SENATE BILL 712

82nd GENERAL ASSEMBLY
State of Illinois

1981 and 1982

INTRODUCED_April 14, 1981.  BY  Senator Sangmeister

 

 

 

 

 

 

                                SYNOPSIS:               (Ch. 120, pars. 2-201 and 9-901; Ch. 122, pars.
                                                                17-2, 17-3.2, 18-8, 34-53, new pars. 17-17,
                                                                17-17.1, 17-17.2, 18-8A, and rep. pars. 17-2.1,
                                                                17-3, 17-3.1, 17-4, 17-8;  and Ch. 127, new par.
                                                                141.92)

                                                                Creates a State income tax to be used
                                exclusively for school aid.  Amends various Acts to provide
                                for  its  levy  at  the  rate  of  2.64%  of  net  income  for
                                individuals and 4.22% of net income for corporations, and for
                                its administration and distribution.  Eliminates the
                                Educational Fund levy.  Effective July 1, 1983, with the
                                first taxable year ending December 31, 1984.

 

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                                                                                                Fiscal Note Act
                                                                                               may be applicable

 

                                                            A BILL FOR

 

 

 

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1           AN ACT creating a State income tax for school aid and 55
2 amending certain Acts relating thereto. 57
3 Be it enacted by the people of the State of Illinois. 61
4 represented in the General Assembly:
5           Section 1. Sections 201 and  901 of the “Illinois Income 63
6  Tax Act”, approved July 1, 1969, as amended, are amended to  64
7  read as follows:
           (Ch. 120, par. 2-201) 66
8           Sec. 201. Tax Imposed.  (a) In general. A tax measured   68
9 by net income is hereby imposed on every individual,  69
10 corporation, trust and estate for each taxable year ending 70
11 after July 31, 1969 on the privilege of earning or receiving
12 income in or as a resident of this State. Such tax shall be 71
13 in addition to all other occupation or privilege taxes 72
14 imposed by this State or by any municipal corporation or 73
15 political subdivision thereof.
16           (b)  Rates. The tax  imposed by subsection (a) of this 75
17 section shall be--
18           (1) in the case of an individual, trust or estate, an 77
19 amount equal to 2 ½% of the taxpayer’s net income for the 78
20 taxable year, and an additional amount equal to 2.64% of net 79
21 income for the taxable year, to be used exclusively for 80
22 school aid, and  
23           (2) in the case of a corporation, an amount equal to 4% 82
24 of the taxpayer’s net income for the taxable year and an 83
25 additional amount equal to 4.22% of net income for the 84
26 taxable year, to be used exclusively for school aid.
27           (c) Beginning on July, 1, 1979 and thereafter, in 86
28 addition to such income tax, there is also hereby imposed the  87
29 Personal Property Tax Replacement Income Tax measured by net 88
30 income on every corporation (including corporations for which 89
31 there is in effect for the taxable year an election under
32 Section 1372 of the Internal Revenue Code), partnership and 90

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1 trust, for each taxable year ending after June 30, 1979. 91
2 Such taxes are imposed on the privilege of earning or 92
3 receiving income in or as a resident of this State. The
4 Personal Property Tax Replacement Income Tax shall be in 94
5 addition to the income tax imposed by subsections (a) and (b) 95
6 of this Section and in addition to all other occupation or
7 privilege taxes imposed by this State or by any municipal 96
8 corporation or political subdivision thereof. 97
9           (d) Additional Personal Property Tax Replacement Income 99
10 Tax Rates. The personal property tax replacement income tax 100
11 imposed by this subsection and subsection (c ) of this Section 101
12 in the case of a corporation, other than a corporation for 102
13 which there is in effect for the taxable year an election 103
14 under Section 1372 of the Internal Revenue Code, shall be an 104
15 additional amount equal to 2.85% of such taxpayer’s net 105
16 income for the taxable year, except that beginning on January
17 1, 1981, and thereafter, the rate of 2.85% specified in this 106
18 subsection shall be reduced to 2.5%, and in the case of a 108
19 partnership, trust or a corporation for which there is in
20 effect for the taxable year an election under Section 1372 of 109
21 the Internal Revenue Code shall be an additional amount equal  110
22 to 1.5% of such taxpayer’s net income for the taxable year. 111
23           (e) For purposes of the additional tax imposed by 113
24 subsections (c) and (d) of this section:  (1) Net income for a 115
25 taxable year which begins before July 1, 1979 and ends after 116
26 June 30, 1979 shall be that amount which bears the same ratio
27 to the taxpayer’s net income for the entire taxable year as 117
28 the number of days in such year after June 30,1979 bears to 118
29 the total number of days in such year, unless the taxpayer 119
30 elects to apportion net income for such taxable year in the 120
31 manner provided by paragraph (2).
32           (2) If the taxpayer so elects, in the case of a taxable 122
33 year beginning before July 1, 1979 and ending after June 30, 123
34 1979 there shall be taken into account in computing base 124
35 income only those items earned, received, paid, incurred or 125

