HB1051 95TH GENERAL ASSEMBLY

LRB095 07918 BDD 28080 b

95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
HB1051

Introduced 2/8/2007, by Rep. Annazette Collins

SYNOPSIS AS INTRODUCED:

New Act
30 ILCS 105/5.675 new
30 ILCS 105/5.676 new
30 ILCS 105/5.677 new
30 ILCS 105/5.678 new
30 ILCS 105/5.679 new
105 ILCS 5/34A-501	from Ch. 122, par. 34A-501

Creates the School District Income Tax Act. Authorizes a school district located within a municipality with 1,000,000 or more inhabitants to impose an income tax of 0.9% on individuals and 1.44% for a period of 2 years. Requires the Department of Revenue to collect the tax and enforce the Act. Provides that 67% of the taxes collected shall be used for educational purposes, 26.4% shall be used for property tax relief, 3.2% shall be used for health and safety programs, 3.2% shall be given to the municipality in which the school district is located to be used in the discretion of the municipality, and 0.2% may be retained by the Department for administrative expenses. Amends the State Finance Act to create the various funds from which distributions of the tax money shall be made. Amends the School Code to authorize the School Finance Authority to issue and additional $200,000,000 in bonds for educational purposes. Effective immediately.

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the School District Income Tax Act.

Section 5. Definitions. In this Act:

"Net income" means the net income of the taxpayer as defined and as determined and computed for the taxable year under the provisions of the Illinois Income Tax Act.

"Taxable year" means the calendar year, or the fiscal year ending in such calendar year, upon the basis of which taxable income is computed under this Act, and also includes a fractional part of a year for which income is earned.

"Resident" means: An individual or corporation who is in the school district for other than a temporary transitory purpose during the taxable year, or who is domiciled in that school district but is absent therefrom for a temporary or transitory purpose during the taxable year.

Section 10. Imposition of tax; limitations. For the period beginning January 1, 2008, and ending December 31, 2010, the school board of each school district located within a municipality with 1,000,000 or more inhabitants may by proper resolution impose a tax measured by net income on every individual and corporation residing or located within the boundaries of the school district for each taxable year ending on or after January 1, 2008, at a rate not to exceed 0.9% for individuals and 1.44% for corporations. The school district which levies a tax authorized by this Section shall transmit to the Department of Revenue a certified copy of the ordinance or resolution imposing such tax whereupon the Department of Revenue shall proceed to administer and enforce this Section on behalf of the school district as of the effective date of the resolution. Upon a change in rate of a tax levied hereunder, or upon the discontinuance of the tax, the school district shall transmit to the Department of Revenue the verified results of a referendum effecting such change or discontinuance.

Section 15. Referenda. The school board of a school district that has imposed a tax under Section 10 may by resolution, or shall upon the petition of 5% of the voters who voted in the school district in the last gubernatorial election, cause to be submitted to the voters of that district at an election in accordance with the general election law a proposition:

(i) to decrease the annual rate for the school district income tax imposed under Section 10, or

(ii) to repeal that school district income tax.

The election called for such purposes shall be governed by the general election law. If a majority of the votes cast on the proposition to decrease the rate of the school district income tax is in favor thereof, the school board shall thereafter, until such authority is revoked in like manner, impose the annual tax as authorized; and if a majority of the votes cast on the proposition to repeal the local income tax for schools is in favor thereof, that tax shall not thereafter be imposed unless again authorized as provided in this Act.

Section 20. Collection.

(a) Any tax imposed under this Act shall be collected by and paid to the Department of Revenue at the same time and in the same manner, with the same withholding and estimated payment requirements and subject to the same assessment and refund procedures, penalties, and interest as the tax imposed by the Illinois Income Tax Act. Except as provided in subsection (b) of this Section, the Department of Revenue shall forthwith pay over to the State Treasurer, ex officio, as trustee, all moneys received by it under this Section to be deposited in a special accounts which the State Treasurer and State Comptroller shall establish and maintain as provided in Section 25.

