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Illinois

* But we have a state spending problem, right?…

• Illinois ranks 28th among the 50 states and District of Columbia in per-capita state and local spending, according to 2012 data, the most recent available, compiled by the Tax Policy Center.

• Illinois ranks 38th in state-only per-capita spending, according to Fiscal Year 2014 data compiled by the Kaiser Family Foundation.

• Illinois ranks 28th in per-capita combined spending on education, health care, human services and public safety — the core services that make up 90 percent of state budgets — and 36th if you calculate that spending as a share of our gross domestic product, according to an analysis of fiscal year 2012 data by Chicago’s Center for Tax and Budget Accountability.

• Illinois ranks 45th in overall state spending as a share of GDP according to a analysis of 2014 data by the Bureau of Economic Analysis.

• Illinois ranks 49th in Medicaid spending per enrollee in a 2011 Kaiser Family Foundation report.

• Illinois ranks 23rd in the state taxes collected as a percentage of personal income and 15th in state taxes collected per capita, according to 2014 data compiled by the Federation of Tax Administrators.

• Illinois has the second-lowest state income tax rate among the eight states that levy a flat tax, and top earners in 38 states pay more state income tax than top earners in Illinois, according to 2016 charts published by the Federation of Tax Administrators.

Now, there are some important things to remember here. One is that relatively low state spending on K-12 is a serious driver of local property tax hikes. Another is that total state and local taxation is about the highest in the country. And while we do spend much less on Medicaid per enrollee, that comes at the cost of providers refusing to take Medicaid patients.

But, hey, even the governor recognizes that we have a very real state revenue problem. He isn’t pushing deep spending cuts at the state level, despite what you may read elsewhere. He wants economic reforms tied mainly to big state tax hikes and a local property tax freeze.

posted by Rich Miller
Friday, Jun 3, 16 @ 12:31 pm

Comments

And we have the second most regressive tax structure after Washington, a wealthy state with perennial budget crises. That needs to be dealt with, either through an expanded personal exemption combined with a higher rate (which I favor, as it wouldn’t need a constitutional amendment) or a graduated tax.

Comment by Angry Chicagoan Friday, Jun 3, 16 @ 12:35 pm
YES YES YES YES!!!!!!! PRINT PRINT PRINT!!!!!! Oh God bless you. Johnie on the spot with the ammo!

Comment by Honeybear Friday, Jun 3, 16 @ 12:36 pm
Does anyone know how many net employers have left the state? (serious question)

Comment by 360 Degree TurnAround Friday, Jun 3, 16 @ 12:38 pm
Which Rauner do we believe? The “I’m an anti-tax kind of guy”, or the Governor who has not yet specified where the needed billions will come from?
Moreover, does anybody know if Rauner has ever stood up to one of his crowd, outside of a private-equity deal where GTCR stood to make $$? Look forward to particulars.

Comment by Ares Friday, Jun 3, 16 @ 12:38 pm
== He isn’t pushing deep spending cuts at the state level==

Really? 33% proposed cut to higher education isn’t considered deep spending cuts?

Comment by Under Influenced Friday, Jun 3, 16 @ 12:39 pm
Excellent post. I’m going to bookmark it and refer it to all those who constantly whine that Illinois has a spending problem. However, I think the jury is still out on whether Rauner is or isn’t pushing deep spending cuts at the state level when it comes to higher ed. His FY 16 budget presentation called for 31% cuts to higher ed (and so far its a 70% cut) - and his FY 17 budget message called for 25% cuts.

Comment by Joe M Friday, Jun 3, 16 @ 12:41 pm
Perhaps he could achieve those “wants” more easily if he’d be honest with the people of Illinois, articulate the economic benefits of his wanted reforms (with specific numbers) and admit the tax hike will be necessary (at least in the short term). The constant tours around the state blaming Democrats for his own lack of leadership is tiring.

Comment by Tournaround Agenda Friday, Jun 3, 16 @ 12:44 pm
Well we’re still number one in Governors and other politicians going to jail. So we got that going for us.

