Excerpts from recent editorials in newspapers in Illinois
March 7, 2019
Gov. Pritzker’s $3.4 billion tax hike: How to fan the ‘Illinois Exodus’
Gov. J.B. Pritzker on Thursday unveiled details of his promised push for a graduated income tax. He campaigned on the issue. He delivered.
So how much will taxes increase under a rate structure Pritzker proposed? You might want to cover your eyes. About $3.4 billion annually, by his calculation.
That extraction of dollars from taxpayers’ pockets would be in addition to roughly $5 billion raised annually in new revenue under the 2017 income tax hike. That legislation lifted the individual rate to 4.95 percent. Lawmakers — including some Republicans — approved it over former Gov. Bruce Rauner’s veto. Don’t confuse any of that with the more than $30 billion raised during four years of the 2011 income tax hike, which increased the individual rate from 3 percent to 5 percent for four years, then dropped it to 3.75 percent.
How did Springfield’s collection of all that new money work out for state government and taxpayers? Here’s how: Illinois remains deeply in debt, continues to borrow to pay bills, faces an insurmountable unfunded pension liability and is losing taxpayers who are fed up with paying more. The flight of Illinoisans to other states is intensifying with 2018′s loss of 45,116 net residents, the worst of five years of consistent, dropping population. And the ceaseless maneuvering to raises taxes has only aggravated Illinois’ national and global reputation as a state whose anti-employer attitude creates unpredictable costs for businesses.
Tax policy drives behavior. It’s why states with low or no income taxes are thriving. Illinois needs to be adding more taxpayers and businesses, not subtracting them. When politicians raise taxes, they aren’t adding. A switch to a graduated tax would eliminate one of Illinois’ only fishing lures to attract taxpayers and jobs: its constitutionally protected flat income tax.
Rates under Pritzker’s plan would jump to nearly 8 percent for anyone earning more than $250,000 per year. For filers who report income of more than $1 million annually, the 7.95 percent rate would not be marginalized; meaning, it would be applied to every dollar, not just income of more than $1 million. Line up the Allied moving vans for business owners and other high-income families who’ve had a bellyful of one of America’s highest state and local tax burdens: exorbitant property taxes, plus high sales taxes, plus fast-rising income taxes.
Pritzker’s only pro-growth selling point Thursday for moving to a graduated structure is that it would bring stability to Illinois’ roller-coaster budget environment. That’s what he said. But it would not bring stability. Unlocking the state constitution to permit graduated rates would allow lawmakers to tinker with tax rates into perpetuity. After a moment of stability — that is, a quick honeymoon for taxpayers at the rates he now proposes — which direction do you think your income tax rate would head?
Pritzker’s proposal, like each tax hike before it, was introduced with no meaningful reform on the spending side of the ledger. This is all about collecting more money. No changes to pensions through — our recommendation — a loosening of the pension clause of the constitution. No spending cuts throughout state government. No reductions in employee head count, or Medicaid reform. Just another dive into taxpayers’ pockets.
In fact, the tax hike would come amid promises of spending new billions, as Pritzker advocates, for local schools, higher education, social programs and wages for the state’s unionized workforce. Grab your wallet for that upcoming contract, which Team Pritzker will negotiate. The unions already are behind the graduated income tax because they want gobs of new revenue for their wage increases.
The lesson in Illinois government is quite clear. Tax hikes come fast and furious, and they’re never enough. The money raised is never, ever enough.
And the dramatic spending reforms that could offset new tax grabs? Sorry, this is Illinois.
Residents get it. They will continue protesting with their feet.
March 8, 2019
Sauk Valley Media
State stands to lose money, influence and more if people don’t take the census seriously
State and local leaders are ramping up their efforts in preparation for the 2020 census. While the actual numbers won’t be counted until next year, the importance of getting residents to respond can’t be overstated.
The federal government does the head count every 10 years to update population numbers and demographics for every household in the country. For simple record-keeping purposes, it’s obvious why this data needs to be accurate, but the numbers go a long way in determining government representation and how billions in federal money will be distributed.
The stakes are high for Illinois, as well as local governments and organizations. That is why the troops have been mobilized to attack any potential problems that could lead to state or local population numbers being underrepresented.
In a state that is losing population, fewer people means less representation in Congress. Illinois, with 18 congressional seats, has lost representation in every census done since the 1930s. An estimated population drop over the last 5 years indicates another will likely be lost in the 2020 count. The projections also create a real possibility of losing two seats if the state’s residents are undercounted. With the loss of two electoral votes, Illinois would lose influence in presidential elections.
The loss of even one seat will also create the need for more redistricting. History tells us that redrawing those boundaries benefits the party in power, and gerrymandering has systematically diluted the power of the electorate.
