if new economic forecasts are correct in predicting an unemployment rate of 8.3 percent for fiscal 1981.

It's doubtful Thompson will veto all tax relief, especially when the national Republican party is talking tax relief and tax cuts.

But last year, Thompson vetoed the Democratic legislation to completely eliminate sales tax on food and nonprescription drugs, and then changed his mind. He then successfully orchestrated a special session with the help of Chicago Mayor Jane Byrne, to get credit for taking one penny off the sales tax. When that strange battle was over, Thompson promised to consider taking another penny off the tax this year "if the state can afford it." In March, he said the state could afford the second penny.

All bills passed by the legislature go to Thompson for his decisions. He can time his announcements for vetoes or approval on each bill to the advantage of his party's candidates. It seems unlikely he would use a special session to force any issue like he did last summer since a session would interfere with the national party conventions and the entire campaign this fall.

Democratic party line

Meanwhile the Democratic party line will be that Illinois can afford more sales tax and circuit breaker relief than the governor had proposed.

And after the general election is over, the lameduck legislature will meet to deal with whatever vetoes Thompson has issued.

Summaries follow of major tax relief bills which passed both houses and will go to the governor.

32/August 1980/Illinois Issues