Comment by Chungas revenge Friday, Jun 3, 16 @ 12:46 pm
We are low on spending, but high on overall tax collection, so don’t get too excited folks. As Rich points out, it is some of the local property taxes hurting us. If the State raised income tax and came up with a fair formula to lower school property taxes, that would go a long way. But merely freezing property taxes isn’t going to fix the mess. Most municipal property tax growth has been tied to pension levies, and the locals don’t get to change the pension designs or employee contributions, only the State can do that. So yes, all this goes back to reforms, like it or not.

Comment by Shemp Friday, Jun 3, 16 @ 12:48 pm
No one should be making excuses for the Governor. He has not owned up to the fact that Illinois does not have enough revenue. If you can’t identify the problem, you can’t fix it. His turnaround agenda has nothing to do with our fiscal problems as has been pointed out repeatedly. Asking teachers, firefighters, cops, and tradespeople to take a pay cut so the governor can raise their taxes is a non-starter. Rauner is the Governor. The state needs more revenue, and Rauner, as the Governor, needs to own the tax increase

Comment by Truthteller Friday, Jun 3, 16 @ 12:50 pm
===Really? 33% proposed cut to higher education isn’t considered deep spending cuts?===

It’s coming from a big bucket.

Comment by Anon Friday, Jun 3, 16 @ 12:51 pm
–He wants economic reforms tied mainly to big state tax hikes and a local property tax freeze. –

So he should get out there and sell it.

Sell that big tax increase he wants — which will have some real, understandable data attached to it– and his “economic reforms,” which should have real, understandable data attached to them, if they are indeed economic reforms and not just a partisan wish-list.

Comment by wordslinger Friday, Jun 3, 16 @ 12:55 pm
The important part is that we have the lowest tax on services such as wealth management, yacht cleaning, valet service and dry cleaning.

I pay more state tax for a bike tire than Ken Griffin pays to get his cars detailed.

Comment by Qui Tam Friday, Jun 3, 16 @ 12:56 pm
Maybe instead of giving kill the government spending beast and kill the unions speeches, Rauner should look to his distant predecessor Richard Ogilvie and how the income tax was sold in place of all the other taxes.

Redo the school funding plan to provide 60% (and don’t count the pension contribution in that 60%) with the local district rate set to provide 40%, cap the local school property tax at that level, limit that cap growth to trailing CPI or less, and figure what is needed to eliminate the annual State deficit spending, what is needed to “re-fi” the Edgar Ramp to level payments, toss in some retirement taxation, and come up with a flat rate plan and a graduated rate plan. Add a temporary 1/2% to pay off the $8B to $16B backlog of bills over a 5 to 10 year period. You could even decouple the corporate rate on either or both plans. And you would probably have to have a temporary flat rate plan as a stop-gap until the voters could approve a graduated plan. Then go sell it as the best action possible given the state’s financial condition.

Previous Governors have sold tough plans. If Rauner is half the great salesman he claims to be, he should be able to sell this.

Comment by RNUG Friday, Jun 3, 16 @ 1:04 pm
-word-

Apparently we think somewhat. alike. I was typing my response at the same time you posted.

Comment by RNUG Friday, Jun 3, 16 @ 1:06 pm
RNUG and Wordslinger are nominated to head the committees to develop a plan to solve the problem.

The MJM and BVR cage match could be a fundraising event on Pay per view with proceeds to pay down the debt. That is where their behavior belongs.

Comment by illlinifan Friday, Jun 3, 16 @ 1:12 pm
Illinois has the 4th highest state and local tax burden in the country.

Comment by Tone Friday, Jun 3, 16 @ 1:13 pm
=====Really? 33% proposed cut to higher education isn’t considered deep spending cuts?===
It’s coming from a big bucket. ==

No, that bucket for higher ed has gotten a lot smaller over the years. For example in FY02, WIU received state appropriations of $64.3 million. In FY15, WIU received state appropriations of $51.2 million.

Comment by Joe M Friday, Jun 3, 16 @ 1:13 pm
Pensions aren’t state spending?

