Back to regular view • Print this page

Illinois is one of the lowest-taxing states in the country, according to Ralph Martire. I know. You don't believe it. You've seen your tax bills.

"I can understand why people think they're getting taxed a lot, and that's because if you're a low- or middle-income wage earner you are being taxed a lot in Illinois," Martire said.

Huh?

"A middle-class taxpayer pays four times as much proportionately as a wealthy taxpayer making $300,000 a year," Martire said. "Illinois is 41st in the nation in total tax burden as a percentage of income, but sixth-highest in regressive taxation. If you're poor or middle class, you are paying too much of the tax burden in this state."

Martire is executive director of the non-profit Center for Tax and Budget Accountability and has crunched state budget numbers for Democrats and Republicans. I called him Thursday after receiving an e-mail from AARP, warning that thousands of the elderly in Illinois may soon lose their home health care because of state budget cuts.

That warning comes on the heels of outcries that thousands of low-income college students are about to lose their state grants. And all of that comes in the aftermath of a judge's ruling that Gov. Patrick Quinn can't lay off 2,600 state employees to help trim the budget deficit.

What's going on?

"This state is a total mess because most people don't understand the budget numbers, and those that do understand lie about them," Martire said. "You look at state funding for almost anything, and we're at or near the bottom of the nation.

"Education funding, funding for developmentally disabled adults, funding for the mentally ill, funding for home health care; you name it and we're among the worst in the country.

"And the reason is simple. Adjusted for inflation, this state's budget is about $1 billion less than it was 10 years ago. You can't spend less and expect to keep up with expenses."

Well, people believe this state has too many employees sitting around doing nothing.

"Wrong," Martire said. "This state has about 54 employees for every 10,000 people, which is one of the lowest in the nation."

If that's true, then the problem must be with the pension system. We're paying our retired state employees too much money.

"Wrong again," he said. "The weighted average (annual pension) of all five of our (state) pension systems is $28,000 a year."

Nonsense. We've all heard stories about school teachers retiring on $100,000 a year and former politicians collecting more than $200,000 annually.

"Right, so that means with those pensions calculated into the equation, most of our retired state employees are actually living on less than $20,000 a year in order to arrive at that $28,000 average," Martire said.

He said Illinois teachers pay 9.6 percent of their wages into their pension system, which is higher than most public-employee pension plans in the nation.

"The real problem is the debt on the pensions," Martire said, "which is caused by the state borrowing from those pensions for 30 years instead of raising revenue. Our unfunded pension liability is staggering because our politicians have failed to make annual contributions to the plans."

As for the actual cost to the state of the pension system, without the unfunded liability, that would be about 5 percent to 6 percent of the state's budget - less than the 6.2 percent that the Social Security system costs the federal government.

"On the other hand, our governor's plan to reduce pension costs to future retirees would have cost this state another $90 billion because as a tradeoff he was going to increase the state pension payment for current employees," Martire said. "That would have been the tradeoff for union support."

So what's the solution?

Raise taxes.

"We need to raise the state income tax from 3 percent to 5 percent, place sales taxes on services like hair salons and others already taxed by most of our neighboring states and offset that by cutting property taxes for homeowners and broadening the earned income tax credit for low-income wage earners," Martire said.

"The cost of solving all of this state's financial problems is actually about 2 percent of the state's budget. That's not going to have an impact on business. It's not going to destroy the state's economy.

"As for cutting the state payroll, this state already outsources most of its social services," Martire said. "We pay social service agencies to take care of our preschool children, our elderly and in most cases we don't give them a dollar for every dollar they spend. It's a great deal for the state.

"The state needs more money. It's that simple."

I told Martire that the citizens I talk to will never believe that. They think politicians just steal their tax money.

"I've talked to citizens all over the state, and by the time I'm done talking, they understand the situation," he said. "You've just got to cut through all the lies and misinformation that's out there and stick to the numbers.

"The numbers don't lie. We're facing about a $12 billion budget deficit next year, and you don't cut your way out of that."

Maybe not. But there's always video gambling and the cigarette tax.