Five-Year Projection Used as Pitch for Progressive Tax


Gov. J.B. Pritzker’s Office of Management and Budget projected significant deficits in the coming years unless voters approve a progressive income tax structure.

A state Representative says that’s not the answer to Illinois’ fiscal problems.

With more than $200 billion in unfunded state retiree costs alone, and billions more in unpaid bills, Illinois’ finances are among the worst in the nation. The state also has among the highest taxes in the nation.

In a statement Wednesday with the release of the annual Economic and Fiscal Policy Report from the Governor’s Office of Management and Budget, Pritzker said the budget enacted this summer with bipartisan support was balanced.


Click here for summary

“Thanks to the bipartisan efforts of the General Assembly, we’ve already made fiscal progress,” Pritzker said.

But the freshman governor said his budget office projected the state will struggle to make ends meet and pay bills in the years ahead.

The report said the baseline forecast does not project an economic recession, but does project slower economic growth. For the five-year state budget forecast, the report projected a surplus for this year’s budget of $484 million, but with a bill backlog of $5.8 billion. The surplus vanishes and the bill backlog increases the following year. Each year thereafter, the report projects increased deficits and increased bill backlogs. By Fiscal Year 2025, the report projected a $3.2 billion deficit with more $19.2 billion in overdue bills.

The report project state’s pension costs would increase in future years along with unfunded liabilities.

“Without structural changes like the Fair Tax, Illinois will continue to struggle to make ends meet, pay our bills on time and deliver vital services, like public education and public safety,” Pritzker said.

State Rep. David McSweeney, R-Barrington Hills, said that shows year’s budget wasn’t actually balanced.

“Forty billion dollars was the total, but there were massive increases in spending and we all knew it wasn’t balanced,” McSweeney said. “There was no revenue estimate and now everyone is admitting it’s an unbalanced budget.”

Pritzker said the solution was a progressive income tax, which would tax higher earners at higher income tax rates. That would require voters to approve a change to the state constitution. Such a question will be in front of voters on the November 2020 ballot. The measure passed the legislature along party lines with Democrats supporting the governor’s proposal.

“While years of mismanagement has created these [fiscal] issues, we have a strong path forward and solution with the Fair Tax, which will ask the wealthiest 3 percent to pay more while 97 percent of Illinoisans will pay the same or less,” the governor said.

Such a move could increase taxes by $3 billion.

McSweeney said more taxes and increased spending was not the answer.

“What we really need in this state is we need pension reform,” McSweeney said. “We need a constitutional amendment, we need for public employee pension reform. We need Medicaid reform. We need to cut spending in this state.”

Adam Schuster, Illinois Policy Institute’s director of Budget and Tax Research, said the governor shouldn’t have used the report to push for a progressive income tax.

“It’s a shame to see Gov. Pritzker using taxpayer resources –and [the Economic and Fiscal Policy Report] is supposed to be a neutral fact-based source of information about state finances –to mislead and push partisan political propaganda,” Schuster said.

Republican legislative leaders weren’t immediately available for comment on Wednesday.

While Republicans oppose the progressive tax as a $3 billion tax increase, McSweeney criticized Republican leadership for supporting this year’s budget.

“Signing on to that unbalanced budget with spending increases they helped make the governor’s argument,” McSweeney said. “We definitely do not, repeat, do not need the progressive tax. I’ve been leading the opposition to it since 2013. We need to cut spending.”

“Years of repeated tax hikes and broken promises from Springfield have damaged our state economy and contributed to 5 straight years of population loss,” Schuster said. “Rather than continuing down the path of trying to keep up with these cost drivers by increasing our tax burden just as rapidly, Gov. Pritzker should pursue true structural reforms to bring spending in line with what taxpayers can afford. That starts with common sense ideas like a spending cap and constitutional pension reform to future benefits.”

(Copyright WBGZ Radio / www.AltonDailyNews.com)



Source link

Leave a Comment

Your email address will not be published. Required fields are marked *