Ep. 67: These 3 things could fix Illinois in 2023
This week’s Policy Shop is by Bryce Hill, director of fiscal and economic research at the Illinois Policy Institute.
Today the 103rd Illinois General Assembly will be inaugurated. With new lawmakers in place, what are the laws they should enact to make life better for Illinoisans? Spoiler alert: Lower taxes wouldn’t hurt.
1) Commit to no new taxes and no tax hikes. Lawmakers can start by alleviating Illinoisans’ pain at the gas pump. While gas prices have fallen from their peak in Illinois, bad policy keeps gas prices the highest in the Midwest. It didn’t help when Gov. J.B. Pritzker doubled the gas tax in 2019 and implemented automatic annual increases. As a result, Illinoisans pay the second-highest gas taxes in the nation.
Pritzker also delayed the 2022 gas tax hike after the November election, so Illinoisans will see two gas tax increases this year. The first hike hit on New Year’s Day, worth about 3 cents, and the regularly scheduled hike will follow on July 1, 2023. Together, the increases are expected to raise the state’s gas tax to more than 44 cents per gallon.
2) Enact a spending cap and a true balanced budget requirement. Some long-term solutions to Illinois’ budget woes? Remove the politics from budgeting: Tie growth in government spending to growth in Illinois’ economy. A spending cap will give lawmakers a reasonable idea of what growth in revenues should look like so they can plan their budget accordingly.
With lawmakers budgeting the same way everyday residents do at home, Illinoisans could rest assured they’re getting a state government they can afford.
Another budgeting tool is a true “balanced budget” requirement that means lawmakers end the fiscal year with balanced books. Illinois’ current system only requires prospective balance, meaning lawmakers only have to declare their proposed budget for the upcoming fiscal year is balanced in order to meet the requirement. This doesn’t make any sense compared to how good budgeting should be done.
Take the pension reform example: while Illinois’ $140 billion in unfunded pension liabilities in the five state retirement systems eat at the state budget, local governments are accountable for approximately another $70 billion in local government pension debt, which consumes significant chunks of property tax dollars. Adopting a hold-harmless pension reform plan would uphold the state’s pension promises to current workers and retirees and allow for adjustments to future benefits. This could put the state’s financial affairs in order and help offer property tax relief.
Meanwhile a property tax freeze would limit local governments subject to the Property Tax Extension Limitation Law from increasing property tax extensions (total tax bills), unless they received voter approval.
4) Cut down on business regulations – To make doing business in the state better, Illinois needs to cut back on its more-than-double the national average of business regulations. One clear step is to create a sunset commission designed to identify regulations for repeal.
Small businesses are the lifeblood of Illinois, and alleviating pressures on them is a must when it comes to attracting new jobs and signaling Illinois is open for business. Businesses with fewer than 20 employees are the only companies that saw job growth after the pandemic hit.
Despite small businesses’ contributions to the state, Illinois’ leaders reward them by subjecting them to more regulatory hurdles than other states. Illinois has the third-highest number of state regulations with 278,475 individual restrictions and requirements, more than double the U.S. average. Many Illinoisans who try to start businesses never make it to opening their doors when compared to other states, indicating there is something unique to Illinois’ regulatory process that is holding them back.
Trimming Illinois’ costly regulations would free up resources that small business owners could use to reinvest in their businesses.
This legislative session promises to be a busy one: it’s time lawmakers put taxpayer priorities first. Get this session off to a good start by calling, emailing or contacting your lawmakers to tell them what taxpayer priorities you’d like to see them take up.