When Illinois Republicans aren’t downplaying the size
of the state’s budget deficit, they’re busy rolling out their own
proposals on how best to close the gap. Case in point: House Minority
Leader Tom Cross and Senate Minority Leader Christine Radogno announced
When Illinois Republicans aren’t downplaying the size of the state’s budget deficit, they’re busy rolling out their own proposals on how best to close the gap. Case in point: House Minority Leader Tom Cross and Senate Minority Leader Christine Radogno announced Wednesday that they would like to pay for a statewide construction plan by expanding gambling. Meanwhile, Cross and the Illinois Policy Institute -- a libertarian think tank -- are unveiling a four-bill package that includes pay-go legislation and a constitutional amendment requiring a three-fifths vote to raise any taxes.
But will such a plan actually dig our state out of this economic crisis? Ralph Martire and his colleagues at the Center for Tax and Budget Accountability (CTBA) don’t think so. In a recent report titled Moving Forward (PDF), CTBA argues that significant cuts at this juncture could send the state into a devastating tailspin. According to their research, if Illinois were to close its budget deficit by cutting spending, it could cause the state’s economy to lose anywhere from 57,000 to 128,000 jobs. Watch Martire explain this at a press conference in Springfield on Wednesday (full video at Blue Room Stream):
The same arguments that dominated the stimulus discussions at the federal level underpin CTBA’s findings: When a staggering economy causes revenues to decline and demand for services like Medicare rise, cutting jobs and services takes money away from people most likely to spend a higher proportion of their income immediately, thus worsening the recession.
As Martire explains, a better alternative is a progressive restructuring of the tax code to solve the state’s longstanding revenue problem.
He further notes that now is the perfect time to implement the policy because the state has stimulus money to hold it over until the new revenue enhancement strategy would start generating additional capital. If the General Assembly uses new tax revenue to maintain or even enhance public spending on infrastructure, health care, and education, CTBA says Illinois could climb out of the recession six months earlier. And low and moderate income individuals won’t be asked to bear the tax burden disproportionately any longer.
Many in Springfield agree. Just yesterday, sources close to Gov. Pat Quinn told the Tribune that he’s considering hiking the income tax to 4.5 percent from the current 3 percent rate while simultaneously raising the standard tax exemption up to $6,000 per person from $2,000 (thereby providing relief to low and middle-income taxpayers).
Sen. James Meeks -- who has reintroduced the education funding reform bill SB 750 -- says that regressive gimmicks like gambling expansion and spending cuts won’t solve anything. The previous version of SB 750, which hit a dead-end in 2007, would have raised the personal income tax rater from 3 percent to 5 percent, hiked the corporate rate from 4.8 percent to 8 percent, and created a refundable tax credit available to any natural person or married couple filing jointly that reports a total annual income of $47,000 or less.
At Wednesday’s press conference, Meeks echoed Martire’s conclusions: “You’re not going to one-time fix your way out of a $9 billion budget hole. It takes people who are responsible, it takes people who are careful, but it takes the General Assembly to have the will.”