illinois - the state of our state

Illinois – The State of Our State

J. Thomas Johnson, PresidentTaxpayers’ Federation of Illinois(217) 522-6818tom@iltaxwatch.org

4th Annual Elmhurst College

Governmental Forum Elmhurst, Illinois

January 26, 2011 

Per CapitaPersonal Income

US Illinois State Rank

1980 $10,114 $11,005 9th

1992 $20,114 $21,980 9th

2009 $39,138 $41,411 16th

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Source: U.S. Census Bureau

Percentage of Growth in State GDP 1999-2009

3

Percentage of Growth in Personal Income 1999-2008

4

Percentage of Growth (Decline) in Employees

on Nonfarm Payroll 1999-2009

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Percentage of Decline of Employees in Manufacturing 1999-2009

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Barometer of Job Recovery7

Source: Institute of Governmental and Public Affairs , Illinois Economic Review, December 2010.

Illinois Job Recovery 600,000

Average State Tax Impact/Job* $ 4,200

Annual Revenue Impactof Job Recovery $2.5

Billion

*Projected by the Regional Economies Application Laboratories – University of Illinois

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Impact of Job Loss

Big Three Taxes(Personal, Corporate Income Taxes & Sales Taxes)

$ Billions

Actual or Historical Growth Projected Rate

2008 $19.4 $19.4

2009 17.7 20.2

2010 16.0 21.0

Projected 2011 16.5 21.9

$69.6 $82.5

Difference $12.9

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General Funds Cumulative Deficit

$34 Billion Spending Base(Billions)

Unpaid Bills $6.5 Corporate Income Tax Refund Backlog .9

State Group Insurance Backlog 1.1

Total $8.5

2010 Pension Obligation Bonds $3.5

2011 Pension Notes $3.7

Federal Stimulus through 2011 $4.5

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Proposed Borrowing Plan

($ Billions)

Debt Consolidation Borrowing $ 8.75 2011 Pension Obligation Notes 4.1

Total 2011 Operating Borrowings $12.85

Annual Debt Service $1.5 Billion for 14 years

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2012 Structural Deficit

($ Billions)

Spending in Excess of Revenue $6.2 New Debt Service 1.5

Total Structural Deficit $7.7

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New Enacted Revenues

($ Billions)

Individual Income Tax $6.0 Corporate Income Tax 1.0

(Including NOL Suspensions)

Estate Tax Reinstatement .3

$7.3

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Illinois Income Tax Rates

Individual Corporate*

2010 3.0 % 7.3 %

2011 - 2014 5.0 9.5

2015 - 2024 3.75 7.75

2025 3.25 7.3

* Inclusive of Personal Property Replacement Tax

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Other Revenue Issues(not yet resolved)

Gaming Expansion

$1 -1.5 Billion One time Revenues

500 million Annual Recurring

Cigarette Tax

Increase from 98 cents to $1.99 per

pack

$330 million

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Spending Limits(General Funds)

Billions

2011 $34,285

2012 36,818

2013 37,554

2014 38,305

2015 39,072

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Current Tax Rates – 3.5% Growth Rates

16.3%

41.5%

48.1%

54.3%

60.3%

64.1%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

2000 2010 2020 2030 2040 2045

% o

f Net

"Bi

g Th

ree"

Rev

enue

% of Net "Big Three" Revenue

Pension Bonds and Notes % of Net Revenue

General Obligation Debt Service % of NetRevenue

Retiree Health Care Costs % of Net Revenue

Pension Contribution % of Net Revenue

*Net “Big Three” Revenue comprises Revenue available to the state after applicable adjustments resulting from the state corporate, personal income, and sales taxes.

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Current Tax Rates – 2% Growth Rates

16.3%

41.5%

54.2%

70.6%

91.1%

104.6%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

2000 2010 2020 2030 2040 2045

% o

f Net

"Bi

g Th

ree"

Rev

enue

% of Net "Big Three" Revenue

Pension Bonds and Notes % of Net Revenue

General Obligation Debt Service % of Net Revenue

Retiree Health Care Costs % of Net Revenue

Pension Contribution % of Net Revenue

*Net “Big Three” Revenue comprises Revenue available to the state after applicable adjustments resulting from the state corporate, personal income, and sales taxes.

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What is Illinois’s Tax CapacityState and Local Taxes as a % of Gross State Product

National Average9.2%

Illinois Pre-Tax (Rank 26th) 9.13%

Illinois Post-Tax (Rank 8th ) 10.20%

16th Place State 9.77%

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State Government is Primarily a Purchaser of Goods &

Services –

Not a Provider

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– Human Services Providers

– Healthcare Providers

– Local Governments

– Higher Education Institutions

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State Government Purchases Services from:

Where do we Start to Cut?

Base Spending (Billions)

Pensions $ 4Employee/Retiree Healthcare 2Medicaid 15K-12 Education 7Higher Education 2Human Services 5Local Government Revenue Sharing 5Corrections 1Mass Transit Operating Subsidies .5

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Re-Engineering State and Local

Government in

Illinois

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State Programs

Merge Human Services – Integrated Service Delivery

De-Institutionalize

Reduce Prison Population by 1/3

Privatize Higher Education

Re-Evaluate the K-12 Funding

Program

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$15 Billion of State Revenues go to

Local Governments

Through 230 different programs

Representing 34% of Local Government Revenue

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DuPage County Taxing Bodies

Countywide 4Townships 9Municipalities 29School Districts 42Community College 1Fire Protection Districts 23Park Districts 35Others 19

162

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