The CME Group, parent company of the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE), said it is a global company that pays a disproportionate amount of Illinois taxes on business from out of state. Opponents say that without similar concessions for smaller companies, the bill faces an uphill climb.
The bill approved by the committee Thursday would slash by at least half the tax liability of CME Group and other trading exchanges which threatened to leave the state after income taxes were raised.
"There would definitely be a reduction in revenues to the state, but of course, if they leave there'll be an even further reduction, of probably something like $40 million," said Illinois State Senate President John Cullerton, D-Chicago.
The bill's approval in committee comes weeks after Occupy Chicago protestors began demonstrating at the Board of Trade, and Thursday, CME Chief Financial Officer James E. Parisi had to fend off questions about perceived corporate favoritism.
"About 550 new trading firms, and those are typically going to be smaller businesses, have been brought to Illinois over the last five years as a result of CME and the exchange industry being located here," said Parisi.
CME says it currently pays too much because nearly all its income is taxed as in-state sales, even though much is from electronic trades with customers out of state.
"As technology evolves, we need to make sure that the tax structure keeps pace with it," said Sen. Jeffrey Schoenberg, D-Evanston.
Though the bill passed the committee vote, its future appears uncertain without relief for smaller companies.
"I'm not going to support it right now," said Senate Minority Leader Christine Radogno, R-Lemont. "The governor's made it clear he's not going to sign it. I do not believe it will move through the house, and it needs to be brought into support so that we've got some relief for small and medium-sized businesses."
Thursday's session came a day after both houses handed the governor a stunning defeat on a bill allowing ComEd to raise rates.
Lawmakers Thursday postponed action on a gambling expansion bill as well as a measure paving the way for red light cameras near Chicago school zones. The House did pass a pension reform bill that, among other things, would prevent state workers who become labor leaders from basing their pensions on their more lucrative union salaries.
"I think the public has gotten stronger and stronger in their desire to see pension reform, and I think that's moved members as well," said House Minority Leader Tom Cross, R-Plainfield.
The pension reform bill garnered nearly unanimous support in the House, but a more contentious showdown looms over a broader pension overhaul bill that the General Assembly could take up when it re-convenes November 8th.