BUDGET DEAL ON THE HORIZON? WHAT AN INCOME TAX INCREASE MEANS FOR ILLINOIS

 

With the end of the month just around the corner, legislators are under strong pressure to pass a budget.  A budget plan was supposed to be completed by the end of June, but legislators were unable to come to agreement and instead passed a 30-day extended budget, which is set to expire July 31.  Much of the challenge facing legislators is the lack of available funding that needed to support Illinoisans' top priorities, including school funding reform, healthcare, paying off the state's pension debt, and property tax relief.  Legislative leaders, elected officials and taxpayers alike know that Illinois needs more money; yet the question on everyone's mind is: How will Illinois raise more money for state priorities and essential services?

 

In the past week, opportunities have arisen in the statehouse that suggest there may be an opportunity to pass a moderate income tax increase in order to generate more money for the state. 

 

Income Tax Options: read a CTBA analysis on potential uses of, and revenue generate by, increasing the state income tax by 1% or 2%.

 

Over 500 organizations around the state signed A+ Illinois' Pledge of Support for Reform!  

This week, A+ Illinois ran a full-page ad in the Chicago Tribune, Chicago Sun-Times and the Springfield State Journal Register, calling on Gov. Blagojevich to support a "modest" income tax increase for schools.  View the ad, which lists the 500 supporting organizations.

 

 

What you can do:

 

1. Continue to call your legislators and the legislative leaders and tell them to pass a comprehensive school funding and fiscal plan that:

• Increases school funding and quality so that every child has access to a quality education,

• Restores Illinois' fiscal health, and

• Ends Illinois' over reliance on property taxes to fund schools.

2. Sign your organization onto the A+ Illinois Pledge of Support, stating that:

• We oppose a "no-growth" or "limited-growth" state budget.

• We support a responsible budget that adequately funds schools and other vital state services.

• We support an income tax increase dedicated to education.

IRSI ILLUSTRATES THE SOURCE OF ILLINOIS' UNFUNDED PENSION LIABILITY - CHECK IT OUT!

 

 

At more than five times the national average,

Illinois has the largest unfunded pension liability in the nation.

Why?

 

 

Not due to overly generous benefits. 

Illinois benefits are just 3.7 percent more than the national average.

 

 

Not due to costs. 

Illinois costs are far below national averages.

 

 

Why then?  Illinois' fiscal problems can be traced to one very simple phenomenon: while the cost of providing public services grows normally with the economy over time, the state’s poorly designed tax system does not grow with the economy, and hence generates less revenue than needed to maintain current public service levels and make the required pension payments from year to year, adjusting solely for inflation.  Because Illinois tax revenues haven’t grown with the economy for decades, Illinois has repeatedly underfunded its retirement systems, just to maintain basic services. 

 

The harsh reality is the state has not gone into debt to fund public employee benefits.  Quite the opposite.  Illinois has borrowed against the pension contributions it owes to maintain public services.  What Illinois suffers from is a structural deficit, the inability of a tax system to generate enough revenue to maintain funding the same level of public services from year to year.

 

Read this article with accompanying graphs, illustrating Illinois' unfunded pension liability.

 

For more information please contact, Jourlande Gabriel

Director of the Illinois Retirement Security Initiative

at (312) 332-1103 or jgabriel@ctbaonline.org.

 

DESPITE STRONG BIPARTISAN AND PUBLIC SUPPORT, PRESIDENT THREATENS TO VETO

 

Last month, the Senate Finance Committee approved a proposal to reauthorize the State Children’s Health Insurance Program (SCHIP) – a joint federal-state program established in 1997 to provide health insurance to children whose families have low incomes but earn too much to qualify for Medicaid. The proposal, which was approved across partisan lines 17-4, will provide $35 billion over five years in increased funding to be paid for by a 61-cent tobacco tax increase. The new funds will keep 800,000 children from becoming uninsured and will extend coverage to 3.2 million more children. Currently, 6.6 million children are enrolled in SCHIP.  Click here for more info from the Coalition on Human Needs.

 

Yet, despite bipartisan support in the Senate, President Bush has threatened to veto the legislation, arguing that the expansion is too big.  A recent poll from the Center for Children and Families at Georgetown University shows that Americans strongly support extending SCHIP to more children.

 

What’s Next: The bill could come to the Senate floor as early as this week. The House Energy and Commerce and Ways and Means Committees may also mark-up SCHIP this week. SCHIP is set to expire on September 30.

 

Universal, Effective and Affordable Health Insurance: An Economic Imperative

While the issue of healthcare has long occupied an important platform on our nation's political agenda, the upcoming presidential election in conjunction with the recent release of Michael Moore's newest documentary SICKO has now, more than ever, spotlighted the absolute need to do something about America's inadequate healthcare system. 