The census data also dictates where more than $800 billion in federal funds will land. The money from more than 300 programs helps pay for everything from education and health care to infrastructure and veterans programs. Census-driven federal funds have brought up to $34 billion a year to the state since the last head count.
Several state programs also use the census numbers to determine who gets what locally - money and services for everything from local government and schools to housing, transportation and nonprofit organizations.
Census numbers can also be an important factor in economic development. Companies pay close attention to population and many of the demographic indicators that answer questions about workforce availability and quality. In addition, the census also drives certain development incentives, such as tax credits.
In the 2010 census, Illinois hasn’t determined the exact number of uncounted Illinois residents, but there were enough to make a significant impact, according to reports from census outreach panels.
Studies by local government leaders show that one missed resident translates to a loss of $1,800 a year. Projected over the 10-year life of the census, that’s $18,000 per person in reduced services.
Local outreach efforts will become much more evident this summer, as the census soldiers break camp for the front lines. Making sure you are counted in the 2020 census is one of the most important things you can do to guarantee a better future for Illinois and your community. Whether it be through door-to-door efforts, mail, email or by phone, it’s never been more important to be counted. Stay tuned for more detailed information on the process.
March 10, 2019
The (Carbondale) Southern Illinoisan
A lot of what-ifs attached to state budget
Gov. J.B. Pritzker’s has unveiled his first budget proposal.
While there is a lot to like about his approach to governance, the proposed budget still forces Illinois citizens to close their eyes, cross their fingers and hope for the best. As proposed, the budget is a sound first step toward stability — bit that’s it.
To his credit, Pritzker admits there are speculative elements built into the budget. And, he correctly points out that all budgets are an outline. The budget plan he has laid out is clearly written in pencil.
However, as opposed to previous budget proposals we have seen, Pritzker’s is more modest in its approach and promises. He described the 2020 budget as a “bridge” document in an interview Friday with The Southern’s editorial board. The proposal is something that will stabilize the state’s finances until his proposed tax plan can be adopted.
The governor said there are three approaches to fixing Illinois’ financial situation — more revenue, budget cuts and business growth. His priority, as illustrated in his proposed budget, is to grow revenue.
Pritzker has proposed a graduated income tax for Illinois residents. At the present time, the Illinois Constitution mandates a flat tax. Implementing Pritzker’s plan is not as simple as the General Assembly cobbling together a bill that the governor would sign.
An abridged look at Pritzker’s tax proposal shows lower rates for Illinois residents earning $250,000 or less. At $250,000 or more, income would be taxed at 7.75 percent rather than the current 4.95 percent. The highest marginal rate would be 7.85 percent on income over $500,000.
Pritzker said those rates, which are still negotiable, would produce an additional $3.4 billion in revenue.
Instituting the graduated tax requires 60 percent approval in both the Illinois House and Senate. That action would get the proposal on the November 2020 ballot, and that measure would have to carry 60 percent of Illinois voters. Although a study by the Paul Simon Public Policy Institute showed broad support for a graduated income tax,
Legislative and public support aside, Illinois is still 18 months from voting on the proposal. Any additional tax revenues derived from the changing tax structure are still two years away. Pritzker admitted this proposed budget will not provide an instant solution to Illinois’ dire financial situation — the state still has a $15 billion backlog of bills.
The proposed budget also produces no short-term solution to the state’s massive unfunded pension liability. Instead, Pritzker is aiming to stabilize the budget while keeping a lid on debt and pension liability until the state is on firmer financial ground.
On the plus side, the proposed budget is based on the state raising revenue itself, not on lowering taxes, which would theoretically bring more business to the state, which would theoretically, again, funnel more revenue into state coffers.
On the downside, this budget proposal contains its share of speculation. There is $200 million in revenue from licensing tied to sports gambling. There is another $170 million tied to licensing for recreational marijuana.
The catch? Neither sports better or recreational marijuana are currently legal in Illinois. Given Illinois’ acceptance of gambling, it’s reasonable to believe that sports betting could become legal in the state during the coming year. The marijuana issue is stickier.
Granted, the proposed revenue isn’t a major part of the budget, but there is no universe in which $370 million is pocket change.
Finally, the Pritzker budget includes a 5 percent increase for higher education. Anyone familiar with Southern Illinois University’s budget woes understands increased funding will be helpful. Educators sought a 10 percent increase, but Pritzker said the money just isn’t there.
The budget also pumps additional funding into K-12 and pre-school programming.
In the final analysis, a lot needs to happen for the promises of this budget to come to fruition. The proposal is optimistic, but the built-in speculation is feasible. It’s a good place to start.