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State owes businesses $850M in tax refunds

Thursday, Apr 28, 2011

* There’s more to making Illinois business friendly than handing out tax subsidies or even reforming things like the workers’ compensation system. For instance

Thousands of Illinois businesses are waiting for the state to pay long-overdue tax refunds, and there’s no sign the wait will end anytime soon.

The state owes money to roughly 36,000 businesses that overpaid their income taxes, going back to 2008. The backlog totals about $850 million, Comptroller Judy Baar Topinka said Wednesday. […]

At Peters Machine Inc. in Decatur, President Jerry Nelson said he continues to wait for about $15,000 dating to the 2008 tax year.

“I’ve tried to get answers, but no one seems to be in a position to let me know what’s going to happen,” Nelson told Lee Enterprises newspapers.

Getting businesses the money they’re legally owed can only help the economy as a whole. Whether they get this done by borrowing or cuts or whatever, the General Assembly and the governor shouldn’t stop until they figure out how to pay what we owe.

* Meanwhile, Greg Baise of the Illinois Manufacturers’ Association says Gov. Pat Quinn needs to be much more involved with passing workers’ comp reform

The key is Gov. Pat Quinn, who has been somewhat involved but needs to step it up if a deal is to be reached, Mr. Baise continued.

Mr. Baise conceded that some business leaders are insisting on a stronger deal than he might agree to. But they, too, listen to Caterpillar, he said, referring to the stir the Peoria-based manufacturer raised a few weeks ago when it seemed to suggest it would move out of Illinois unless the state improved its business climate.

As a matter of practical politics, a bill needs to pass in the next couple of weeks, before the Legislature turns to the volatile subjects of remap and the budget, Mr. Baise said.

“If the governor moves forward at all on causation, we can say Illinois is changing its pattern,” he said. Given Caterpillar, the weak economy and other pressures to act, “If we can’t get this one done now, I don’t see how we ever get it done.”

* Back to the budget

Illinois’ recent income tax increase cannot be temporary, as is currently written in the law, if the state wants to avoid deep cuts to social services, according to one budget expert.

“I think it’s disingenuous for [lawmakers] to have claimed that this is a four-year tax increase that is set to expire. They did the right thing by raising revenue. They did the wrong thing by making it temporary,” said Ralph Martire, director of the Center for Tax and Budget Accountability, a think tank focused on budget policy. “I think one of the most disingenuous pieces of public policy that has been perpetuated on voters and taxpayers for decades now is that they can have public services and never have to pay for them. At some point, you need adequate sustainable revenue raised in a responsible way.”

The governor has said that he wants to ensure the tax hike is temporary, and you won’t find many others who think it should be made permanent. The problem is that nobody in power is willing to do what it takes to make this happen. We’re in for another big budget crisis down the line if incredibly tough decisions aren’t made now.

* Video of Martire’s comments

[Thanks to for the video.]

* Budget and business roundup…

* Cross says state budget plan could be ready in two or three weeks: So far, Republicans say the two parties have worked surprisingly well together, and Cross says he trusts House Speaker Michael Madigan’s word to hold spending under an agreed-to amount.

* Topinka: State will be $8 billion in hole: Democratic Gov. Pat Quinn’s administration agreed with Topinka’s calculation. Quinn’s budget office issued a statement, saying Illinois continues to face “serious fiscal challenges due to many years of budget mismanagement.” But the administration firmly stated that borrowing money at low-interest rates to help pay down a mounting backlog of overdue bills is “paramount to stabilizing the budget.”

* VIDEO: Comptroller Topinka on unpaid bills

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- Posted by Rich Miller        

  1. - jake - Thursday, Apr 28, 11 @ 7:46 am:

    The best way out of the revenue/expenditure impasse begins with recognizing the fatal flaw in the state constitution; i.e., the requirement that the income tax be flat. The combination of that requirement plus the regressive nature of other state and local taxes such as the sales tax, means that Illinois is a high tax state for low income people and a low tax state for high income people. Amending the constitution is a cumbersome process but in this case the need is so compelling that perhaps it can be done. If so, one could for example roll the income tax back to 3 per cent for the lower income end, raise it to 7% for the high income end, and have adequate and sustainable revenue for a reasonable state budget. This range of percentages is very typical across the country. Hardly any other state has a flat personal income tax.

  2. - Cincinnatus - Thursday, Apr 28, 11 @ 8:26 am:

    “Center for Tax and Budget Accountability”

    I’m looking forward to the analysis from the Tax Foundation that supports the conclusion that the tax increase must be made permanent so that we cannot cut social services spending.

