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Press Release - Thursday, June 29, 2000

SPRINGFIELD - Governor George H. Ryan today signed legislation to suspend Illinois' 5 percent sales tax on gasoline and also issued an executive order creating state "monitoring teams" to check on gas prices across the state to make sure that cost reductions are passed on to consumers. "We called our legislators to Springfield to provide some relief to Illinois taxpayers and to do everything we could to reduce the undeserved burden we have endured because of exorbitant gas prices," Governor Ryan said. "Thanks to the quick action of the General Assembly during today's special session, I believe Illinois consumers will start to see some relief at the pump starting on Saturday," he added.

Ryan signed Senate Bill 1310, which suspends the five-percent state sales tax on motor fuel and gasohol for a period of six months. According to the law, retailers now are required to post a notice on each pump stating the price on the pumps should reflect the tax reduction. While legislators are asking oil companies to work toward informing consumers and retailers about the new law, the law also places a $500 penalty on those stations that do not display a notice.

The Governor's executive order:

1) Directs the Department of Revenue to notify gas station owners immediately of the tax relief law.

2) Creates a Gas Price Monitoring Team that will inspect and utilize gas stations in the ordinary course of business

Ryan said the agencies involved in the monitoring teams include Illinois State Police, Department of Natural Resources, Illinois Environmental Protection Agency, State Fire Marshal, Department of Agriculture, Department of Revenue and Illinois Lottery. Monitoring of stations will begin the day the tax relief takes effect. Team members will report on any station that fails to report a price reduction. The Office of the Governor will report violators to the appropriate prosecutorial authorities for investigation.

"There is no guarantee in a free-market economy that prices will go down, but I believe that the political and public pressure applied by the roll back of the sales tax will help force prices down," Ryan said.

"Despite the naysayers, the state treasury can afford this tax cut because we'll be able to put up $75 million in unanticipated new revenues to make up for it," Ryan said. The suspension of the tax could cost the state $180 million during the next six months. State agencies also were ordered to freeze two percent of their operating budgets as a way to offset the tax.

Illinois had its last gas tax increase in 1989, which set a five- percent tax on gasoline. The state's sales tax on gasoline is 6.25 percent of the pump price. The state 's share is 5 percent and the remaining 1.25 percent is distributed back to local governments.

Ryan has said the high gasoline prices being paid by consumers in Illinois are the result of new gasoline production rules ordered by the U.S. Environmental Protection Agency in an effort to reduce smog. The Governor told the U.S. House Judiciary Committee that he supports a federal investigation of pricing practices by oil companies that have led to consumers in Chicago paying the nation's highest retail gasoline prices.

Ryan testified at a Judiciary Committee hearing on a proposed Federal Trade Commission investigation into alleged price collusion by the oil companies. He also told the committee that the U.S. Environmental Protection Agency shoulders a portion of the blame for high gas prices because the agency has refused to suspend new gasoline production rules that have caused a sharp increase in pump prices.

Senate Bill 1310

SB 1310 temporarily suspends the state portion of the use and occupation taxes ("sales tax") on motor fuel and gasohol from July 1, 2000 to December 31, 2000.

SB 1310 provides that of the remaining 1.25% use tax 100% will be distributed to the State and Local Sales Tax Reform Fund. This distribution is the same as the current formula for the local share of the use tax.

SB 1310 also provides that of the remaining 1.25% of the occupation tax, 20% shall be distributed into the County and Mass Transit District Fund, and 80% shall be distributed into the Local Government Tax Fund. This distribution is the same as the current formula for the local share of the occupation tax.

SB 1310 lowers the rate to be prepaid by motor fuel retailers to 1 cent for both motor fuel and for gasohol. The current prepaid tax of 4 cents for motor fuel and 3 cents for gasohol is reinstated as of January 1, 2001.

SB 1310 provides that a sign shall be placed on each pump by the motor fuel retailer that states; "As of July 1, 2000, the State of Illinois has eliminated the State's share of sales tax on motor fuel and gasohol through December 31,2000. The price on this pump should reflect the elimination of the tax." This sign shall be at least 4 inches by 8 inches and any retailer failing to display this sign shall by guilty of a petty offense and be fined $500 for each retail premises violating the sign requirements.

Section 22 ensures that truckers paying Illinois tax though the International Fuel Tax Agreement (IFTA) will also be subject to the 1.25% rate.

This proposal does not amend any local tax acts.



WHEREAS, during the month of June, 2000, retail gasoline prices have increased dramatically and disproportionately throughout Illinois and other Midwestern states, and in some portions of Illinois now exceed $2.00 per gallon; and

WHEREAS, these price increases are causing hardships on the citizens of Illinois, especially those on fixed incomes; and

WHEREAS, high retail gasoline prices could jeopardize Illinois' future economic growth and estimates show that high gasoline prices could drain approximately $1 billion from Illinois' robust economy through increased consumer prices and added transportation costs; and

WHEREAS, high retail gasoline prices have resulted from a variety of causes, including but not limited to federal regulations, current national energy policy, supply shortages, increased crude oil prices, and other factors which would most adequately be addressed through federal action, which has not been forthcoming; and

WHEREAS, in an effort to provide Illinois consumers with some relief from high gas price, legislation has been signed into law that will suspend the state sales tax on motor fuel and gasohol for a period of six months; and

WHEREAS, I am committed to using the full resources available to me as Governor to see that consumers in Illinois are receiving the benefits of reduced gasoline prices resulting from a suspension of the state sales tax on motor fuel and gasohol;

THEREFORE, I, George H. Ryan, Governor of the State of Illinois, hereby order the following:

1.The Department of Revenue will notify all gas station owners of the sales tax suspension so that the owners may immediately adjust their prices to reflect these savings.

2.There is created a Gas Price Monitoring Team.

3.The Team will consist of those state agencies that regularly visit the gas stations in the course of their duties, including: Department of Agriculture, Department of Natural Resources, Conservation Police, Illinois State Police, State Fire Marshal, Department of Lottery, Environmental Protection Agency, and Department of Revenue.

4.Employees of these agencies will be provided with a standardized reporting form and are charged with recording prices at gas stations and reporting any gas station that fails to reduce prices appropriately.

5.Employees of these agencies are also charged with determining whether the consumer notification sign is displayed on the retail dispensing devices as required by law.

This order shall take effect immediately.

June 29, 2000

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