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Illinois is leaving money on the table with structurally unsound tax policy

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Illinois is leaving money on the table with structurally unsound tax policy


The Illinois General Assembly just enacted a $55.2 billion General Fund budget for the upcoming 2026 fiscal year. A sizable chunk of that budget, $16 billion, covers mandatory spending obligations Illinois is required to pay either by law, such as debt service owed to bond holders, or contract, like health insurance for state workers. That leaves around $39 billion for services, over 94% of which goes to education, health care, social services and public safety, the core services families rely on across Illinois.

Most of the commentary since the budget passed has highlighted one of three things: what the incremental increases were for various items, like the state’s school-funding formula, which got $307 million instead of the $350 million originally proposed; what got cut, like $330 million in health care for noncitizens between the ages of 42 and 64; or what didn’t get addressed at all, like the $771 million fiscal cliff facing the Regional Transportation Authority. Certainly, this short-term stuff matters. That said, it doesn’t paint a complete picture of state finances.

For instance, while the $307 million bump for K-12 is welcome, the shortfall in what the evidence shows every school needs to provide an adequate education to all students will grow from $2.6 billion this year to $2.7 billion next year. Meanwhile, fiscal year 2026 appropriations for higher education will be around $2 billion, or 42% less, in real, inflation-adjusted dollars than they were 26 years ago. In fact, while year-over-year spending will increase slightly, total FY 2026 General Fund appropriations for the four core services are 12% less in real, inflation-adjusted terms than they were back in FY 2000.

Despite cutting real spending on services for decades, the state still couldn’t balance its FY 2026 budget without bumping a number of taxes and fees by $482 million, sweeping some $237 million from other state funds, not making a $171 million scheduled transfer to the Road Fund, and creating a tax amnesty program to raise a quick $228 million.

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So why does Illinois, which has an economy of over $1 trillion, the fifth largest of any state, have to manufacture a combined $1.1 billion in revenue to balance its budget, even though real spending on services will be less next year than at the start of this century?

No short-term budgetary analysis will explain that. However, a review of the long-term data does. And that data shows the Illinois General Fund has a structural deficit. A structural deficit exists when over time, tax revenue growth doesn’t support the inflationary cost of maintaining the same level of public services from year to year. The long-term data also shows that flawed tax policy caused this structural deficit, and those policy flaws are clear: Neither of Illinois’ two primary revenue sources — the income and sales taxes — are designed to respond to the modern economy. This has created a tax system that’s both unsound and unfair.

Start with the Illinois sales tax, which applies primarily to purchase of goods, not services. That’s a losing proposition, given that the sale of goods accounts for just 17% of state gross domestic product, while the sale of services accounts for 74%. Failing to levy sales taxes on most of the largest and fastest-growing segment of the economy means the revenue it generates can’t grow with the economy. Fixing that requires assessing the Illinois sales tax to the purchase of all consumer services, like neighboring Iowa and Wisconsin do. That reform would generate over $2 billion in new revenue.

Then there’s the income tax, which is supposed to create some tax fairness and respond to how income growth is actually shared among taxpayers over time. Since 1979, the real incomes of the bottom 10% of earners has declined. Folks in the middle realized a modest 8% growth in income, while the wealthiest 10% saw their incomes jump by 30%. So to respond to reality and tax people fairly, the income tax should vary with ability to pay, by imposing higher tax rates on higher levels of income and lower rates on lower levels of income.

Except the Illinois income tax can’t, because the state Constitution requires utilization of only one, flat rate. To fix this, the state’s flat income tax rate should be increased by 1.5 percentage points, to 6.45%. That’s enough to generate about $4.4 billion in net new revenue, after covering the cost of implementing a new, refundable tax credit to offset the impact of the aforesaid tax increases on low- and middle-income families. Collectively, these reforms would eliminate the structural deficit, while simultaneously making state tax policy fairer for people.

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Bottom line: Getting Illinois’ fiscal house in order is the only way to fund core services sustainably over time, and getting there requires aligning Illinois tax policy with today’s economy.

Ralph Martire is executive director of the Center for Tax and Budget Accountability, a nonpartisan fiscal policy think tank, and the Arthur Rubloff professor of Public Policy at Roosevelt University.

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Produce Recall Issued In Parasite Outbreak Hitting IL

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Produce Recall Issued In Parasite Outbreak Hitting IL


A number of Taco Bell locations have posted signs announcing they are “currently unable to sell Lettuce, Cilantro Onion, Pico de Gallo, and Guacamole due to a nationwide recall,” according to Detroit-area news radio outlet WWJ.

Taco Bell told the Post it would keep monitoring the situation and follow authorities’ guidance.

Taco Bell Lettuce Linked To Growing MI Parasite Outbreak: FDA

“Public health officials have not confirmed a link to Taco Bell or any specific ingredient, supplier, restaurant or retailer,” the company told the Post. “While authorities continue their broader review, Taco Bell has voluntarily and temporarily removed limited ingredients at select restaurants as a precautionary measure.”

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In Michigan, where cases have been concentrated, media reports said notices were posted at some Detroit-area Taco Bell restaurants last week telling customers the chain was “currently unable to sell Lettuce, Cilantro-Onion, Pico de Gallo, and Guacamole due to a nationwide recall.”