Comment by lake county democrat Friday, Jun 3, 16 @ 1:14 pm
According to whom, Tone? I’ve seen it as high as 5th, as low as 10th. Nowhere have I seen Illinois ranked as high as 4th for state/local tax burden.

Comment by 47th Ward Friday, Jun 3, 16 @ 1:15 pm
A statistic the article should have also included: Illinois has the fewest state employees per capita of the 50 states.

Comment by Joe M Friday, Jun 3, 16 @ 1:15 pm
Zorn is purposefully being deceptive

Comment by Tone Friday, Jun 3, 16 @ 1:16 pm
Elimination of prevailing wage and Right-to-work are not economic reforms!

Comment by Spliff Friday, Jun 3, 16 @ 1:16 pm
Rauner has no interest in ending this. We’ve heard him say again that he’ll only DISCUSS tax hikes/tax reform AFTER his turnaround agenda is in place. What’s to stop him from playing more hardball even if you pass his agenda?

Maybe he also has a Plan B.

First you make it seem like a political battle of wills and bash the bad guys about the Turnaround Agenda. If it passes great, but either way you keep playing hardball.

You refuse to raise taxes no matter what. Businesses struggle because the State isn’t paying them their due. These businesses are ripe for the picking say if you got a few billion lying around. Your buddy Ken Griffin said he likes “finding opportunities when trouble hits markets” and boy is there ever trouble.

Then that nasty AFSCME contract limits subcontracting and pays these lazy good for nothings way too much. When contract becomes null and void and state workers are out on the street business opportunities abound! And look, GTCR holds a company that is a healthcare provider for prisoners. What a coincidence! My goodness and they have IT, contingent worker and procurement services too? What are the chances?

You don’t give a fig about the pain you inflicted because you know big money is to be made and you’re just the guy to do it.

Comment by Sangamo Sam Friday, Jun 3, 16 @ 1:20 pm
With IL property taxes second highest, total state and local taxes likely the highest, and Chicago’s sales tax the highest of a large city, people are feeling the affect on their pocketbook but not seeing comparatively great returns for their taxes.

Comment by Anonymous Friday, Jun 3, 16 @ 1:21 pm
“Illinois has the 4th highest state and local tax burden in the country.”

“Zorn is purposefully being deceptive”

Unsupported assertions are unsupported.

– MrJM

Comment by @MisterJayEm Friday, Jun 3, 16 @ 1:28 pm
Another great article from Eric Zorn.

The middle class of Illinois are overburdened with regressive taxes.

Eliminating these regressive taxes on the middle class will grow Illinois economy for the benefit of everyone.

Comment by Chicago 20 Friday, Jun 3, 16 @ 1:29 pm
Tone @ 1:13pm

Here’s a fun fact for you, 87% of all statistics are made up on the spot to support a person’s argument.

Comment by Gruntled University Employee Friday, Jun 3, 16 @ 1:32 pm
Zorn is intentionally misleading for the sake argument (as usual). Who seriously looks at 2011 Medicaid spend data pre-Obamacare expansion? What a joke.

Comment by PalumbrasWay Friday, Jun 3, 16 @ 1:35 pm
Let’s remember our property tax rates before we say anything else.

Comment by Annoyed Friday, Jun 3, 16 @ 1:36 pm
==He isn’t pushing deep spending cuts at the state level, despite what you may read elsewhere.==

It’s difficult to tell exactly what he’s pushing considering he has yet to introduce a balanced budget.

Comment by Jimmy baseball Friday, Jun 3, 16 @ 1:38 pm
== Illinois has the 4th highest state and local tax burden in the country. ==

And if you read what I wrote, I proposed lowering local property taxes and pretty much freezing them in exchange for statewide taxes and expansion of the tax base.

Comment by RNUG Friday, Jun 3, 16 @ 1:38 pm
Tone…
97% of your posts are worthless, but at least there is consensus.

Comment by Captain Illini Friday, Jun 3, 16 @ 1:40 pm
== RNUG and Wordslinger are nominated to head the committees to develop a plan to solve the problem. ==

I’d rather try to herd cats.