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1 accrued after June 30, 1979 , and the standard exemption 126
2 provided by section 204 shall be limited to that amount which  127
3 bears the same ratio to the total exemption allowable under
4 such section (determined without regard to this section) as 128
5 the number of days after June 30, 1979 in the taxable year 129
6 bears to 365. The election provided by this paragraph shall 130
7 be made in such manner and at such time as the Department may 131
8 by forms or regulations prescribe, but shall be made not 132
9 later than the due date (including any extensions thereof) 133
10 for the filing of the return for the taxable year, and shall
11 be irrevocable. 134
12           ( f )  (1) The additional tax imposed upon a corporation, 136
13 other than a corporation for which there is in effect for the 137
14 taxable year an election ender Section 1372 of the Internal 138
15 Revenue Code, by subsection (c) and (d) of this section for a  139
16 taxable year which begins before January 1, 1981 and ends
17 after December 31, 1980 , shall be calculated by applying the 140
18 2.85% rate to that part of the taxpayer’s net income which 141
19 bears the same ratio to the taxpayer’s net income for the 142
20 entire taxable year as the number of days in such year prior
21 to January 1, 1981 bears to the total number of days in such 143
22 year and by applying the 2.5% rate to that part of the  144
23 taxpayer’s net income which bears the same ratio to the 145
24 taxpayer’s net income for the entire taxable year as  the 146
25 number of days in such year after December 31, 1980 bears to
26 the total number of days in such year, unless the taxpayer 147
27 elects to apportion net income for such taxable year in the 148
28 manner provided by paragraph (2)
29           (2) If a taxpayer so elects, the additional tax imposed  150
30 for a taxable year beginning before January 1, 1981 and 151
31 ending after December 31, 1980 may be calculated by adding 152
32 together the following amounts:
33           (A) The amount resulting from applying the 2.85% rate to 154
34 that part of the taxpayer’s total net income attributable to 155
35 the portion of the taxable year prior to January 1, 1981 ; and 156

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1           (B) The amount resulting from applying the 2.5% rate to 158
2 that part of taxpayer’s total net income not attributable to 159
3 the portion of the taxable year prior to January 1, 1981 . 160
4 For purposes of this paragraph, the part of the taxpayer’s 162
5 total net income which is attributable to the portion of its 163
6 taxable year prior to January 1, 1981 , is calculated by taking 164
7   into account only those items earned, received, paid, 165
8 incurred or accrued prior to January 1, 1981, and by limiting
9 the standard exemption provided by Section 204 to that amount 166
10 which bears the same ratio to the total exemption  otherwise 167
11 allowable under such section as the number of days in that 168
12 portion of taxpayer’s taxable year prior to January 1, 1981 169
13 bears to the total number of days in such year. The election
14 provided by this paragraph shall be made in such manner and 170
15 at such time as the Department may by forms or regulations 171
16   prescribe, but shall be made not later than the due date 172
17 (including any extensions thereof) for the filing of the  173
18 return for the taxable year, and shall be irrevocable.  174
           (Ch. 120, par. 9-901) 176
19           Sec. 901. Collection Authority.          (a) In general. The 178
20 Department shall collect the taxes imposed by this Act, and 179
21 shall pay all moneys received by it under this Act except 180
22 moneys collected pursuant to Section 201 (c) and (d) of this 181
23 Act and moneys collected to be used exclusively for school 182
24 aid as provided by Section 201 (b) (1) and (2) of this Act,
25 into the General Revenue Fund in the State Treasury.  Money 184
26 collected pursuant to Section 201 (c) and (d) of this Act 185
27 shall be paid into the “Personal Property Tax Replacement
28 Fund”, a special fund in the State Treasury.  Money collected 186
29 for school aid pursuant to Section 201 (b) (1) and (2) of this 187
30 Act shall be paid into the School Income Tax Fund, a special  188
31 fund in the State Treasury.
32           (b) Local Governmental Distributive Fund. Effective 190
33 August 1, 1969 , the Treasurer shall transfer each month from 191
34 the General Revenue Fund to a special fund in the State 192