 

A new discussion paper released by the Brookings Institution outlines the economic imperative to implementing a universal, effective and affordable health insurance program in the United States.  The reasons for doing so include:

1. Rapidly rising premiums put a strain on businesses, wages and jobs.

2. Ineffective care results in a less productive workforce.

3. The rapid increase in public health spending is a central cause of the serious fiscal challenges we face in the years and decades ahead.

4. Health care security is an important piece of the broader question of economic security.

Click here to read the full paper.

 

WAGE INCREASE GOES INTO EFFECT TODAY - READ SOME FAST FACTS ON WORKER IMPACT

 

Today, America's 13 million minimum wage workers will finally receive a long-overdue pay raise.  For the first time in over a decade, the federal minimum wage has increased, jumping 70 cents to $5.85 an hour. The minimum wage will continue to increase each summer until 2009, when it will reach $7.25 an hour.

 

Did you know..

• More than sixty percent of minimum wage workers are women, and almost forty percent are people of color.

• Almost eighty percent of those who benefit from the minimum wage increase are adult workers, not teenagers seeking pocket change.

• This raise means that minimum wage earners will almost immediately earn an additional $1,500 to help support their families. When the full increase takes effect in 2009, these workers will see a total increase of $4,400 per year.

• This increase to the minimum wage, combined with the federal Earned Income Tax Credit (EITC) and the food stamps program, will bring a family of four above the poverty line. It will benefit an estimated 6.4 million children of low-income workers.

• Even with this increase, the real value of the minimum wage will still be $2.25 below what it was at its peak in 1968. To have the purchasing power it had in 1968, the minimum wage would have to be $9.50 an hour today.

The Minimum Wage in Illinois

 

While this increase in the federal minimum wage is a great victory, many states, including Illinois, have recognized the inadequacy of the national minimum wage and have imposed their own state minimum wage.  Illinois took steps to strengthen its minimum wage last November during the legislative veto session, when legislators approved a minimum wage increase of $1, bringing the state minimum wage up to $7.50. This was an important victory for low wage workers in that a full-time minimum wage worker now earn an additional $2,080 a year. This boost benefits about 647,000 workers, 144,000 parents and 269,000 children around the state and took effect July 1, 2007.
 

Unfortunately, what was lacking from the final legislation was a permanent annual cost of living adjustment (COLA). This annual adjustment is important for minimum wage workers because it ensures that low wage workers will not fall behind when prices rise but paychecks don't.  COLA's are also good for employers because they provide predictable and steady changes in the minimum wage rather than unpredictable changes in wage costs that are subject to fluctuating political climates. As part of the compromise bill that was passed (SB 1268), minimum wage workers will receive annual wage increases of 25 cents for three years: to $7.75 in July 2008, $8.00 in July 2009, and $8.25 in 2010.

 

Read a message from Rev. Al Sharp, executive director of Protestants for the Common Good, on the moral importance of providing a liveable minimum wage for our hardworking American families.

 

SUPPORT TRANSIT FUNDING NOW! CALL YOUR STATE LEGISLATOR AND THE GOVERNOR

 

Pace Suburban Bus started hearings on proposed service cuts.  The Chicago Transit Authority (CTA) is struggling to address rail improvements.

 

Bring Illinois into the 21^st Century by supporting sustainable transit funding. The Northeast region has relied on a 24 year old funding formula that has not accommodated population growth or the loss of federal operating dollars eliminated over a decade ago. 

 

Call your legislators and Governor Blagojevich TODAY to urge them to support the funding and accountability reforms (SB 572, House Amendments 1 and 2) for the Regional Transportation Authority (RTA).   This is a good solution for the region and the state because it can reduce congestion and facilitate the movement of goods across the state and to the rest of the country.

 

These reforms will:

 

• Update the funding formula to restore fiscal health to the transit system and set it on a course for improvements and growth;

 

• Strengthen the RTA’s powers to ensure greater fiscal accountability from CTA, Pace and Metra and to evaluate performance and to improve coordination;

 

• Ensure 5-year strategic planning cycles that, among other objectives, take into consideration access to area jobs for low income communities, and;

 

• Create the Innovation, Coordination and Enhancement Fund as well as the Suburban Mobility Fund to furnish resources for demonstration projects and projects that address mobility for transit dependent populations.

 

(Legislation will eventually include reforms to the CTA pension so that expenditures are in-line with the new funding package.)

 

Every Vote Counts.  Since the legislature is now in an overtime session, every bill needs 3/5 majority in order to get passed out of its respective chamber.  That means that your state representative and senator play a critical role in the future of transit.

 

To contact your state Representative and Senator, click here.  To reach the Office of Governor Blagojevich, call (217) 782-0244 or (312) 814-2121.

 

RESOURCES:

• Hear from the Chair of the House Mass Transit Committee, Representative Julie Hamos (D-Evanston) about the legislation, go to www.juliehamos.org.

• Learn more about how transit is funded and planned, take a look at the primer, Transit Uncovered.

For more information, contact Dia Cirillo at 312-332-6522 or dcirillo@ctbaonline.org.