Comment by RNUG Friday, Jun 3, 16 @ 1:41 pm
Here I go again, I know. The answer my friends is blowing in the wind. The wind is blowing “progressive income tax”. 34 states have one, their schools will open on time. Also, the District of Columbia and the Federal Government have one.

Comment by an independent Friday, Jun 3, 16 @ 1:43 pm
>He isn’t pushing deep spending cuts at the state level, despite what you may read elsewhere. He wants economic reforms tied mainly to big state tax hikes and a local property tax freeze.

I think the deliberate destruction of the higher education and social service systems represents a push for deep spending cuts. I see evidence of him wanting to destroy tings, but I don’t see evidence of him wanting specific reforms. It would be comforting to agree with your perceptions though.

Comment by Earnest Friday, Jun 3, 16 @ 1:43 pm
== Pensions aren’t state spending? ==

They are, but for the purposes of the support level, I don’t think they should be counted as part of the State’s contribution to the schools. It’s not baked in as a school district expense, and point is to get more state support to the school districts so they aren’t as dependent on the local property taxes and can lower them.

Comment by Anonymous Friday, Jun 3, 16 @ 1:45 pm
@ Tone . . . . At least you are consistent. Wrong, but consistent.

Comment by East Central Illinois Friday, Jun 3, 16 @ 1:46 pm
=And if you read what I wrote, I proposed lowering local property taxes and pretty much freezing them in exchange for statewide taxes and expansion of the tax base.=

This is very similar to the plan Martire has offered for some time. I support much of the plan, if not all.

@RNUG- There is no doubt that you know your stuff. In my opinion You are always reasonable and put a great deal of careful thought into your opinions. That is much appreciated.

The only thing that scares me is a cap on property taxes. My reasoning- The state has, historically, been unreliable as a source for consistent funding for schools (and many, many others). To cap the tax without a way out if the state fails to uphold it’s commitment could be an even greater disaster.

There should be some out clause for schools etc. if funding does not come through. I would prefer no mandatory cap, allow local government to make good decisions. If the do not, the voters can make a change.

= Most municipal property tax growth has been tied to pension levies=

That statement may be true if you are applying it to city/county government. It is not true for schools.

Comment by JS Mill Friday, Jun 3, 16 @ 1:47 pm
1:45pm was I

Comment by RNUG Friday, Jun 3, 16 @ 1:52 pm
Thanks for the reality check on the stats, Rich.

Comment by James Knell Friday, Jun 3, 16 @ 1:52 pm
== = Most municipal property tax growth has been tied to pension levies=

That statement may be true if you are applying it to city/county government. It is not true for schools. ==

When 90% of my tax bill is for various schools, that is where you attack the problem.

Comment by RNUG Friday, Jun 3, 16 @ 1:53 pm
Keep your collective heads in the sand. Illinois is in a death spiral that higher taxes won’t cure.

Comment by Tone Friday, Jun 3, 16 @ 1:56 pm
@RNUG- I agree with yor statement on the percentage of your tax bill that goes to schools.

The statement about the pension made by a previous poster, as it applies to schools, is still wrong.

Tier 2 has caused our pension payment to decrease.

Not every district has had as many retirements followed by replacement with Tier 2 personnel as we have, and some may have more.

Salaries and benefits are the single biggest driver of our budget since we mostly spend on people. Yes, the pension is a part of that but health care cost increases have outstripped the increases in any other category. We share the increases with our staff, but that has been the area of greatest increase. I feel confident most schools would tell you the same thing.

Comment by JS Mill Friday, Jun 3, 16 @ 2:00 pm
=Keep your collective heads in the sand. Illinois is in a death spiral that higher taxes won’t cure. =

And you go ahead and stay under your bridge.

Comment by JS Mill Friday, Jun 3, 16 @ 2:01 pm
=== economic reforms ===

As Rich noted quite succinctly, the ROI on such “reforms” is minuscule at best. And, by ROI, we’re referring strictly to new revenue that may occur as a result of those changes.

