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Governor signs bill to eliminate business tax breaks

Posted August 15, 2007 11:00 pm

Doug Finke

A key component of the new state budget was put into place Thursday with the elimination of $250 million worth of business tax breaks.

Gov. Rod Blagojevich signed Senate Bill 1544, which ends a handful of tax breaks now enjoyed by businesses and creates an amnesty program for some businesses that have unpaid taxes.

Blagojevich called the tax breaks "corporate loopholes" that placed an unfair burden on individual taxpayers.

"For too long, working families have shouldered more and more of the tax burden while big business pays less and less," Blagojevich said in a written statement.

The breaks eliminated include such things as making it more difficult for companies to use subsidiaries to hide revenue from Illinois tax collectors and eliminating arrangements that create artificial deductions on Illinois taxes.

Both the House and Senate embraced the bill as a way of raising more revenue for state coffers after Blagojevich's proposed gross-receipts tax flopped in the General Assembly. The governor has ruled out any increase in the income or sales tax to bolster state revenues.

Eliminating the tax breaks helped lawmakers balance the fiscal 2008 budget that was passed last week and is now awaiting action by Blagojevich. He said this week he will cut $200 million in pork projects and another $300 million in "special interest" spending from the budget, though he has not offered any examples of either.

He also plans to bypass the legislature by allocating $463 million to a variety of health-care initiatives targeting the poor and uninsured.

House Speaker Michael Madigan, D-Chicago, said once the governor acts on the rest of the budget, the House will return to Springfield and try to override the vetoes. However, Senate President Emil Jones, D-Chicago, has said he will not allow the Senate to vote on reinstating the money cut by the governor. Both chambers must override the vetoes or the cuts will stand.

At the same time, anything in the budget that's not vetoed by the governor will go into effect. That will allow Comptroller Dan Hynes to start writing checks for state expenses rung up since Aug. 1, when a temporary state budget expired.

Also Thursday, Blagojevich vetoed a bill that would have reinstated a tax credit for companies that begin offering day care services to employees.

"This bill creates a corporate tax loophole in a tight fiscal year," Blagojevich said in a statement accompanying the veto.

"I don't consider it a tax loophole," said sponsoring Rep. Sandy Cole, R-Grayslake. "It wasn't an expensive program."

Cole said the credits give incentives to small and mid-size companies to start day care services for their employees. The largest amount paid out in one year under the program was $1 million.

The bill passed the House on a 112-0 vote and the Senate by a 58-0 vote. Cole said she will decide later whether to try and override Blagojevich's veto.

Doug Finke can be reached at (217) 788-1527 or doug.finke@sj-r.com.

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