Senate Week in Review: September 3-7

Springfield – Insinuations by House Speaker Michael Madigan (D-Chicago) that following the November election, state Democrats may take advantage of some lawmakers’ lame-duck status to advance pension and cost-shift changes without Republican support prompted a quick response from House and Senate GOP leaders, according to State Sen. Sue Rezin (R-Morris).

In other news, as gas prices edge higher, Sen. Rezin provides an in-depth look into how Illinois’ local motor fuel taxes are determined.
Sen. Rezin is set to host a Senior Health Fair this month in Peru.  The event will be held on Tuesday, September 11 at The Eagles located at 830 Harrison in Peru from 9:00 a.m. till noon.  The admission is free and attendees will be able to learn how to live a happier and healthier life through the resources available to them throughout the community.  There will be over 50 participants in the fair with various information on state, local, and private programs.

Additionally, there will be free screenings at the fair which include flu shots, blood sugar testing, body fat, blood pressure, bone density, pulmonary function, and pulse oximetry.  Information on hospice, assisted living, nursing homes, adult daycare, financial planning, nutrition and more will be available as well.

For additional information please call Sen. Rezin’s district office at 815-220-8720 or visit her website at

Senate Republican Leader Christine Radogno and House Republican Leader Tom Cross
responded to implications during the week that Democrats are considering unilaterally passing pension changes in January with Democrat-only votes. Pointing to the Democrats’ 2011 tax increase, which was passed in the waning hours of a lame-duck January session, the GOP leaders expressed concerns that without a bipartisan solution, Democrats would rely on a massive property tax increase to shore up the state’s dismally underfunded state employee retirement systems.

The state’s leaders agree that comprehensive pension reform is necessary to ensure the solvency of Illinois’ five state retirement systems; however, reform negotiations hit a roadblock late in the spring when Gov. Pat Quinn, Speaker Madigan and Senate President John Cullerton introduced a proposal that would shift the responsibility of pension payouts for teachers and university employees from the state, to local school districts and universities. Most Republicans oppose the idea, noting the shift is not true “savings,” but simply shifts the burden of the pension obligations onto local taxing bodies, which is expected to drive up the costs of property taxes for suburban and downstate taxpayers.

The Republican leaders noted that Illinois can no longer continue “throwing new revenue” at the state’s problems at taxpayers’ expense. Instead, they advocated for bipartisan cooperation in negotiating a comprehensive pension reform plan that would not rely on another burdensome tax increase.

Travelers may have noticed prices at the pump increase this past Labor Day holiday. Illinois motorists who wonder at the variations in gas prices across the state might be surprised to learn that local, state and federal taxes account for some of the differences.

Illinois has many different taxes on the sale of motor fuel including various federal, state, and local motor fuel taxes, as well as various sales taxes. The state taxes include the flat 19 cents per gallon motor fuel tax on gasoline/gasohol (21 cents for diesel), the 1.1 cents per gallon in environmental fees, and the state sales tax of 5% of motor fuel sales (imposed on the price before the inclusion of the state motor fuel tax). By state law, only 80% of the price of gasohol is subject to the state sales tax.

Many lawmakers think the state’s sales tax on motor fuel sales is bad public policy because, the way the tax is calculated, it’s actually a tax on a tax. The price of a gallon of fuel includes the price of the product plus a separate motor fuel tax. The sales tax is figured on that total price.

The state’s share of the sales tax is 5 percent, while local governments receive 1.25 percent. Some municipalities pile their own sales taxes on fuel in addition – ranging from 0.25 percent in some small communities to 3.5 percent in the city of Chicago.

In terms of the state motor fuel tax, Illinois has the 31st highest rate in the nation at 20.1 cents per gallon (including environmental fees). In comparison to neighboring states, Illinois’ rate is lower than the tax rates of Wisconsin (32.9 cents per gallon), Kentucky (25.9 cents) and Iowa (22.0 cents), but is higher than Michigan (19.0 cents), Indiana (18.0 cents), and Missouri (17.3 cents).

Illinois had only the 41st highest rate of motor fuel tax collections on a per-capita basis at a rate of $103 per capita. All states neighboring Illinois (except Michigan at $99) had higher per-capita rates than Illinois (Indiana $118; Iowa $146; Kentucky $152; Missouri $121; and Wisconsin ($172). However, if Illinois included sales tax revenue from motor fuel, its per-capita value would rise from $104 to $149 per capita and its ranking would rise from 41st to 18th. The ranking would likely be even lower if it were not for the amount of public transportation available in the Chicago metropolitan area that limits the amount of revenue collected from motor fuel related tax revenues, thus, keeping the per-capita values artificially high.

In its latest report (July 2012), the American Petroleum Institute shows Illinois having the fifth highest gasoline tax total (including all state, federal, and local taxes) in the nation at 58.1 cents per gallon. Only California (67.7 cents), New York (67.7 cents), Hawaii (66.7 cents) and Connecticut (63.4 cents) had higher rates.

Neighboring states Indiana (56.5 cents) and Michigan (57.9 cents) were close behind Illinois. Not surprisingly, all of the highest-ranked states also imposed some sort of sales tax on motor fuel in addition to their standard motor fuel tax. However, some other states adjacent to Illinois have notably lower taxes, with Wisconsin at 51.3 cents, Iowa at 40.4 cents and Missouri at 35.7 cents.

Opponents of reducing/eliminating the state’s sales tax on motor fuel sales note that it would create a significant dent in state and local government coffers throughout Illinois. In the summer of 2000, the state suspended the 5% state portion of the sales tax applied to motor fuel and gasohol, for the period July 1, 2000, through Dec. 31, 2000. The Commission estimated that the suspension of sales tax on motor fuel cost the state approximately $157 million. However, at today’s prices, the cost to the state for a similar six-month suspension could be as high as $400 million.

Without these taxes, replacement revenues would have to be found or equitable spending cuts would need to follow.

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