Then there’s the so-called ROI as it relates to the lives of working people - lower wages, diminished quality of life, likely loss of jobs to out-of-staters willing to work for far less, fewer workers eligible for workers’ comp, etc. Any consideration of the supposed ROI must account for the impact on real people’s lives. But the governor doesn’t/won’t talk about that.

Generic “reform” sounds dandy and it polls well. What doesn’t poll as well is obliterating organized labor, decimating worker protections under workers’ comp, cutting wages (and putting Illinois workers at a competitive disadvantage) by repealing prevailing wage, and suppressing worker wages by making it far more difficult for individuals to organize and collectively advocate.

It’s real simple: Why wasn’t the governor straight about his intentions during the general election campaign, and why isn’t he being straight about them now? Because people in Illinois, by and large, do not want what he wants. If in fact the voting public was clamoring to crush the unions, etc., don’t you think that’s exactly what the governor would be talking publicly about? Of course he would.

But he’s not. And there’s a reason for that.

Comment by Louis Capricious Friday, Jun 3, 16 @ 2:05 pm
“Keep your collective heads in the sand.”

If you want your claims to be taken seriously, you need to support them with reliable citations or a rigorous logical defense. Don’t just assert your claims, argue for them. Otherwise you’re just engaging in empty sloganeering.

– MrJM

Comment by @MisterJayEm Friday, Jun 3, 16 @ 2:08 pm
I love it, ignore the fact that Illinois has the 4th highest state and local tax burden and it lost 100,000 people to other states last year. Higher taxes will certainly fix it, right?

Comment by Tone Friday, Jun 3, 16 @ 2:09 pm
===the fact that Illinois has the 4th highest state and local tax burden===

You haven’t established that as a fact yet. It’s only an assertion at this point.

Comment by 47th Ward Friday, Jun 3, 16 @ 2:15 pm
==A statistic the article should have also included: Illinois has the fewest state employees per capita of the 50 states.==

How many of those “state” employees in other states are working at the local level in Illinois? For example, my small township has around 20 senior service workers and case managers. At what level are these folks employed in other states, state or local?

Comment by nixit Friday, Jun 3, 16 @ 2:15 pm
At least RNUG has a starting point.
An Ogilvie is badly needed, but it appears only a bone-shaking thrashing at the polls this November (or the loss of the Governor’s personal net worth) will prod the Governor to move in that direction.

Comment by Ares Friday, Jun 3, 16 @ 2:17 pm
Those numbers listed above are a little over the map and not apples to apples comparisons but the general concept is right, we do have a revenue problem, but we also have both a short & long term debt issue. Both in un-budgeted mandated expenditures, pensions & the back-log of unpaid bills.

This is where Madigan & Rauner need to make a deal, but it seems like Madigan is resistant. So what do we do? Just raise taxes and ignore everything else until Madigan finally goes away?

Comment by Ahoy! Friday, Jun 3, 16 @ 2:36 pm
As a percent of income, Illinois taxes do not rate as high.

Comment by anon Friday, Jun 3, 16 @ 2:38 pm
===Keep your collective heads in the sand. Illinois is in a death spiral that higher taxes won’t cure.===

Then leave already! Geez. If I thought I lived in a place that was “in a death spiral,” I would get gone. I think Illinois is a great place to work, live and raise a family. I just wish my government could be functional.

Comment by Ducky LaMoore Friday, Jun 3, 16 @ 2:39 pm
Trying to improve the place. If it weren’t for the city of Chicago, I we would have left a long time ago.

Comment by Tone Friday, Jun 3, 16 @ 3:14 pm
It is a fact that Illinois has the highest property tax, in cook and chicago highest sales and parking in the united states. plus enormous fees and fines which or not counted as “taxes” but effectively are. Our government is bloated and incompetent I do not want pay anymore in taxes to it. I also do not understand this view that its somehow “cheap” to live in Illinois and we have it good here. someone must have forgotten to tell this to the +100K who evacuated the state last year. TX and TN Washington state and others manage to have low taxes why can’t illinois?

Comment by atsuishin Friday, Jun 3, 16 @ 3:14 pm
One heck of an attribute to hang your hat on. Way to go Rauner! Where will we be when at the end of your administration?