(b) The School District Income Tax Refund Fund is hereby created in the State Treasury. The Department of Revenue shall deposit a percentage of the amounts collected from the tax imposed under this Act by any school district into a special account that the State Treasurer and State Comptroller shall establish and maintain within the School District Income Tax Refund Fund for the purpose of paying refunds resulting from overpayment of tax liability under this Act with respect to that school district. The Department of Revenue shall determine the percentage of the amounts collected from the tax imposed under this Act by any school district that is to be deposited into the special account maintained in the School District Income Tax Refund Fund to pay refunds resulting from overpayment of tax liability under this Act with respect to that school district and shall certify that percentage to the Comptroller, all in accordance with rules adopted by the Department of Revenue for purposes of this Section. Money in the special account maintained in the School District Income Tax Refund Fund with respect to any school district shall be expended exclusively for the purpose of paying refunds resulting from overpayment of tax liability with respect to that school district under this Act. The Director of Revenue shall order payment of refunds resulting from overpayment of tax liability under this Act from the special account maintained with respect to a school district in the School District Income Tax Refund Fund only to the extent that amounts collected pursuant to this Act for that school district have been deposited to and retained in that special account. This Section shall constitute an irrevocable and continuing appropriation from the School District Income Tax Refund Fund and the special accounts established and maintained therein for the purpose of paying refunds upon the order of the Director of the Department of Revenue in accordance with the provisions of this Section.

(c) The Department of Revenue shall promulgate such rules and regulations as may be necessary to implement the provisions of this Act.

Section 25. Proceeds from school district income tax; distribution. The Department of Revenue shall immediately pay over to the State Treasurer, ex officio, as trustee, all moneys collected under this Act to be deposited into the following funds and distributed as follows:

(1) 67% of all moneys collected under this Act shall be deposited into the School District Income Tax Educational Assistance Fund, which is created in the State treasury. On or before the 25th day of each calendar month, the Department of Revenue shall prepare and certify to the Comptroller the disbursement of stated sums of money to named school districts, the school districts to be those from which the Department has collected taxes under this Act during the second preceding calendar month. The amount to be paid to each school district shall be the amount collected from that school district during the second preceding calendar month and deposited into the School District Income Tax Educational Assistance Fund. Moneys distributed to a school district from the School District Income Tax Education Assistance Fund shall be used, subject to the approval of the School Finance Authority, solely for instructional purposes.

(2) 26.4% of all moneys collected under this Act shall be deposited into the Property Tax Relief Fund, which is created in the State treasury. On or before March 1 of each year, the Department of Revenue shall prepare and certify to the Comptroller the disbursement of stated sums of money to persons who qualify for the general homestead exemption or the alternative general homestead exemption under Sections 15-175 and 15-176 of the Property Tax Code who reside in school districts from which the Department has collected taxes under this Act during the preceding calendar year. The amount to be paid to each such individual shall be determined by dividing the amount collected from that school district during the preceding calendar year and deposited into the Property Tax Relief Fund by the number of persons who qualify for the general homestead exemption or the alternative general homestead exemption under Sections 15-175 and 15-176 of the Property Tax Code who reside in that school district.

(3) 3.2% of all moneys collected under this Act shall be deposited into the Local School Education Improvement Fund, which is created in the State treasury. On or before the 25th day of each calendar month, the Department of Revenue shall prepare and certify to the Comptroller the disbursement of stated sums of money to named school districts, the school districts to be those from which the Department has collected taxes under this Act during the second preceding calendar month. The amount to be paid to each school district shall be the amount collected from that school district during the second preceding calendar month and deposited into the Local School Education Improvement Fund. Moneys distributed to a school district from the Local School Education Improvement Fund shall be used solely for educational improvement purposes not directly related to classroom instruction and cooperatively administered by appropriate agencies of the municipality in which the school district is located and local school councils.

