Will Illinois legislators break their promise to reduce taxes?

by Ted Dabrowski and Paul Schumacher In 2011, when Illinois legislators passed the largest income tax increase in the state’s history, they promised to roll back the increase beginning in 2015.  “We have some temporary tax increases that are designed to pay our bills, get Illinois back on fiscal sound footing and make sure that our state...

by Ted Dabrowski and Paul Schumacher

In 2011, when Illinois legislators passed the largest income tax increase in the state’s history, they promised to roll back the increase beginning in 2015. 

“We have some temporary tax increases that are designed to pay our bills, get Illinois back on fiscal sound footing and make sure that our state has a strong economy.” — Gov. Pat Quinn

“The purpose of this bill is to raise enough money so that we can continue to pay our pensions without borrowing the money, to pay off our debt, to have enough money to pay the interest on that debt, and for the first time ever, establish caps on how much we can appropriate. We even are going to change our rules to basically turn over to the minority party the right to dictate whether or not there will be an extra spending over that cap. And it is going to work.”  —Senate President John Cullerton

“…Remember the point of this income tax increase is not to expand programs, not to do brand new things in Illinois state government, it is only intended to pay our old bills and deal with the structural deficit. This is not about new spending. It is about trying to bring ourselves in line with the problems of old debt and of a structural deficit.”  —House Majority Leader Barbara Flynn Currie

Though lawmakers have failed to get the state’s economy on track and to pay down the unpaid bills backlog, they did manage to put their promise to reduce taxes into law. A significant portion of the $7 billion tax hike is scheduled to sunset in January 2015 – the individual income tax rate will fall to 3.75 percent from 5 percent and the corporate income tax rate will drop to 5.25 percent from 7.00 percent.

Unless, of course, they abandon their promise.

The Illinois General Assembly shows no signs of preparing the budget for the inevitable drop in revenues when the tax hike sunsets in 2015. Instead, lawmakers plan to spend more than $35 billion in fiscal year 2014 – nearly $2 billion more than in fiscal year 2013. That total includes a one-time, unanticipated $1.5 billion tax collection. That money could go toward paying down the state’s unpaid bills. Instead, it’s being used to prop up state programs.

Putting even more pressure on the budget is Illinois’ anticipated expansion of Medicaid and the lack of real pension reform.

The General Assembly’s current actions continue a trend of budget failure that began more than 20 years ago and have picked up steam since 2000. As the graphic below shows, Illinois state spending has grown three times faster than the growth of the state’s population plus inflation since 1990 – a major reason why the General Assembly hasn’t balanced its budget since 2001.

The state’s growing 2014 budget is further evidence that legislators have no intention to reform spending.

Illinois has a spending problem, not a revenue problem.

It’s time that legislators are held accountable for how poorly they’ve managed this state’s finances. If not, don’t be surprised to see the temporary tax increase become permanent – and the proposal for aprogressive income tax hike to follow.