Comment by WETHEPEOPLE Friday, Jun 3, 16 @ 3:16 pm
==If I thought I lived in a place that was “in a death spiral,” I would get gone.==

some of us have family ties and cannot leave even though we would like to. Not everyone has the luxury of pulling up the stakes.

Comment by atsuishin Friday, Jun 3, 16 @ 3:29 pm
If this TA hadn’t been slipped in there after he was elected………….Where is the demand for real facts, statistics and support for Rauner’s reforms. Why would anyone agree with his plan if his plan is one big secret?

As to the middle class being overburdened with taxes, isn’t that what a graduated tax would go towards fixing? Isn’t that why the millionaire tax vote overwhelmingly passed? Looking for ways to get more revenue from the same people (who are overburdened now) isn’t going to work. People talk about the millionaires leaving the state? How about middle class people leaving the state? Why no concern about them since they’re paying the bulk of taxes now?

People probably don’t object that much to a fair increase. But working families are stretched. Time for some help from those in a better financial situation.

Comment by AnonymousOne Friday, Jun 3, 16 @ 3:32 pm
Comparing Illinois to other states and then concluding the State does not have a spending problem is fraught with problems. What if a large number of states are overspending? To throw out bullet points like that without digging into the numbers can lead to false conclusions and ultimately some bad decisions. Illinois has a spending problem because it spends more money that it brings in. If I did the same, but so did 50% of the population, could I conclude I don’t have a spending problem? Now solving that spending problem doesn’t necessarily mean the only solution is to reduce spending, but Illinois has a spending problem and how we compare to other states is irrelevant.

Comment by Say no to big government Friday, Jun 3, 16 @ 3:35 pm
===Illinois has a spending problem===

The real problem is that Illinois has a lot of people, especially children, who live in poverty. It has a lot of students who need an education, a lot of people who get sick and need care, a lot of people who get caught up in the criminal justice system, and a lot of people who need government services.

Your handle sort of gives you away, but what you’re really saying is we need to stop helping so many people. Own it.

Comment by 47th Ward Friday, Jun 3, 16 @ 3:42 pm
==Nowhere have I seen Illinois ranked as high as 4th for state/local tax burden.==

Illinois has the highest effective state and local tax burden in 2016. Number one.

https://wallethub.com/edu/best-worst-states-to-be-a-taxpayer/2416/#detailed

Comment by Formerly Known As... Friday, Jun 3, 16 @ 3:54 pm
== An Ogilvie is badly needed, but it appears only a bone-shaking thrashing at the polls this November (or the loss of the Governor’s personal net worth) will prod the Governor to move in that direction. ==

Ares, at this point I don’t think that would be enough. I’m envisioning it will take something out of the 19th century: irate citizens, boiling cauldrons of tar, plus some buckets of feathers and a rail.

Comment by RNUG Friday, Jun 3, 16 @ 3:55 pm
Perdón. Illinois has the highest effective state and local tax rate as of 2016.

State and local tax burden could be lower than first. State and local tax rate is first.

Comment by Formerly Known As... Friday, Jun 3, 16 @ 4:00 pm
Ok, thanks. I’d seen the info on Wallethub and couldn’t decipher it. Your link was helpful.

The non-partisan Tax Foundation may or may not be a better source than Wallethub. It ranks Illinois 5th.

http://taxfoundation.org/state-tax-climate/illinois

And Forbes took a look at Wallethub’s data, then factored in tax rates as a percentage of income by state, and found Illinois ranked 10th highest tax burden.

Here’s a handy chart:

http://blogs-images.forbes.com/niallmccarthy/files/2016/06/20160602_Tax.jpg

Comment by 47th Ward Friday, Jun 3, 16 @ 4:06 pm
Thanks for those, @47th. Another Wallethub one on ==state tax burden==, not including local taxes, has Illinois tenth like Forbes. They might be the same data.

https://wallethub.com/edu/states-with-highest-lowest-tax-burden/20494/

Comment by Formerly Known As... Friday, Jun 3, 16 @ 4:33 pm