(4) 3.2% of all moneys collected under this Act shall be deposited into the School District Tax Municipal Fund, which is created in the State treasury. On or before the 25th day of each calendar month, the Department of Revenue shall prepare and certify to the Comptroller the disbursement of stated sums of money to named municipalities, the municipalities to be those that contain a school district from which the Department has collected taxes under this Act during the second preceding calendar month. The amount to be paid to each municipality shall be the amount collected from that school district during the second preceding calendar month and deposited into the School District Tax Municipal Fund. Moneys distributed to a municipality from the School District Tax Municipal Fund shall be used in the discretion of the corporate authority of the municipality.

(5) Up to 0.2% of the moneys collected under this Act may be retained by the Department of Revenue for the costs of collection, administration, and enforcement under this Act.

Section 30. Intent. Any moneys received by a school district as a result of this Act are intended to be in addition to, and not in lieu of any other source of funding and shall not be used the supplant or replace any other source of funding Assistance Fund.

Section 900. The State Finance Act is amended by adding Sections 5.675, 5.676, 5.677, 5.678, and 5.679 as follows:

(30 ILCS 105/5.675 new)

Sec. 5.675. The School District Income Tax Educational Assistance Fund.

(30 ILCS 105/5.676 new)

Sec. 5.676. The School District Income Tax Refund Fund.

(30 ILCS 105/5.677 new)

Sec. 5.677. The Property Tax Relief Fund.

(30 ILCS 105/5.678 new)

Sec. 5.678. The Local School Education Improvement Fund.

(30 ILCS 105/5.679 new)

Sec. 5.679. The School District Tax Municipal Fund.

Section 905. The School Code is amended by changing Section 34A-501 as follows:

(105 ILCS 5/34A-501) (from Ch. 122, par. 34A-501)

Sec. 34A-501. Power to issue Bonds.

(a) The Authority may incur indebtedness by the issuance of its negotiable full faith and credit general obligation bonds (the "Bonds") in an amount not to exceed at any time the sum of $895,000,000 $695,000,000 (excluding Bonds to be issued to refund outstanding Bonds) for the purpose of providing the Board with moneys for ordinary and necessary expenditures for educational purposes, maintenance of school facilities, and other operational needs of the Board; payment of outstanding debt obligations of the Board and of the City, the proceeds of which were used to provide financing for the Board; providing or increasing a working cash fund as provided by paragraph (d) of this Section 34A-501; providing the Board with moneys for school construction and rehabilitation purposes as provided by paragraph (e) of this Section; payment of fees for arrangements as provided by paragraph (c) of Section 34A-502; payment of interest on Bonds; establishment of reserves to secure Bonds; the payment of costs of issuance of Bonds; payment of principal of or interest or redemption premium on any Bonds or notes of the Authority; and all other expenditures of the Authority incidental to and necessary or convenient for carrying out its corporate purposes and powers, and in an additional amount not to exceed at any time the sum of $427,000,000 (excluding Bonds to be issued to refund outstanding Bonds) for the purpose of providing the Board with moneys for ordinary and necessary expenditures for educational purposes, maintenance of school facilities, and other operational needs of the Board; payment of fees for arrangements as provided by paragraph (c) of Section 34A-502; payment in connection with agreements or contracts entered into as provided for in Section 7 of the Bond Authorization Act; payment of interest on Bonds; establishment of reserves to secure Bonds; the payment of costs of issuance of Bonds; payment of principal of or interest or redemption premium on any Bonds or notes of the Authority; and all other expenditures of the Authority incidental to and necessary or convenient for carrying out its corporate purposes and powers. No more than $40,000,000 of proceeds of Bonds of the Authority shall be deposited in a working cash fund as provided by paragraph (d) of this Section 34A-501. No more than $95,000,000 of proceeds of Bonds of the Authority shall be provided to the Board for school construction and rehabilitation purposes; provided that not less than $32,000,000 nor more than $37,000,000 of such proceeds shall be used by the Board for constructing new school buildings or providing additions to school buildings.

(b) The Authority may from time to time (i) issue Bonds to refund any outstanding Bonds or notes of the Authority whether the Bonds or notes to be refunded have or have not matured or become redeemable and (ii) issue Bonds partly to refund Bonds or notes then outstanding and partly for any other purpose hereinabove set forth.

