Time to Repeal Illinois Tax Hike

One year anniversary of Illinois income tax hike has Sen. Johnson looking for more long-term solutions

January 13, 2012

One year ago, the Democrats in the Illinois Legislature pushed through a 67 percent, $7 billion tax hike that will cost every working Illinois family a week’s pay every year.

“Unfortunately, we have little to show for the largest tax hike in Illinois’ history,” said State Senator Christine Johnson (R-Shabbona).

“A year later, our unemployment has gone up and as of November was 16 percent above the national average, business has gone down, and billions of dollars in unpaid bills remain. To sum it up, the tax increase did not work and it is time to repeal it.”

With state finances crumbling, Democrat leaders pushed the 2011 three-year tax hike as a way to pay off old bills and resolve the state’s financial problems. However, Johnson said the legislature continued to spend like the increase was permanent leaving Illinois little room to improve our financial situation.”

Last week Gov. Quinn released budget projections showing that instead of generating a surplus, the Fiscal Year 2012 budget still spends more than state takes in. In fact, according to the Governor, Illinois will still see a $500 million shortfall at the end of this fiscal year—not including $2 billion in deferred obligations according to Sen. Johnson.

Looking forward, Quinn’s projections indicate that in the year the tax increase will expire, the state is on target to spend $800 million more than available revenues.

“By continuing to overspend, the state’s Democrat leaders are building expenses into the state budget that will make it more difficult to phase out the increase,” Johnson said.

Currently the Governor’s Administration estimates a $7 billion bill backlog, while the Comptroller says it could be as high as $8 billion.

“Even after the massive hike the state still cannot pay its bills. Right now it is taking the state an average of 75 days to issue repayments to our Medicaid providers. It is unfair to keep trying to balance the budget on the back of these providers and other Illinois employers who are suffering massive losses because they cannot get paid on time,” Johnson said.

The tax increase falls just a week after Moody’s Investment Service downgraded Illinois credit rating to A2 making it the lowest-rated state in the nation. Only one state, California, qualifies for the next-highest rating A1. All the rest are ranked higher.

Besides the income tax, high corporate tax burdens influenced major employers like Sears and the Chicago Mercantile Exchange to threaten to leave the state if special incentives were not offered.

Despite the bleak outlook, Sen. Johnson said it is not too late to save the state.

“While Illinois may be broke fiscally, we are rich in resources and hard-working people. Our Republican caucus has a plan to utilize these assets to jumpstart our state into an economic comeback,” Sen. Johnson said.

The plan, called “Reality Check” was created last year as an alternative to the Governor’s budget proposal. The proposal contains a menu of more than $6.5 billion in spending cuts and revenue generators that the senator said would enable the state to bring the budget into line with available revenues.

“It is my hope that we will successfully repeal the increase this spring and implement a more long-term solution to our budget crisis so in a year from now Illinois families will have a $1,000 more in their pockets instead of $1,000 less, like they do today,” Johnson said.

Contact: Whitney Schlosser
217.782.4288
Wschlosser@SenateGOP.state.il.us

Office of Senator Christine Johnson

About Office of Senator Christine Johnson

Christine Johnson is State Senator for the 35th District. Johnson was appointed DeKalb County Treasurer in 1994 and won five elections to keep that job. She was appointed to the Illinois Senate to replace Brad Burzynski in February 2011. She graduated from Northern Illinois University in 1983 with a degree in journalism and public relations.
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17 thoughts on “Time to Repeal Illinois Tax Hike

  1. Re: pension program.

    As a retiree I can give you numerous reasons why it is not the pension system, rather the State that did not live up to their end and took money from the “pot” of retirement payments.

    Even more importantly, the employees had no choice to but be in the pension system. We never paid into Social Security. I worked for over 34 years and was promised from day one of employment certain things. Two of those being pension and insurance assurance. The pension payment is based on a percentage of my wages based on the number of years of employment.

    The State of IL has a long list of crooks who have raided our pension too many times to count.

    I spent 34+ years of service to the community…. dedicated and hard working. Now, in my senior years, it is not fair to try to eliminate our pension system… we had no choice in joining and PAID into it. This was not a pension that was paid by the employer… we paid. It was the State that has failed to pay in their portion.

    As of January 1, 2011, pensions for NEW employees were modified. That is fine, they knew from the get-go what changes there were in the system.

    Pick on somebody else… like making State officials responsible for their actions.

    • I ‘subsidize’ Social Security because it gets yanked out of Job #3 and I already qualified with enough ‘quarters’ from previous employment. But, if I get a state pension (assuming it is not obliterated by the time I retire), I will not get to collect Social Security because it will be offset.

  2. Illinois needs to get rid of the public pension system immediately for ALL new hires…PERIOD. The pension system and the “GIVE ME” mentality that goes along with it is the reason we are in this mess!