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Illinois GOP trails badly in midterm cash

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Illinois GOP trails badly in midterm cash


The Illinois Republican Party filed its quarterly campaign finance report on the July 15 deadline. The party reported having just $223K in the bank. The next day, the party sent a letter to the Illinois State Board of Elections saying they were “reconciling” their records after a leadership change, and then noted that their actual end balance was $101K higher than it had reported the day before.

But that bit of found money was basically the end of the “good news” for the GOP last week.

Republicans no longer have a pet billionaire. Bruce Rauner and Ken Griffin have fled the state. The legions of wealthy business titans who once contributed and raised money have either retired to sunnier climes or passed away. Several prominent party members have publicly shunned labor unions and their hefty political war chests, although the state GOP legislative leaders have at least tried to rebuild ties to trade unions and even the Illinois Education Association. But the heavily gerrymandered legislative map combined with the current political climate means they’ll mostly receive scraps.

And, yes, the House Democrats are struggling this month with scandals, including a state representative who resigned under pressure and another who was indicted. I’m not trying to downplay that at all. But Democrats have the national political environment, the local infrastructure and tons of cash behind them. The Republicans have little to none of that.

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The GOP’s gubernatorial candidate, Darren Bailey, raised $1.3 million in the second quarter, which ended June 30. That sounds like a lot, but he spent almost all of that on direct mail fundraising costs. The huge expenditures do give him a prospect list for future fundraising, but he ended the quarter with a mere $128K in the bank. That was still a whole lot more than the rest of the statewide ticket.

Attorney General nominee Bob Fioretti, a perennial candidate, raised $31K, spent $39K and had $28K on hand at the end of the quarter along with almost $15K in recent debt. Secretary of State candidate Diane Harris raised $6K, spent a bit over $4K and had a paltry $1,816.42 in the bank. Treasurer candidate Max Solomon, who ran as a write-in during the primary because the party failed to recruit anyone, raised less than $3K, reported no spending and ended the quarter with less than $8K. Comptroller candidate Bryan Drew raised $30K and received $47K in in-kind contributions from a company owned, ironically, by independent gubernatorial candidate Collin Corbett, spent less than $3K, ended with $54K and had $25K in debt from earlier this year.

Man, that’s just downright pathetic.

But I suppose it doesn’t really matter anyway unless we see a massive sea-change in national opinion in the coming months or the federal government finds a way to not certify certain election results. Regardless of where individual candidates are at this moment, they’ll have the money to compete. Unlike the Republicans, the Dems do have a pet billionaire (JB Pritzker) and, I assume eventually for most of them, organized labor.

The Republican legislative leaders have tried to scrape and claw as much as they can, but they’re vastly outgunned. Senate Republican Leader John Curran raised just $75K in the second quarter. He spent $71K and reported having a bit more than $3 million in the bank. His caucus committee reported having $160K in the bank.

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Leader Curran has three Republican-held districts to defend in the Chicago media market that have all trended Democratic in the last three cycles. Depending how bad things get, he could be defending a couple, two or three more.

The Senate Democrats have a ton of money to do whatever they want. Senate President Don Harmon has about $20 million in his personal campaign account and $1.7 million in his caucus account.

Over in the House, Republican Leader Tony McCombie has at least four Democratic-trending or swingy districts to defend and just $1.3 million in her personal campaign account and another $363K in her caucus account so far.

In contrast, House Speaker Chris Welch had $11.4 million in his personal account and $1.2 million in his caucus account. Like Senate President Harmon, he has more than enough money already, but more is never enough when there’s so much out there, so those numbers will likely rise by November.

Rich Miller also publishes Capitol Fax, a daily political newsletter, and CapitolFax.com.

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Hillsboro grad, Springfield golfer Alex Eickhoff 2nd at state amateur

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Hillsboro grad, Springfield golfer Alex Eickhoff 2nd at state amateur


BLOOMINGTON — Springfield’s Alex Eickhoff nearly had a magical Thursday as he tied for second place in the 95th annual Illinois State Amateur Championship at Crestwicke Country Club.  

Eickhoff, a 2020 Hillsboro High School graduate and former standout on the Southern Illinois University Edwardsville’s men’s golf team, shot a 4-under-par 68 in Thursday’s third round and followed that with an even-par 71 to finish the three-day, four-round event 1-over 285. He tied for second with Bloomington’s Logan Stauffer.  

Eickhoff briefly took the lead through nine holes of his fourth round when he sat at 1-under par. Chicago’s Charlie Kulwin finished both of Thursday’s rounds under par and finished 2-under 282. He was the lone golfer to finish under par for the tournament.

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Eickhoff was The State Journal-Register’s Small School Boys Golfer of the year twice in his high school career: once as a freshman in 2016-17 and again as a senior in 2019-20. After high school, he golfed for the University of Minnesota for two years before transferring to SIUE.  

He began the tournament with a 3-over 74 on Tuesday and shaved off a stroke Wednesday with a 2-over 73. He closed out the event with an even-par 71 in Thursday’s final round.

Other area golfers who made the cut were Springfield’s Charles Hoogland (7-over 291, tied for 20th) and Jacksonville’s Brady Kaufmann (8-over 292, 25th). 

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The last golfer from The State Journal-Register’s coverage area to win the Illinois State Amateur was Jay Davis. Davis, a Jacksonville Routt graduate, won the 1991 and ‘92 tournaments. 

Contact Ryan Mahan: 788-1546, ryan.mahan@sj-r.com, Twitter.com/RyanMahanSJR.





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