* 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.