    • Fine–then give me back the $85,000+ that was yanked out of my paycheck for the past 21 years towards a pension and we can call it even. I would have my house paid off by now and I could be setting something aside myself. Instead, I currently have a full-time job and three part-time jobs to supplement that. 35% of my paycheck is gone before I get it.

  3. Don’t you remember that Rockford was the machine tool capital of the world? Their jobs and even their machines were moved abroad. Why are we evolving into a service economy, because of faulty trade policies. India has a 40% tariff on our goods we have a 2% tariff on theirs’. China manipulates its currency to our detriment. Walgreens sent 150 accounting jobs from Deerfield, Illinois to India. The Ugland House in the Cayman islands has 18,000 P.O. boxes of corporations registered there to avoid U.S. taxes. The code word excuse that corporations use for outsourcing is “to remain competitive”. However, they just want to enrich their CEO’s and make as much money as possible for the stockholders at the expense of our country. There is a greater demand for county services than ever. The Dekalb county share of the tax burden in Dekalb is 13%. You should talk to the school board, the City of Dekalb, and Cortland if you are concerned about taxes. It is their poor decisions such as the dense housing development on the west side of Dekalb, the building a subdivision and school next to the landfill, and the overbuilding of the new high school that has cost us. The unwise development has negatively impacted the county budget Years ago, Cliff Simonsen preached about how the existing homeowners were subsidizing the new developments. It took too long to implement impact fees in Dekalb and even longer for Cortland to figure it out. I doubt impact fees cover all the real costs. Communities make the mistake of bringing in too much residential growth. It is a money loser. Commercial and retail growth are what communities need more of.

    • I’m not going to defend corporations, their CEOs or their stockholders. But tell me the impact increasing Illinois’ income tax by 67% has on the 18,000 PO Box holders in the Cayman Islands? I think I might be reading an excuse for raising taxes.

      Ummm, the landfill. Yup. The Town of Cortland sold its corporate police powers. Yup. The school board assured the Town of Cortland that they would build an elementary school on the site adjacent to a landfill in exchange for support for the referendum. The, uhhh, county board had something to do with that ordeal, too. (you didn’t have anything to do with that).

      Yup the high school was overbuilt and taxpayers were lied to.

      And finally, re: growth. We need to stop our economic development efforts or completely revamp them. DeKalb County is growing as an investor’s graveyard because with one hand tied behind our backs so they can’t see our fingers are crossed we keep telling commercial developers to bring their clients in here because we are a community on the come, meaning people are or will be moving here soon. We do not have the rooftops needed to support the retail base we have and if we do not want residential growth it is a terrible investment to site a new retail store in this county.

      • First Christine Johnson said, “That we didn’t get anything for our tax increase.” It helped pay many of our overdue State’s bills! That certainly was something. I don’t think we need an excuse to keep the State solvent. I didn’t know we had a shortage of housing here. I don’t believe that there are projections that the population will increase dramatically in this area. I think that the depression that has hit the middle class has reduced demand so that many businesses have to think twice before expanding.
        Those corporations that are avoiding taxes in the Cayman Islands should be located in the U.S. and paying federal and state taxes. Some of which I believe used to be located in Illinois.

        • Considering the foreclosure pandemic I should have more clearly stated, “we do not have enough occupied rooftops…”

          And another think: The debt abatement tax rate for the $110 million bond was projected on the basis of $60 million in new construction each year for the entire term of the debt ($20 mil EAV). Taxpayers were sold on the come, too, I guess.

  4. Mac,
    As a member of the city ‘s financial advisory board you did make precise recommendations for cut backs and indicated their dollar value.

    Can you do the same for the state? I’ve asked local legislators to do so and once actually got back a reply cutting programs that would save maybe 10% of the deficit.

    What specific programs would you cut and at one savings — prisons, medicaid, higher education, support to secondary and primary education, state police etc.

    Anyway, rather than just say cuts are needed show us where non trivial cuts can be found. Yes, the various small legislative ear mark programs can go but in total the some is small in contrast to the size of the deficit.

    I’ve actually shared a few ideas with state officials, though admittedly the sums were quite small and often involved ending tax expenditures

    • There’s no need to cut programs if we cut the corruption. There’s no room for the greedy in good government. The most compounding deficit is in public pensions. Confront the issue of pension loophole exploitation by public servants assisted by professional consultants. If the Illinois Constitution is to be manipulated to protect such selfish gains from being reduced then tax the hell out of it. But fix it before borrowing any more money to pay another dollar of public pension abuse. The savings will be enormous and the reduction in debt obligation will provide more in operational revenue.

      Abuse isn’t limited to pensions. I’ve heard figures as high as 15% of our operational budget is wasted to corruption. That’s a worthy goal for elimination. It deserves our best collective action.