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1 treasury, to be known as the “Local Government Distributive 193
2 Fund”, an amount equal to 1/12 of the net revenue realized 194
3 from the tax imposed by Section 201, subsections (a) and (b) 195
4 of this Act during the preceding month. Net revenue realized 196
5 for a month shall be defined as the revenue from the tax
6 imposed by Section 201, subsections (a) and (b) of the 197
7 “Illinois Income Tax Act”, deposited in the General Revenue 198
8 Fund during the month minus the amount paid out in state 199
9 warrants during the same month as refunds to taxpayers for 200
10 overpayment of liability under the tax imposed by Section 201
11 201, subsection (a) and (b) of the “Illinois Income Tax Act”.
13           Section 2. Sections 17-2, 17-3.2, 18-8 and 34-53 of “The 204
14 School Code”, approved March 18, 1961 , as amended, are 205
15 amended, and Sections 17-17, 17-17.1, 17-17.2 and 18-8A are 206
16 added thereto, the amended and added Sections to read as
17   follows:
          (Ch.122, par. 17-2) 208
18           Sec. 17-2. Tax levies – Purposes – Rates.  Except as 211
19 otherwise provided in Articles 12 and 13  of this Act , the 212
20 following maximum rates shall apply to all taxes levied after
21 August 10, 1965 , in districts having a population of less 213
22 than 500,000 inhabitants, including those districts organized 214
23 under Article 11 of “The School Code”, approved March 18, 215
24 1961, as amended. The school board of any district having a 216
25 population of less than 500,000 inhabitants may levy a tax 217
26 annually, at not to exceed the maximum rates and for the
27 specified purposes, upon all the taxable property of the 218
28 district at the value, as equalized or assessed by the 219
29 Department of Revenue as follows: 220
30           (1) districts maintaining only grades 1 through 8, .92%  222
31 for educational purposes and .25% for operations, building 223
32 and maintaining purposes; 224
33            (2) districts maintenance only grades 9 through 12, .92%  226
34 for educational purposes and .25% for operations, building 227
35 and maintenance purposes; 228

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1           (3) districts maintaining grades 1 though 12, 1.60% for 230
2 educational purposes and .375% for operations, building and 231
3 maintenance purposes;
4           (4) all districts,  .06% for a capital improvements fund 233
5 (which is in addition to the levy for operations, building 234
6 and maintenance purposes) and such fund is to be levied, 235
7 accumulated and spent only in accordance with Section 17-2 .3 236
8 of this Act;
9           (5)  districts providing transportation for pupils,  .12% 238
10 for transportation purposes; 239
11           (6) districts providing summer classes,  .15% for 241
12 educational purposes, subject to Section 17-2.1 of this Act. 242
13           Whenever any special charter school district operating 244
14 grades 1 through 12, has organized or shall organize under 245
15 the general school law, the district so organized may 246
16 continue to levy taxes at not to exceed the rate at which 247
17 taxes were last actually extended by the special charter 248
18 district, except that if such rate at which taxes were last 249
19 actually extended by such special charter district was less
20 than the maximum rate for districts maintaining grades 1 250
21 through 12 authorized under this Section, such special  251
22 charter district nevertheless may levy taxes at a rate not to 252
23 exceed the maximum rate for districts maintaining grades 1 253
24 through 12 authorized under this Section, and except that if 254
25 any such district maintains only grades 1 through 8, the  255
26 board may levy, for educational purposes, at a rate not to
27 exceed the maximum rate for elementary districts authorized 256
28 under this Section.
29            Maximum rates before or after established in excess of 258
30 those prescribed shall not be affected by the amendatory Act 259
31 of 1965.
           ( Ch. 122, par. 17-3.2) 261
32           Sec.  17-3.2.  Additional or supplemental budget. 264
33 Whenever the voters of a school district have voted in favor
34 of an increase in the annual tax rate for educational or 265

