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Martire: Tax hike still leaves Illinois $2.5 billion short

Friday, Jul 28, 2017

* Illinois Issues

Q: One of the provisions of the budget package for Fiscal Year 2018 is an increase in the state’s personal income tax rate from 3.75 percent to 4.95 percent, while the corporate rate is boosted from 5.25 percent to 7 percent. Is this enough to generate the revenue the state needs?

Ralph Martire, executive director of the Chicago-based Center for Tax and Budget Accountability: One thing that my organization does is that we project whether or not the state’s current revenues will be able to maintain current expenditures into the future, if law doesn’t change. So if no programs or services are added or expanded, does your current revenue make, generate enough growth over time to sustain current level services, and pay off the debt you’ve already incurred at the state level?

So before the tax increase passed and the net tax increase was roughly about $5 billion a year, we projected the state really needed about $7.5 billion in new revenue to be able to maintain current expenditures. And that — if and only if —the state also dealt with its pension debt problem in a rational way because the other main pressure on state finances is the repayment plan for the money that was borrowed from the five state public employee pension system over the last few decades.

- Posted by Rich Miller        

24 Comments
  1. - Anonymous - Friday, Jul 28, 17 @ 12:18 pm:

    Gambling expansion and legalizing weed is a start….


  2. - Fixer - Friday, Jul 28, 17 @ 12:22 pm:

    But they aren’t maintaining current expenditures, if you consider the cuts to higher ed and agencies. I don’t know how much those amount to in $s, but would bear consideration.


  3. - 360 Degree TurnAround - Friday, Jul 28, 17 @ 12:23 pm:

    Quit worrying Ralph. The Governor is going to start a revolution, with rainbows and ponies, that will make everything better.


  4. - MOON - Friday, Jul 28, 17 @ 12:24 pm:

    Rauner could instruct his department heads to cut expenses by 5 or 10% and over several years that may alleviate Martire’s forecast.

    Such a plan would require Rauner to grow a backbone, but, after all he claims to have all the answers.

    I am sure his “Best Team In America” has the solution.


  5. - Truth Squad - Friday, Jul 28, 17 @ 12:24 pm:

    Well, time for the Dems to get to cutting. Because there’s no way you get 15 GOP members to do any more revenue.


  6. - the Cardinal - Friday, Jul 28, 17 @ 12:25 pm:

    Is he the same guy that promoted a service tax on just about everything (but lawyers and plumbers)5-6 years ago?


  7. - Sue - Friday, Jul 28, 17 @ 12:30 pm:

    Same headline out today about Chicago. All we are doing as taxpayers is working to pay the pension beneficiaries an ever increasing share of state revenue while services continue to shrink. Any wonder people are fleeing and business is expanding elsewhere


  8. - Oswego Willy - Friday, Jul 28, 17 @ 12:32 pm:

    I can’t remember…

    Did any of Rauner’s agency heads or the Governor’s budget office list any cuts, like $2.5 billion, or “one” when questioned by a GA Committee?


  9. - Lamont - Friday, Jul 28, 17 @ 12:34 pm:

    I agree with gambling expansion and legal marijuana, but a millionaires tax would help too.


  10. - Sue - Friday, Jul 28, 17 @ 12:37 pm:

    Lamont - CT learned the hard way on taxing the so called rich - GE left and now the Gov of CT is cutting deals to retain wealthy taxpayers all the while he has a huge deficit. Why don’t folks like you recognize the reality is we have a spending problem driving the structural deficit and doing things like Medicaid expansion sounds nice but backfires when the bills come due


  11. - RNUG - Friday, Jul 28, 17 @ 12:37 pm:

    No surprise. The Governor’s own agencies and bureaus said the 4.95% needed a lot of service taxes also to achieve the total revenue necessary. Without the service taxes, the income tax rate needed to be around 5.25% - 5.5%, something the Governor wouldn’t agree to (back when they thought there was a Grand Bargain). Most service taxes got left out of the final bill, so the State will come up short.


