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Gov. Quinn’s budget: The tax increase cometh for Illinois

Café Society will meet at Chicago Cultural Center on Wednesday, March 17.

In a 20-minute speech before the Illinois General Assembly on March 10, Gov. Pat Quinn called for raising the state income tax from 3 percent to 4 percent. The increase will be used to fund education and ease other cuts he’s proposing in his new budget. “It might seem easy to close our eyes, cross our fingers and kick the can down the road,” Quinn said to lessen the impact of this announcement. “We can’t do that.”

More bluntly, the governor said the state government is in a “financial crisis.” There’s no argument on that. Illinois faces a two-year budget deficit going into FY2011 totaling at least $12.8 billion, according to an analysis published in January by the Institute for Illinois’ Fiscal Sustainability. That puts Illinois second to California when it comes to budget woes.

With an unemployment rate hovering around 11 percent, Illinois has seen a huge drop in tax revenues, and even the money the state collects from such sources as riverboat gambling is below projections. Currently the state owes the University of Illinois school system $735 million and the Chicago Public School system $475 million.

In laying out his budget proposal, Quinn said he would not sugarcoat the state’s fiscal situation. “The problems we face today are daunting,” he said. “We are in a battle that we must win. We are fighting for Illinois.” Quinn, in fact, titled his 2011 fiscal year budget plan, “Fighting for Illinois.” What that involves, he outlined, is creating jobs, cutting costs and strategic borrowing. In addition to the proposed tax increase, Quinn’s plan includes:

  • Illinois Jobs Now! – the state’s first job creating and capital improvement program in more than a decade, intended to create or retain 439,000 jobs over the next six years.
  • Small Business Job Creation Tax Credit – giving companies with fewer than 50 employees a $2,500 tax credit for each full-time job created over the next year.
  • High-Speed Rail – Making Illinois the high-speed rail hub of the Midwest with $1.2 billion in federal funding for a new high-speed rail corridor to connect Chicago to St. Louis, creating 6,000 Illinois jobs.

The governor’s plan also proposes saving the state $203 million through employee furlough days, renegotiated employee contracts, employee health insurance savings, and additional travel restrictions. He also proposed streamlining the state pension system for new hires, saving approximately $300 million (info is missing) the first year. Quinn proposed cutting services such as home care for older adults, child care and community mental health services by $276 million, and scaling back prescription drug assistance and group health coverage for state retirees.

The governor said that an income tax “surcharge” would help restore Illinois’ education budget to current levels and allow the state to pay some of the millions it owes to public schools, community colleges, and four-year universities. “I challenge the General Assembly to take immediate action to enact the 1 percent for education initiative,” Quinn said. “If we can enact this emergency rescue plan promptly – we can keep 17,000 committed teachers from getting layoff notices in the next few weeks.”

Immediate reaction to Quinn’s budget proposals was swift and strong. Many comments posted on news sites and blogs expressed doubt that any new tax revenue would actually go toward education. People were quick to offer their own solutions to the budget crisis, which they see rooted in mismanagement and corruption. “The tax increase will not go to the schools,” wrote Angry American on the Daily Herald’s website. “It will go to the bloated pension system.” Another Daily Herald commenter, Uncle Ronnie, posted: “Lucky for me and a lot of people, I don’t have job, so raise [taxes] all you want. [Illinois] has 11.3% unemployment, a corrupt government, and is 13 billion in debt. Solution: raise taxes so more people leave.”

Greg Hinz, Crain’s Chicago Business columnist, said Quinn was doing what politicians do all the time, attempting “to scare the bejabbers outta people, to tell them that if a certain program or policy or tax isn’t approved, the heavens will part, small babies will babble and civilization will end.” But Hinz also thinks Quinn’s budget nightmare isn’t scary enough. Even with Quinn’s proposed cuts, Hinz wrote that, “the state next year under his budget still would run up more than $4.7 billion in bills it won’t be able to pay, forcing it to borrow or forcing state vendors to wait still longer. That would make the state’s two-year budget hole around $12 billion, by the Quinn administration’s own estimates. And that is truly scary. I’d like to report that Illinois government is prepared to tackle seriously the financial woes and put the state on the way to recovery. I can’t. Despite promising signs on a few things like pensions, Springfield still isn’t getting serious. Be afraid — very afraid.”

Do you think Gov. Quinn’s budget proposals will help pull Illinois out of the red? Why or why not?What is your biggest concern with Quinn’s budget proposal? As a state citizen, what can you do to improve the budget situation? How can citizens of Illinois become more powerful in influencing budget decisions? Where do you want to see more state dollars spent? If Illinois lawmakers can’t mend the state’s budget, how do you see the outcome affecting you and your community? How can we push for a more responsible budget for the people of Illinois?

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