OTHER TAX AND FEE HIKES, AS WELL
In addition to income tax increases, the Governor proposed several other tax and fee hikes for the upcoming fiscal year.
Employers would face $287 million in additional costs through the removal of various tax credits aimed at fostering economic development. I am concerned the move would further weaken the struggling Illinois economy, which lost 175,000 jobs last year and ranks 46th nationally in terms of job growth.
Smokers and drivers would also see higher taxes under Governor Quinn's plan. The tax on cigarettes would increase $1 per pack, motor vehicle fees would jump from $79 to $99, and driver’s license fees would double from $10 to $20.
GOVERNOR QUINN’S PENSION REFORM WOULD CREATE TWO-TIERED SYSTEM
Changes to the state pension system are another highlight of the Governor’s plan.
Governor Quinn is proposing a $3.2 billion raid of the pension system, the biggest shorting of pension funds ever. He is also seeking the creation of a “two-tiered” pension system, with one set of benefits for current members, and another set of benefits for new members.
The two-tiered system would result in significant savings down the road, but Governor Quinn wants to use some of those future savings now – which is troubling to many lawmakers.
Governor Quinn’s plan raises the retirement age for newly hired teachers and state employees from 62 to 67 and reduces benefit formulas for new state hires. Current teachers and state employees would have to contribute more, with an additional 2 percent of their salary going to the pension system.
MORE CUTS ARE POSSIBLE
Because state spending has increased by $7 billion during the last six years, I am disappointed that more of an emphasis wasn’t placed on spending cuts in the Governor’s proposal, which actually increases General Revenue Fund spending by $628 million compared to Fiscal Year 2009.
It is important to note that programs imposed by former Gov. Rod Blagojevich, such as subsidized healthcare coverage for families making up to $80,000, were largely left untouched.
PLAN INCLUDES CAPITAL CONSTRUCTION PROGRAM
A final pillar of the Governor’s plan was a new $26 billion capital construction program to update and expand Illinois’ infrastructure, including roads, bridges, highways, schools and mass transit networks.
It has been a decade since Illinois last had a capital program.
Last week Republican legislative leaders called for action on a statewide capital investment plan to create jobs and address the state’s transportation and construction needs.
On March 11, Senate Republican Leader Christine Radogno of Lemont and House Republican Leader Tom Cross of Oswego said they want to initiate negotiations between the four legislative caucuses to generate a bipartisan package that could be supported by the Governor and lawmakers from both parties.
They said any allocations from a capital plan must be fair to all areas of the state, the projects should be based on the needs of the state, and any projects that have been promised must be funded.