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1 operations, building and maintenance purposes or both at an 266
2 election held after the adoption of the annual school budget 267
3 for any fiscal year, the board may adopt or pass during that 268
4 fiscal year an additional or supplemental budget under the
5 sole authority of this Section by a vote of a majority of the 269
6 full membership of the board, any other provision of this 270
7 Article to the contrary notwithstanding, in and by which such 271
8 additional or supplemental budget the board shall appropriate 272
9 such additional sums of money as it may find necessary to 273
10 defray expenses and liabilities of that district to be 274
11 incurred for educational or operations, building and
12 maintenance purposes or both of the district during that 275
13 fiscal year, but not in excess of the additional funds 276
14 estimated to be available by virtue of such voted increase in 277
15 the annual tax rate for educational or operations, building
16 and maintenance purposes or both.  Such additional or 278
17 supplemental budget shall be regarded as an amendment of the 279
18 annual school budget for the fiscal year in which it is  280
19 adopted, and the board may levy the additional tax for 281
20 educational or operations, building and maintenance purposes
21 or both to equal the amount of the additional sums of money 282
22 appropriated in that additional or supplemental budget, 283
23 immediately.
24           (Ch. 122, new par. 17-17) 285
25           Sec. 17-17.  Distribution of tax revenues.  On or before 287
26 July 1 of each year, the Department of Revenue shall prepare 288
27 and certify to the Comptroller the disbursement of sums of 289
28 money to school districts from money collected the preceding 290
29 year from the portion of the State income tax levy designated  
30 for exclusive use for school aid, The amount to be paid to 291
31 each district shall be determined by the amount of income 292
32 taxes collected exclusively for use for school aid from 293
33 individuals and corporations within each school district 294
34 during that fiscal year by the Department, modified by a  
35 population weighting which shall be devised by the State 295

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1 Board of Education and implemented upon approval of the  296
2 General Assembly, and excluding a deduction of 1% from the 297
3 taxes collected, which shall be retained by the State
4 Treasurer to cover the costs incurred by the Department in 298
5 administering the disbursement and enforcing the tax.  The 299
6 Department, at the time of each disbursement to the school 300
7 district, shall prepare and certify to the Comptroller the
8 amount so retained by the State Treasurer to be paid to the 301
9 school districts from the School Aid Fund according to the 302
10 individual school district’s income tax contribution to the 303
11 Fund, modified by a population weighting factor as
12 established by the State Board of Education.  Within 10 days 304
13 after receipt by the Comptroller of the disbursement 305
14 certification, the comptroller shall cause the warrants to be  306
15 drawn for the respective amount in accordance with the
16 directions contained in the certification. 307
17           The local school board of any district receiving funds  309
18 under this Section may apply those funds to any fund from 310
19 which that board is authorized to make expenditures by law, 311
          (Ch. 122, new par. 17-17.1)  313
20           Sec. 17-17.1.  Determination of individual school  315
21 district’s contribution of income tax paid exclusively for 316
22 school aid.  (a) Full-year resident.  The entire amount of 317
23 the person’s State income tax paid for the use for school aid 318
24 for the taxable year shall be allocated to that district
25 except the amount of tax which is attributable to income  319
26 derived from real property located outside the district. (b) 320
27 Part-time residents.  The amount of the person’s State income 321
28 tax paid for the taxable year for that part of the year the 322
29 person was a resident of the district shall be allocated to 
30 the district.
          (Ch. 122, new par. 17-17.2) 324
31           Sec. 17-17.2.  The Department of Revenue shall promulgate 326
32 any rules and regulations deemed necessary to implement the 327
33 provisions of this Article with regard to the State income  328

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1 tax for school aid. 328
          ( Ch. 122, par. 18-8) 330
2           Sec. 18-8.  Basis for apportionment to districts and 332
3 laboratory schools.)  A.  The amount to be apportioned shall 333
4 be determined for each educational service region by school 334
5 districts, as follows:
6           1.  General Provisions: (a)  In the computation of the 337
7 amounts to be apportioned, the average daily attendance of 338
8 all pupils in grades 9 thorough 12 shall be multiplied by 339
9 1.25.
10            (b)  The actual number of pupils in average daily 341
11 attendance shall be computed in a one-teacher school district 342
12 by dividing the total aggregate days of pupil attendance by 343
13 the actual number of days school is in session but not more 344
14 than 30 such pupils shall be accredited for such type of  345
15 district; and in districts of 2 or more teachers, or in 346
16 districts where records of attendance are kept by session
17 teachers, by taking the sum of the respective averages of the 347
18 units composing the groups. 348
19           ( c )  Pupils in average daily attendance shall be computed 351
20 upon the average of the best 6 months of pupils attendance of  352
21 the current school year except as district claims may be 353
22 later amended as provided hereinafter in this section.  Days
23 of attendance shall be kept by regular calendar months, 354
24 except any days of attendance in August shall be added to the 355
25 month of  September and any days of attendance in June shall 356
26 be added to the month of May.  Days of attendance by pupils 357
27 shall be counted only for sessions of not less than 5 clock 358
28 hours of school work per day under direct supervision of 359
29 teachers, with pupils of legal school age and in kindergarten
30 and grades 1 through 12.  360
31           (d) Pupils regularly enrolled in a public school for 362
32 only a part of the school day may be counted on the basis of 363
33 1/6 day for every class hour of instruction of 40 minutes or 364
34 more attended pursuant to such enrollment. 365

