Posted by Ted Biondo on Jul 12, 2017 in Illinois General Assembly, politics, State income Taxes, state pensions | 0 comments	
Recalling Illinois’ past record, everyone must know that Madigan and company’s new budget will not solve the state’s financial crisis. Springfield will continue to spend the additional $5 billion a year, just as they squandered most of the $32 billion extra tax dollars collected during the last temporary income tax hike.
Madigan’s budget permanently increases the income tax rate to 4.95% from 3.75% and corporate income tax increases to 7% from 5.25%. No, the personal income tax increase is not 1.2% as some local proponents suggest; it’s a huge 32% tax increase.
What the budget does not include – a property tax freeze; not balanced by $2 billion; meaningful workman’s compensation; a reduction in the 7000 units of government; attempts to pay down the $14.7 billion in unpaid bills this Fiscal Year(FY); no term limits and insufficient pension reform with debts of $130 billion in unfunded liabilities.
The budget does not include revenue for the EDGE tax credit for business – Economic Development for a Growing Economy. EDGE had become the largest income tax incentive for businesses in Illinois. It was designed to authorize income tax credits for companies that invest in facilities and hire and/or retain employees in Illinois – no longer a priority in Madigan’s budget.
The budget also cuts 98% of the Department of Commerce and Economic Opportunity funding proposed by the GOP and reduces funding for higher education in public universities and community colleges to FY15 levels, thereby removing many tools for economic development in a state that needs more high paying jobs.
There is no funding in the budget for RVC’s Maintenance Repair Overhaul facility at the airport, which was promised by the Governor Quinn, and could affect the federal funds pledged by Dick Durbin. Local banks went out on a limb for RVC and the airport, but lack of state funding could require our area to foot the bill for full implementation.
Some items the Madigan budget does include is additional funding to Chicago Public schools (CPS) from downstate school districts when the new school funding formula is approved and increases the Earned Income Tax Credit to 14% of the federal tax credit and to 18% in FY18.
The budget also increases K-12 education funding by hundreds of millions over FY17 estimated expenses; creates a credit for instructional materials and supplies retroactive to January 1, 2017 for Illinois educators and increases General Funds by $730.5 million over FY17 estimated expenses.
Using creative financing, Madigan’s promised budget cuts of $3 billion simply shift debt and interest to FY18 by scheduling no payments in FY17 of a proposed $6 billion dollar bond borrowed to pay down the state’s $14 billion accumulated debt and by smoothing pensions for future years “saving” $900 million for FY17.
Another Madigan sleight-of-hand “saves” more than $1.2 billion by sweeping many funds that have been collected for other authorized programs. Finally, highly inflated estimates of $500 million for unions using a new 401K program for Tier 3 employee pension plan adds to the “savings.”
The budget also includes additional untried projects, state fairs and diversity program studies. Within 30 days of the effective date of the Budget Act, hourly wages for service providers are increased by $119 million.
The budget appropriates $6.7 billion General Funds for an Evidence Based Model for school funding formula, which is an increase of $778.3 million over FY17.
There is another $221 million for Chicago Public Schools seeking pension parity with downstate schools and $202 million for non-formula Chicago Block Grant overages and $29 million for a new Bilingual Education set aside.
The budget also includes new line items for Human Services, immigration and refugee services, including an immigration welcoming center, homeless prevention; temporary assistance and grant programs for a total increase of $228 million.
Monetary Award Programs (MAP), capital projects, increases for the office of Attorney General, Lisa Madigan, and community grants for a total of an additional $450 million.
Another $5 million for youth employment programs for the Department of Natural Resources and $10 million more for a supplemental appropriation to the Department of Revenue. Also, McCormick Place Expansion Project Fund may now issue debt of $300M more dollars.
This budget will resolve nothing because there are no systemic solutions for what caused the financial crisis. Debt is not being reduced with the additional $5 billion in taxes, since the additional taxes are being spent on new and expanded programs – many more than can be listed here.
The budget merely swaps one type of debt for another kicking the can down the road for additional tax hikes to resolve future pension cash flow problems.