Illinois Tax Increase Awaits Governor Sign-Off
January 13, 2011
CHICAGO - Illinois is joining the more than 30 states that are using tax increases to balance recession-damaged budgets. That has many human services providers sighing in relief. With the state facing a $15 billion budget hole and a backlog of unpaid bills for hospitals and social services, Kathy Ryg, president of Voices for Illinois Children, is glad the state now has a stable source of revenue.
However, Ryg also points out that thousands of Illinois children would not have lost early childhood education and other services if the legislature had acted sooner.
"The revenue gap did not have to be as large as it is now, and we wouldn't have to continue to look at the draconian cuts that may still be required."
The first version of a tax increase was passed in the state senate more than a year ago, and the new bill squeaked through only hours before the new General Assembly was sworn in on Wednesday. It limits spending growth to 2 percent, temporarily increases the personal income tax from 3 percent to 5 percent and raises corporate taxes as well. Opponents say it will drive businesses out of Illinois, but Ryg disagrees.
"Businesses want a qualified workforce. We get that, as businesses recognize, by investing in children at the earliest stages."
Ryg says investing in education and families creates jobs. She adds that although Illinois taxpayers may not want to dig deeper, polls find them unwilling to cut further when it comes to human services.
John Bouman, president of the Shriver Center, says stabilizing the state's credit line and budget will make Illinois more attractive to business than its neighbors are.
"Illinois, and Chicago in particular, is an excellent market. We continue to create jobs in this state, more than our neighbors do. Our tax rates are not out of line with them."
Bouman, who leads The Coalition for a Responsible Budget, notes that because the tax increase is accompanied by spending limits, new programs are unlikely and there will be more budget cuts. However, he says the steady source of income will help.
"The core programs for senior citizens, for people with disabilities, for people with mental health issues, as well as parks and national monuments, driver's licenses and so on will be more or less protected from a severe budget ax."