  12. - Ron - Friday, Jul 28, 17 @ 12:42 pm:

    - Anonymous - Friday, Jul 28, 17 @ 12:18 pm:

    Gambling expansion and legalizing weed is a start….

    Yep, too bad IL pols are far too reactionary to do those things.


  13. - Anonymous - Friday, Jul 28, 17 @ 12:43 pm:

    What about the $2 million plus in cuts to higher education and state agencies, including 5% cuts?


  14. - Rod - Friday, Jul 28, 17 @ 12:44 pm:

    This is not really news because effectively Mr. Martire has said this before in passing even on WTTW. But he is a good Democrat and played down the inherently unbalanced nature of what would likely pass the GA in terms of appropriations and revenues.

    The reality is the State will not have the revenue to maintain the higher level of k-12 funding to implement SB 1 over a ten year period of time unless cuts are continually made over the same period of time with or without the money for CPS.


  15. - Anon - Friday, Jul 28, 17 @ 1:01 pm:

    The tax rate really needs to be about 7-8% to reasonably keep up with the coming pension obligations the general fund is facing going forward.

    Even if we held everything else static on spending for the next decade (completely impossible) we would need billions in new revenue just to meet the ever growing pension obligations.

    Pension obligations (and increased interest expenses) have already accounted for every dollar of revenue raised during the last tax increase, and its just not enough.

    People need to wrap their minds around the fact that taxes have to go up alot, and that you are going to get absolutely nothing new in return for them because all new revenue will be going strictly to the ever growing pension obligations that are crowding out all new spending from the general fund.

    Any politician that tries to sell you on the idea of “investing…I mean new spending” is selling you a bill of goods because the state doesn’t have the money to appropriate to anything new. The new revenue is already accounted for, and will be for probably the next generation.


  16. - anon - Friday, Jul 28, 17 @ 1:09 pm:

    yep–civic committee of commercial club and civic federation said same–this was the result of the goofy idea of passing the gov’s introduced budget an all of its phony assumptions–next guy will have a mess to clean -up


  17. - Lucky Pierre - Friday, Jul 28, 17 @ 1:11 pm:

    Senator Cullerton and Speaker Madigan assured us less than one month ago that budget they passed was balanced and spends less than the Governor proposed.

    They also said now that the budget is passed they can start to address the needed reforms Illinois needs.

    Why does anyone take them seriously?


  18. - Oswego Willy - Friday, Jul 28, 17 @ 1:19 pm:

    ===Senator Cullerton and Speaker Madigan assured us less than one month ago that budget they passed was balanced and spends less than the Governor proposed.===

    Good thing Rauner vetoed it.

    Hurting seniors, hurting higher education, hurting agriculture, hurting prisons, hurting road construction.

    Rauner vetoed it all

    “Rauner vetoed that”

    You should be happy.


  19. - Fredo Corleone - Friday, Jul 28, 17 @ 1:24 pm:

    Sounds like we need to increase those pesky income taxes to 6%.

    I’m not sure that legalized weed and more gambling will help. By the time Madigan and Cullerton got through with that there would be another ten thousand union jobs created to oversee it.

    Have a great weekend.


  20. - Oswego Willy - Friday, Jul 28, 17 @ 1:39 pm:

    === By the time Madigan and Cullerton got through…===

    So you’re saying Rauner is so grossly inept… he can’t do anything, can’t be a governor… You’re probably right, lol


  21. - Grandson of Man - Friday, Jul 28, 17 @ 3:24 pm:

    Legalize marijuana, expand gaming and MMJ and pass a millionaire surcharge. Rauner came here trying to force middle class workers to make huge concessions. That’s wrong, and he himself has to pay more in taxes.


  22. - FLEA - Friday, Jul 28, 17 @ 3:53 pm:

    Ralph has had this figured out for about 10-12 years////go Ralph


  23. - blue dog dem - Friday, Jul 28, 17 @ 4:19 pm:

    Holy smokes. Who would have ever guessed.


  24. - Liandro - Friday, Jul 28, 17 @ 4:32 pm:

    Soooo…same as it ever was?


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