AROUND THE DISTRICT
I was pleased to be able to attend the Illinois Partners for Human Service (IPHS) Legislative Dialogue January 26 at Advocates for Access in Peoria Heights.
State lawmakers and the CEOs/Executive Directors of the IPHS member organizations discussed a number of issues, including the restructuring of the state’s debt and what late payments mean to state vendors; redesigning the Illinois Department of Human Services; and state and federal Medicaid reform efforts.
‘STATE OF STATE’ WILL OFFER INSIGHT INTO QUINN’S PRIORITIES
The annual “State of the State” address February 1 will offer insight into Governor Pat Quinn’s priorities for the upcoming legislative session.
The State of the State address allows the Governor to give his assessment of the prior year and lay out his agenda for the year ahead. Frankly, Illinois faces a number of daunting challenges that will require decisive leadership and action. The “tax-and-spend” policies of the recent years have left Illinois in shambles.
State budget forecasts recently released by the Quinn Administration and Comptroller Judy Baar Topinka underscore the importance of addressing Illinois’ multi-billion dollar deficit and burgeoning backlog of bills. But while the state’s budget woes remains a top priority for lawmakers, media reports indicate the Governor will likely turn his attention to other important—and contentious—issues like public pensions, taxes, and the Medicaid system.
We need specific strategies, not just rhetoric about how the Governor will achieve the goals he stated earlier this year – his plan to hold education and healthcare spending level through Fiscal Year 2015; his pledge to allow the 67% income tax increase to expire as scheduled; and the spending cuts he will support to avoid the $800 million deficit his budget office projects in 2015. The people also deserve more information about how he intends to tackle Illinois’ Medicaid and pension system obligations.
I am especially interested in how Governor Quinn will convince his fellow Democrat leaders to finally end the scandal-ridden Legislative Scholarship Program. I have sponsored legislation to abolish the program, and many of my colleagues have said they will no longer participate in the program.
ILLINOIS HAS BIGGEST DOWNWARD SHIFT
Pressure to eliminate the tax hike increased during the week with the release of the Tax Foundation’s 2012 State Business Tax Climate Index. The national, widely-respected organization revealed Illinois saw the biggest downward shift of any state, falling from 16th place in 2011 to 28th place in 2012.
Though the state’s 67 percent income tax hike undoubtedly contributed to the drop, Illinois is a high-tax state in other areas. According to the Tax Foundation, the state ranks as the fifth worst in business taxes, the seventh worst in unemployment insurance taxes and the sixth worst in property taxes.
The Tax Foundation highlighted the important role taxes play when it comes to a state’s ability to attract and retain employers. The report noted that, “States do not institute tax policy in a vacuum. Every change to a state’s tax system makes its business tax climate more or less competitive compared to other states, and makes the state more or less attractive to business.” The Tax Foundation emphasized that when higher taxes cut into profits the cost is passed on to consumers—through higher prices, employees—in lower wages and fewer jobs, or shareholders—in lower dividends or share value.
According to the Tax Foundation report, “evidence shows that states with the best tax systems will be the most competitive in attracting new businesses and most effective at generating economic and employment growth.” The Tax Foundation pointed to former Governor Rod Blagojevich’s controversial gross receipts tax (GRT) proposal, emphasizing that hundreds of millions of dollars in capital investments in Illinois were halted until the GRT bill was overwhelmingly defeated.
The Tax Foundation also noted that while a state’s tax burden is not business’ only consideration when it comes to establishing a presence, it is undoubtedly a compelling one. The report pointed to the recent business tax credits that were approved by Illinois lawmakers in late 2011. The costly credits were negotiated after desirable Illinois companies, including Sears and the Chicago Mercantile Exchange, threatened to leave the state citing the burdensome cost of the state’s new corporate tax increase.
‘REALITY CHECK’ OFFERS ALTERNATIVES
I have long been an advocate for state budget reforms and spending cuts as a way to meet Illinois’ fiscal obligations and roll back the Democrat’s 67 percent tax increase as scheduled. The Tax Foundation notes that “unlike changes to a state’s health care, transportation, or education system…changes to the tax code can quickly improve a state’s business climate.”
I am willing to work with the Governor and Democrat legislative leaders to right Illinois’ budget wrongs. In March 2011, the my fellow Senate Republicans and I introduced a “Reality Check” budget proposal that outlines ways to reduce state spending, return the state to solvency, and roll back the 2011 tax hike.