March 12th, 2010
Stating that Illinois is facing a financial crisis of epic proportions, Governor Quinn presented his proposed Fiscal Year 2011 budget on Wednesday. He called for a 1% income tax “surcharge” for education, but did not include the revenue from that surcharge in his proposed budget–which is designed to show what will happen if the General Assembly fails to increase state revenues. The recommended income tax increase, according to the Governor’s Chief of Staff, Jack Lavin, would apply to both individuals and corporations and if it goes into effect July 1, 2010, would raise $3 billion for FY 2011. The proposed budget includes about $2 billion dollar in budget cuts, with education funding receiving the largest decrease at $1.3 billion–which is primarily caused by loss of federal stimulus funds. The budget proposal does call for pension reform measures, including a two-tiered pension system for state employees, but no details were provided.
The Governor proposed a $2,500 tax credit for each full time job created at businesses with 50 or fewer employees. The tax credit would be capped at $50 million and according to the Governor’s office, could generate up to 20,000 new jobs.
Click on Governor Quinn’s FY 2011 Budget Summary for more details on the FY 2011 budget.
Tags: Governor Quinn, Income Tax, Tax Increase
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March 12th, 2010
The February 2010 Economic Forecast Report prepared by Moody’s|Economy.com paints a picture of a very slow protracted economic recovery for Illinois. Compared to other U.S. markets, the report asserts that Illinois will experience a “below-average performing economy” and estimates that it may take three to four years for Illinois to return to pre-recession unemployment rates of 5%-6%. Unemployment is projected to reach a high of 11.6% sometime in late 2010.
High unemployment combined with a sharp drop in wages and personal income, have resulted in declining retail sales and consequently, declining sales tax revenues. Without directly referencing HB 174, the report suggests that Illinois could increase sales tax revenues by adopting “a broad-based services tax.” (HB 174 is the Cullerton-Meeks bill proposing both an across the board income tax increase in addition to a sales tax increase by broadening the sales tax base to include certain services.)
On a positive note, the report states that Illinois’ long-term recovery should be bolstered by a more streamlined and efficient manufacturing base, continued development of transportation and distribution hubs, and growth in the financial and professional services industries. Click here, to view the complete report.
Tags: Illinois Budget
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February 26th, 2010
The Illinois Chamber’s bill to simplify reporting requirements for tax incentive programs administered by the Department of Commerce and Economic Opportunity (DCEO) passed unanimously out of House State Government Committee this week. HB 5230 now goes to the House floor for further action. We will keep you posted.
Tags: DCEO, legislation
Posted in Economic Competitiveness, Uncategorized | No Comments »
February 26th, 2010
In a 4 1/2 hour House Appropriations Committee meeting on Tuesday, legislators got an earful about the state’s deficit and what should be done about it. In addition to representatives of the Governor’s Office of Management and Budget and the bipartisan Commission on Government Forecasting and Accountability, the Civic Federation of Chicago and the Civic Committee of the Commercial Club of Chicago presented testimony about the need for budgetary cutbacks. Both organizations have recently issued reports on the state budget deficit with recommendations for getting the state’s fiscal house in order. Lawrence Msall, of the Civic Federation, presented their Fiscal Rehabilitation Plan for the State of Illinois, which pegged the true deficit amount at $12.8 billion. Their proposal calls for cuts in expenditures of at least $2.1 billion, along with pension, state health insurance and Medicaid reforms.Facing Facts
The Civic Federation opposes any new revenue increases without pension reform and spending cuts, but if these are implemented, their plan advocates increasing the individual income tax from 3% to 5%, and the corporate from 4.8% (before replacement tax) to 6.4% (with replacement tax of 2.5% a total of 8.9%). They also call for taxing retirement income and Social Security income, currently exempt, and eliminating a number of corporate tax incentives including the R & D credit and Manufacturers Purchase Credit. The Civic Committee of the Commercial Club, in their report “Facing Facts” believes significant cost savings are possible and that no tax increase should be considered unless the state simultaneously reduces its costs dramatically. Eden Martin, from the Civic Committee outlined pension, healthcare and Medicaid reforms possible.
Tags: House Appropriations Committee, Illinois Budget
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February 26th, 2010
Governor Quinn’s Office of Management and Budget (GOMB) on Wednesday of this week launched Budget Illinois, a web site that will allow Illinois residents to provide feedback on the proposed fiscal year 2011 budget. According to the information from GOMB, visitors to the site will be able to view 2010 revenues and expenditures, actual-to-date and estimated for the balance of the year, as well as estimated revenue and expenditures for fiscal year 2011. The Governor’s office will be reviewing comments received in preparation for his postponed Budget Address, now scheduled for March 10th, at noon. Governor Quinn continues to call for a general income tax increase to address the state’s budget deficit, but has also proposed about $2 billion dollars in budget cuts to education, social services, and public safety.
Tags: Governor Quinn, Illinois Budget, Tax Increase
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