The Illinois Senate could vote as early as Wednesday on a proposal to raise the state income tax – again. Although the plan’s architects, state Sens. John Cullerton and Christine Radogno are seeking kudos for their bipartisan collaboration, the reaction from many Illinois taxpayers has been: “Really? Almost two years without a state budget, and all you can come up with is sending me a higher tax bill?”
The lynchpin of the Senate proposal is an increase in the state personal income tax rate to 4.95 percent – or higher, since the proposal’s sponsors say they want the tax increase to be “adequate” to cover Springfield’s many problems. This puts the typical Illinois family on the hook for at least $810 in higher taxes this year. It also includes a sugary drinks tax that would send another $560 million to politicians.
But when it comes to spending reforms, the Senate plan leaves much to be desired.
Many facets of Cullerton and Radogno’s plan give lip service to solving problems, but contain little in actual reforms.
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Take pension spiking, for example. State law allows school districts to inflate teachers’ pensions by giving teachers raises of up to 6 percent in the final four years of their careers. So what do Cullerton and Radogno propose? Lowering the pension spiking ceiling to 5 percent.
On the pension front, the plan offers little to fix the state’s $130 billion public-sector retirement crisis. The new budget creates a 401(k)-style plan for government workers – a good thing – but then restricts enrollment to only 5 percent of government employees. Why?
A property tax freeze is overdue in Illinois. But the Senate plan freezes property taxes for just two years, and lacks spending reforms to curb costs incurred by local governments, which are one of the most significant drivers of property taxes.
The plan does little to fix workers’ compensation in a way that will satisfy the complaints of Illinois businesses struggling to pay for the nation’s seventh-most expensive workers’ compensation system.
Perhaps worst of all for those who live outside of Chicago is the bailout for Chicago Public Schools. CPS has longstanding financial problems it refuses to address. Instead, it wants a handout from people in Belleville, Collinsville and the rest of Illinois. The Senate proposal hands this to the district, forcing all Illinoisans to pay $215 million in 2017 to CPS and another $221 million in 2018.
If it seems like déjà vu, that’s because it is. Illinois Democrats raised the income tax in 2011, and at the time, former Gov. Pat Quinn said it would “pay our bills, get Illinois back on fiscal sound footing and make sure that our state has a strong economy.” Illinoisans paid more than $31 billion in higher taxes between 2011 and 2014, and what do they have to show for it?
Ninety cents of every dollar generated by that tax increase went to pensions, leaving only 10 cents for the important education and social services on which Illinois communities rely. Illinois suffered one of the weakest economic recoveries in the nation. The state never retired its backlog of bills. And residents fled to other states in record numbers.
The Senate’s budget plan is a repeat of that same failed strategy: a higher tax bill now with promised real reforms later. The only difference is that this time, with Radogno’s backing, it’s bipartisan.
Illinois deserves a budget plan that keeps its residents and businesses here and attracts new ventures and families. State Sens. James Clayborne, Bill Haine, and Kyle McCarter, would be wise to vote against the Senate budget proposal.
Kristina Rasmussen is the president and chief operating officer of the Illinois Policy Institute, a taxpayer watchdog group. She can be reached at email@example.com.