Illinois Gov. JB Pritzker signs key bills into law

Illinois Gov. JB Pritzker signed a raft of major bills into law over the past week, culminating with the Northern Illinois Transit Authority Act on Tuesday.

The governor's signature brought to a close a drawn-out battle to avert Chicago-area public transit's fiscal cliff and restructure operations to improve service and oversight.

Pritzker said in a statement the law will modernize transit systems across the state.

"We are bolstering operations and upgrading trains, tracks, and buses, and we're doing it in the most responsible way, with no new statewide taxes," he said. "For families, workers, businesses, schoolchildren, and visitors, this is a once in a generation investment that will benefit everyone, especially the overall Illinois economy. We need to continue pushing forward until Illinois truly has the best transit system in the nation."

The NITA Act's $1.5 billion in annual funding will be enough to avoid the fiscal cliff, transit advocates said.

The new law includes funding for downstate public transit and shores up the Illinois Tollway capital program, but it has drawn criticism from some downstate lawmakers and interest groups.

"With the transit fiscal cliff, there were no good solutions, just hard decisions," said Maurice Scholten, president of the Taxpayers' Federation of Illinois. "In the bill (that passed), the revenue measures that were included were not as bad as other revenue proposals that had been discussed, such as the delivery fee and the billionaires' tax."

The NITA Act relies on several revenue-raising measures, including redirecting some of the state sales tax on gas from the road fund or the general fund to transit; diverting interest from the road fund to transit; and increasing the regional sales tax that funds public transit in the six counties around Chicago.

The law replaces the Regional Transportation Authority with the Northern Illinois Transit Authority and gives the new authority more oversight and power over capital spending, service plans and funding allocation, leaving the Chicago Transit Authority, Metra commuter rail and Pace suburban bus service to handle day-to-day operations.

"The people of Illinois deserve buses and trains that run reliably and on-time, that are safe, that are accessible for passengers with disabilities, and that are administered without waste, fraud, and abuse," state Rep. Kam Buckner, D-Chicago, said in a statement.

"Over a year of listening to stakeholders from across the ideological spectrum resulted in this legislation, which will help give Illinoisans the kind of public transit options they deserve," he said.

"Together, we worked to avoid 40% cuts to northeastern Illinois public transit service and prevented almost 3,000 of the system's workers from being laid off ?all while investing and building a system meant to serve residents across the state for decades to come," state Sen. Ram Villivalam, D-Chicago, added in a statement.

The Illinois Clean Jobs Coalition lauded the new law.

"Illinois is making the greatest investment in public transit in Illinois history, and by association, making a significant investment in its people," the coalition said in a statement, adding, "ICJC looks forward to working with legislative champions in the years to come to pass additional legislation that achieves net-zero emissions in the transportation sector by 2050 while improving mobility and accessibility."

The governor also signed SB 1911 into law on Friday. Among other things, the legislation includes an expansion of STAR bonds in the state, making it easier to set up a development tool that redirects sales tax revenue within a specified district in connection with major tourism, entertainment, retail and related projects.

The bill also makes a workaround to federal state and local tax deduction caps permanent and swaps the Global Intangible Low Tax Income tax for the Net Controlled Foreign Corporation Tested Income regime, effective Jan. 1. And it decouples Illinois from recent federal bonus depreciation for newly constructed non-residential real property changes.

The change from GILTI to NCFCTI drew opposition from the Taxpayers' Federation. The goal of the change was to bring tax income back to the U.S. government, Scholten said, but NCFCTI lacks the 10% return on tangible capital in foreign jurisdictions that GILTI offered.

"This new regime is broader than GILTI; it's not just a rebranding or renaming, there are substantive changes within it," Scholten said.

They have other concerns, including about the apportionment factor that's used to figure out how much income is subject to taxation in Illinois.

"Illinois can only tax income that is connected with activity here in Illinois, which is done by the apportionment factor," Scholten said. "The foreign earned income that is now in the corporate tax base here in Illinois, it is not getting representation in the apportionment factor? It results in Illinois taxing more than its fair share of income."

The federation also opposed the decoupling from federal bonus depreciation. The measure concerns manufacturing facilities and when corporations can deduct the expenses for those facilities.

A federal law change in the Trump administration's tax and spending bill allowed corporations to deduct those expenses immediately, giving them an immediate tax break while lowering tax revenue. When Illinois decoupled from that, it meant that companies have to deduct those costs over the life of the facility.

"They generated money that the state counted on, but it makes Illinois' corporate income tax policy slightly more of an outlier compared to other states," Scholten said. "State tax codes have to be competitive with each other, so that's something that policymakers have to keep in mind. They shouldn't just make the changes in isolation; they have to look at how Illinois compares to other states."