  3. - thechampaignlife - Thursday, Apr 28, 11 @ 8:26 am:

    How smart a move would it be to make it permanent now! It saves them from having to take the heat a second time 4 years from now. They’ve already taken heat for the increase and I can’t see much additional heat for this move, at least among those who might have still actually voted for them.

  4. - Cincinnatus - Thursday, Apr 28, 11 @ 8:35 am:

    “Tiny, localized state agency could be dissolved”

    This is an interesting case study on whether or not government can be cut in this state. I hope Rich will have a follow-up after the issue is resolved.

  5. - Linus - Thursday, Apr 28, 11 @ 8:37 am:

    “Getting businesses the money they’re legally owed can only help the economy as a whole. Whether they get this done by borrowing or cuts or whatever, the General Assembly and the governor shouldn’t stop until they figure out how to pay what we owe.”

    That’s absolutely right, and another strong argument for a reasonable, debt-restructuring plan that can help get our long-overdue bills paid and off the books. Our outstanding obligations - including the billions owed to schools, health care & social-service providers - really are an enormous drag on our economic recovery.

  6. - Cincinnatus - Thursday, Apr 28, 11 @ 8:37 am:


    Interesting proposition, doing it now. Do you (or others) think there is enough Democrat support to get it done?

  7. - thechampaignlife - Thursday, Apr 28, 11 @ 8:59 am:

    It would have to happen before the end of May to get lumped in with the original increase in the voters’ minds, I think. I don’t see that happening, though, so the current GA is kicking the can to the GA four years from now. Sadly, many of them will still be there so they’re only hurting themselves by having to take the heat a second time.

  8. - Shemp - Thursday, Apr 28, 11 @ 9:36 am:

    How about not threatening to jail landscapers for working with state and local governments? HB3237 would make it a FELONY for a landscaper to work below prevailing wage on some projects, but IDOL doesn’t give specifics on which projects. Enough already Illinois!

  9. - Cincinnatus - Thursday, Apr 28, 11 @ 10:12 am:


    Prevailing wage (Davis-Bacon) costs taxpayers about 10% more on any given government project, according to this UC-Berkeley study.

  10. - Time Keeps on Ticking, Ticking - Thursday, Apr 28, 11 @ 10:55 am:

    Did Judy Bar get a product placement royality for that huge McDonalds coffee with a straw in the video? That would take care of a voucher or two. She is right about her system being ancient. Totally inefficent. Good luck, hopefully republicans can point to a specific dollar amount of cuts that would make borrowing acceptable to them. It is a shame that common sense cash-flow nut and bolts has to be held hostage for politcal reasons.

  11. - Granger - Thursday, Apr 28, 11 @ 12:05 pm:

    Should these business to whom the state owes $850 million be willing to give the State a 3% across the boar reduction in their tax refunds? That way they could enjoy a small amount of pain along with their employees and State employees.

  12. - Time Keeps on Ticking, Ticking - Thursday, Apr 28, 11 @ 12:10 pm:

    Granger–I am sure they would. But the state is so broke it can not cut deals like that even with the willing. Borrowing is the only way to pay in a timely manner–that’s a fact, Jack.

  13. - MikeMacD - Thursday, Apr 28, 11 @ 1:23 pm:

    I’m left wondering why some of these businesses that are owed tax refunds can’t apply what they are owed to current tax liabilities, improving their cash flow and recovering what they are owed that way.

    I’m sure there are good reasons, but my ignorance of the state tax code as it applies to businesses acts as an obstacle.

  14. - wordslinger - Thursday, Apr 28, 11 @ 1:46 pm:

    –But they, too, listen to Caterpillar, he said, referring to the stir the Peoria-based manufacturer raised a few weeks ago when it seemed to suggest it would move out of Illinois unless the state improved its business climate.–

    What lousy journalism. Seemed to suggest? What weasel-word nonsense is that?

    The CAT letter, and the CEOs later comments, spoke for themselves, clearly, and did not “seem to suggest” anything resembling Hinz’s statement.

  15. - Vote Quimby! - Thursday, Apr 28, 11 @ 3:12 pm:

    What if the businesses started using the money owed from IDOR as a credit for current tax obligations? If its good for the goose…

  16. - Yellow Dog Democrat - Thursday, Apr 28, 11 @ 4:24 pm:

    @Quimby -

    I believe they can in fact file to apply any refunds due to future obligations.

    I also think that part of the reason they are NOT being paid quickly is that the Prompt Payment Act does not apply to tax returns.

Sorry, comments for this post are now closed.

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