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