(c) Bonds issued in accordance with paragraph (a) of this Section may be issued in excess of any statutory limitation as to debt, and may be issued without referendum.

(d) The Authority may create a working cash fund to provide working cash for the Board. Amounts in the working cash fund shall be used by the Authority to make loans from time to time to the Board to enable the Board to cover anticipated cash flow deficiencies which it may experience within the fiscal year of the Board in which the loan is made, all as and to the extent determined by the Authority. The loans shall be made in such amounts and upon such terms as the Board and the Authority shall agree. The Authority shall not under any circumstance be obligated to make any such loan. No interest need be charged on any such loan. The Board may pledge and assign to the repayment of such loans and may apply to that repayment any particular receipts of the Board which have not been pledged to the payment of any of the Board's bonds, notes, tax anticipation warrants or state aid anticipation certificates. Each loan shall be required to be repaid in full by the Board within the fiscal year of the Board in which the loan was made and, in any event, within 11 months from the date on which it was made. Interest and other investment earnings on the working cash fund shall be deposited in and shall be part of that fund. Whenever the Authority shall determine that all or part of the working cash fund is no longer needed for making loans to the Board as provided in this paragraph, the Authority shall reduce the amount of the fund so that the amount in the fund does not exceed the amount which the Authority determines is necessary for use for making future loans to the Board as provided in this paragraph. Upon any such reduction in the amount of the working cash fund and upon its abolition, all amounts in excess of the amounts to remain in the fund shall be deposited in the debt service fund established by the Authority for the Bonds for use for paying principal of Bonds at their maturity or on earlier redemption dates, redemption premium and any interest accruing on those Bonds, all as the Authority shall determine and direct.

(e) For purposes of this Section, "school construction and rehabilitation purposes" means constructing new school buildings and rehabilitating and accomplishing the deferred maintenance existing as of August 31, 1984, of school buildings, including, without limitation, repairing, modernizing, providing additions to and facilities in, altering and reconstructing school buildings and equipment.

Any interest or other investment earnings on proceeds of Bonds issued for the purpose of providing the Board with moneys for school construction and rehabilitation purposes shall be applied as provided in the resolution authorizing such Bonds, which resolution shall require those earnings to be used for the same purpose as the proceeds of those Bonds or for the payment of principal of or interest or redemption premium on any Bonds, either at maturity or an earlier redemption date. Application by the Authority of any proceeds of Bonds issued for the purpose of providing the Board with moneys for school construction and rehabilitation purposes, or interest or other investment earnings thereon, shall be in the sole judgment and discretion of the Authority, but no such moneys shall be so provided unless the Authority shall have found and determined, in its sole judgment and discretion, that such moneys are to be used for those purposes and not for providing the Board with moneys for its ordinary and necessary expenditures for educational purposes, maintenance of school facilities or other operational needs. Application by the Authority of any proceeds of bonds issued for educational purposes shall be in the sole judgment and discretion of the Authority, but no such moneys shall be provided unless the Authority shall have found and determined, in its sole judgment and discretion, that the moneys are to be used for educational purposes. The Authority may, in making its findings and determinations, rely upon information provided by or on behalf of the Board. The Authority may from time to time make and amend regulations and issue directives with respect to the use and application of such moneys.

The Authority may, at any time, in its sole judgment and discretion, deposit unexpended proceeds of Bonds issued for the purpose of providing the Board with moneys for school construction and rehabilitation purposes or interest or other investment earnings thereon solely in a debt service fund for any Bonds and shall apply such moneys to the payment of principal of or interest or redemption premium on Bonds, at maturity or an earlier redemption date. In the resolution authorizing Bonds, the Authority may make commitments or covenants to holders of Bonds with respect to such use of such unexpended proceeds and interest or other investment earnings.

(Source: P.A. 88-511.)

Section 999. Effective date. This Act takes effect upon becoming law.