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1           ( e )  Days of attendance may be less than 5 clock hours on 367
2 the opening and closing of the school term, and upon the 368
3 first day of pupil attendance, if preceded by a day or days 369
4 utilized as an institute or teachers’ workshop 370
5           (f)  A session of 4 or more clock hours may be counted as 372
6 a day of attendance upon certification by the regional  373
7 superintendent, and approved by the State Superintendent of  374
8 Education to the extent that the district has been forced to 375
9 use daily multiple sessions.
10           (g )  A session of 3 or more clock hours may be counted as 377
11 a day of attendance when the remainder of the school day is 378
12 utilized for an in-service training program for teachers, up 379
13 to a maximum of 5 days per school year of which a maximum of 380
14 4 days of such 5 days may be used for parent–teacher 381
15 conferences, provided a district conducts an in-service 382
16 training program for teachers which has been approved by the
17 State Superintendent of Education; or, in lieu of 4 such 383
18 days, 2 full days may be devoted to parent-teacher 384
19 conferences, in which event each such day may be counted as a 385
20 day of attendance.  Any days so used shall not be considered 386
21 for computing average daily attendance.
22           (h)   A session of not less than 1 clock hour teaching of  388
23 hospitalized or homebound pupils on-site or by telephone to 389
24 the classroom may be counted as ½ day of attendance 390
25 however these pupils must receive 4 or more clock hours of 391
26 instruction to be counted for a full day of attendance. 392
27           (i)  A session of at least 4 clock hours may be counted 394
28 as a day of attendance for first grade pupils, and a session 395
29 of 2 or more hours may be counted as ½ day of attendance by 396
30 kindergarten pupils.
31           (j)  For handicapped children below the age of 6 years 398 398
32 who cannot attend two or more clock hours because of handicap 399
33 or immaturity, a session of not less than one clock hour may 400
34 be counted as ½ day of attendance; however for such 401
35 children whose educational needs so require a session of 4 or  402

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1 more clock hours may be counted as a full day of attendance.  402
2           (k)  A recognized kindergarten shall not have more than  404
3 ½ day of attendance counted in any 1 day.  However, 405
4 kindergartens may count 2  ½ days of attendance in any 5 406
5 consecutive school days.  Where a kindergarten pupil attends
6 school for 2 half days on anyone school day, such pupil 407
7 shall have the following day as a day absent from school,  408
8 unless the school district obtains permission in writing from 409
9 the State Superintendent of Education.  Only the first year 410
10 of attendance in one kindergarten shall be counted except in 411
11 case of children who entered the kindergarten in their fifth
12 year whose educational  development requires a second year of 412
13 kindergarten as determined under the rules and regulations of 413
14 the State Board of Education.
15           (1)  Days of attendance by tuition pupils shall be  415
16 accredited only to the districts that pay the tuition to a 416
17 recognized school.
18 (m)  For the school year beginning July 1, 1979 , the 418
19 greater of the weighted average daily attendance for the 419
20 1978-79 school year or the average of the weighted average 420
21 daily attendance for the 1977-78 and 1978-79 school years 421
22 shall be used to compute the State aid entitlement.  For any
23 school year beginning July 1, 1980 , or thereafter, the 422
24 greater of the immediately preceding year’s weighted average 423
25 daily attendance or the average of the weighted average daily 424
26 attendance of the immediately preceding year and the previous 425
27 2 years shall be used.
28           (n)  The number of pupils in a district listed as 427
29 eligible under Title I of the Elementary and Secondary 428
30 Education Act of 1965 shall result in an increase in the 429
31 weighted average daily attendance calculated as follows: The 430
32 number of pupils eligible under Title I shall increase the 431
33 weighted ADA by .50 for each student adjusted by dividing the 432
34 percent of pupils eligible for Title I in the district by the
35 ratio of pupils eligible for Title I in the State to the best 433

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1 6 months’ weighted average daily attendance in the State.  In 434
2 no case may the adjustment under this paragraph result in a 435
3 greater weighting than .675 per eligible Title I student. 436
4            (o)  Any school district which fails for nay given school 438
5 year to maintain school as required by law, or to maintain a 439
6 recognized school is not eligible to file for such school  440
7 year any claim upon the common school fund.  In case of  441
8 non-recognition of one or more attendance centers in a school 442
9 district otherwise operating recognized schools, the claim of
10 the district shall be reduced in the proportion which the 443
11 average daily attendance in the attendance center or centers 444
12 bear to the average daily attendance in the school district.  445
13 A “recognized school” means any public school which meets the 446
14 standards as established for recognition by the State Board 447
15 of Education.  A school district or attendance center n