      And the budget is not the only benefactor of ending the culture of corruption in Illinois. The more people given equal opportunity the more contributors we have. There are no stakeholders unless we are all stakeholders.

      Another area in need of investigation is consolidation and centralization of administrative support services through technological advances. I believe there is potential for substantive savings there, without cutting programs.

      The reorganization of some programs might harvest productive results. We have brand spanking new but already abandoned prisons in Thomson. Abandoned youth centers in St. Charles. And no. or little, facilities for the mentally ill. No long term half-way housing. I’m thinking spending the same dollars differently in that area might also be beneficial to far more than the budget.

      • Dump all the ‘patronage’ employees in state government hired because they know somebody instead of something. Stop handing out pay raises to the politically connected. Stop overpaying contractors for work because they previous passed out campaign donations. Dump the tuition waivers passed out to the politically connected parents of college students (Pritchard is one of a just a few who gave out those waivers through a committee but too many others gave them out as ‘patronage’ to campaign donors.)

        Erase the favors Blago and others passed out.

        The corruption tax in Illinois is at least 10%. Cut out that nonsense and there would be enough money for what we need without raising taxes.

  5. If solving Illinois’ financial problems were easy Republican governor George Ryan would have solved them. We have had a shrinking tax base for years. Motorola and Maytag are just a couple of companies that shipped Illinois jobs abroad. Multinational corporations haven’t created jobs here but in Asia and they have kept the profits offshore.We also have corporations demanding corporate welfare at a time the need for services are greater than ever. So who do you throw under the bus? The elderly, the sick, and veterans? Pat Quinn did the only thing he could do, raise revenue. It is a courageous politician these days willing to raise taxes. The federal government isn’t going to raise taxes on the wealthy and corporations. The middle class is under attack and Republicans want to balance budgets on the backs of the poor and the endangered middle class. Many formerly middle class workers have become the working poor due to corporate efforts to drive down wages in this country.

    • So what did Democratic Gov. Blagojevich add to the issue? And there was something else Gov. Quinn could have done but so far hasn’t: Reform. That’s what his political career was self-promoted on. Increasing revenues (taxes) is not reform. That’s Standard Operating Procedure. End the culture of corruption in Illinois. That’s reform. Blow the whistle. Kick the greed out of our government. That’s courage. Raising taxes isn’t courageous. It’s mediocrity exploited. It’s the laziness of status quo plus step raises and COLA. It is far more courageous to hear the voices of your constituents above the choir of paid professionals urging an elected county board member, for example, to protect the status quo in government finance.

      • We are now feeling the impact of 30 years of Reaganomics and the deindustrialization of America. Our tax base is being outsourced and the demand for services has increased as many in the middle class have become the working poor. Governor Quinn is courageous and a reformer. Does he have a magic wand, NO? If you equate maintaining services as protecting the status quo, I plead guilty. However, as a board member I have no vote on our broken criminal justice system that is costing us a fortune. Illinois has 50,000 prisoners only 33,000 “beds.” The county has 140 prisoners only 90 beds. I have no control of a health care system that is strangling government and business in America. I obviously have no say regarding our failed national tax and trade policies. For the record, there are a lot of good things that the county does, it isn’t all bad. Dekalb County has a healthy rainy day fund. By the way, I listen to the staff but in the end I do what I believe is right. It is very easy to find simple answers to difficult problems when one is only a critic.

        • The deindustrialization of America occurred more as a result of technological advancements that reduced labor costs (and jobs) more than political policy. We have evolved from a manufacturing economy to a service economy. However our tax structure is still based on the antiquated economic model. It needs to be restructured to the service economy we now live in. Restructuring is not what Ralph Martire was proposing with his HB755 BS.

          Gov. Quinn has my special attention. As Lt. Gov. he billed himself as the real reformer. He even helped those of us who wanted a 20 year Con Con. The Big Money hired Axelrod to defeat the constitution convention question. But I thought Quinn was a fighter we needed. Since being elected he has done far more to protect his stakeholders than his constituents. To this point.

          I do agree that the County does a lot of good things but I wouldn’t highlight a healthy rainy day fund when there are people losing their homes and their tax bill was a contributing factor.

          I don’t equate maintaining services as protecting the status quo, Protecting status quo is protecting those that got theirs even above the needs of those in the middle class who’ve joined the working poor and the poorer souls that were displaced when they did.

    • Ryan was not interested in solving real problems because that would have meant shaking up the status quo. He just looked the other way and claimed there was simply a “culture” in state government. There were projects in Illinois under Ryan, because he had a different set of people who needed overpaid jobs than Blago’s set of people who needed overpaid jobs.

      It is time the politically connected get thrown under the bus.

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