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 Weekly Review
Provided through the Generous Support of the McCormick Tribune Foundation
CTBA Weekly Review April 8, 2008  
CTBA Quick Links
In This Issue
Education Funding Reform
Income Tax Constitutional Amendments
State Unpaid Bill Backlog
Calendar
Education Funding  
Another Senator Signs on to SB 2288!
 
Thanks to Your Calls and Letters, SB 2288 Now has 21 Co-Sponsors!
 
Is Your Senator a Co-Sponsor of SB 2288?
 
 
Click here to see if your Senator is a sponsor.  If not, please contact him or her and tell them to co-sponsor SB 2288!
 
Senate Bill 2288 provides a new, permanent revenue source for schools, property tax relief for homeowners and $1 billion for debt service for a state infrastructure program.
 
 
The number of Senators signing on to SB 2288 grows every week.  The bill also has received support from many education funding reform coalitions, including A+ Illinois. 
 
Please continue to call or write your Senator and tell them to co-sponsor SB 2288.  Use the A+ Illinois' website tools to find your Senator and their contact information here.   
 
SB 2288 makes significant changes to tax and school funding laws.
  • It reduces our reliance on property taxes to fund schools by mandating an annual property tax abatement of $2.9 billion (indexed to inflation for each subsequent year) with every property owner seeing a minimum of 20% property tax relief on the portion of the bill designated to education.
  • The Invest in Illinois Fund is created and funded with $1 billion each year to provide funding for debt service and fees on bonds for capital projects, such as roads and schools, throughout the State.
  • The bill also mandates a $300 million annual appropriation (indexed for inflation) for grants to institutions of Higher Education.
  • Increases for Early Childhood education are phased in, from $45 million in 2009-2010 to $180 million in 2012-2013.
  • Increases to the Foundation Level are phased in, raising it from $6,044 for the 2009-2010 school year (from $5,734) up to $6,974 for the 2012-2013 school year.  The Foundation Level and Supplemental General State Aid (Poverty Grants) are automatically tied to increases to the Employment Cost Index to control for inflation.
  • Creates a School Improvement Partnership Fund to target resources to proven programs such as smaller class sizes, literacy coaching, longer school days and teacher mentoring;
  • Maintains and expands grants for high-poverty schools
  • The personal income tax is increased to 5% (from 3%), and the corporate income tax is increased to 8% (from 4.8%).
  • Family Tax Credits are provided to single taxpayers earning less than $26,695 and married couples earning less than $53,694.

 

    Click here to listen to a 23 minute interview with Ralph Martire, Executive Director of the Center for Tax and Budget Accountability, on SB 2288.

CTBA has numerous reports outlining the education funding problem in Illinois and how to fix it.  Visit the education page of the CTBA website for more information. 

Income Tax

 

Proposed Income Tax Constitutional Amendments

Two constitutional amendments have been proposed to change the income tax.

SJRCA 89 (Senators Mike Frerichs & Kwame Raoul)-Graduated Income Tax

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SJRCA 89 is a graduated tax constitutional amendment resolution.  SJRCA 89 would change the income tax structure from flat to graduated with the 8 to 5 ratio for the corporate income tax based on the average individual income tax rate.  SJRCA 89 has been referred to rules in the Senate.

HJRCA 42 (Rep. Mike Smith)-Graduated Income Tax

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HJRCA 42 is a constitutional amendment resolution that would create a higher tier individual income tax of 6% for those people earning at least $250,000. Those individuals earning less than $250,000 would be subject to the current 3% income tax rate and would receive an increase in their standard exemption of $2,500 from $2,000 to $4,500. Revenues from the graduated income tax would be used for the increased standard exemption and to fund education and a capital program.  HJRCA 42 is scheduled to be heard in House State Government Administration Committee on Wednesday, April 9.
RESOURCES:
 
CTBA has several issue briefs and research reports on the Illinois Income Tax and tax fairness.  Click here to access these reports.

 

 
State Finance  

Comptroller Dan Hynes Pegs Current State Bill Backlog at $1.4 Billion, Up $500 Million From This Point Last Year

State Owes Another $1.3 Billion in Medicaid Bills
 
The Comptroller's Office has released its third quarter state finance report, The Comptroller's Quarterly.  The report states that the backlog of unpaid bills in the Comptroller's Office stood at $1.416 billion and compares unfavorably to last year's third quarter backlog of $936 million. This represents a sharp decline over the course of fiscal year 2008 as the office began the year holding virtually no bills, although historically the state has maintained bill backlogs at this same point over the previous seven years.
 
 The state also owes another $1.3 billion in bills at the Department of Healthcare and Family Services. (Read CTBA reports analyzing healthcare finance here).
 
 The report concludes that the state's fiscal health is headed in the wrong direction.  The slowdown in the economy nationwide has caused many economists to believe that the country in a recession.  Factors such as a slowdown in job growth (or losses in many areas), the housing market problems, the credit crunch, consumer confidence issues and the troubles in the banking industry point to a recession having begun in early 2008.   The Comptroller reports that Illinois appears so far to have escaped being among the hardest hit (such as California and Florida), as the real estate slowdown here has not been as extreme as elsewhere. 
 
 However, Illinois (and in particular the Chicago area) is not immune. Eventually, as any economic slowdown persists, jobs and employment numbers are also vulnerable. In Illinois, sales tax revenues are already slowing. Growth has been a meager 0.6% through the first nine months of the year. Minimal growth is expected for the remainder of the year. Fortunately, individual income tax revenues have come in at a strong growth rate so far this fiscal year. However, income tax collections tend to lag economic performance, so this strong growth is largely tied to economic performance last year.  Job growth already appears to be slowing with Illinois jobs in February 2008 slightly below January 2008 numbers.

As illustrated by the large backlog of bills at the Office of the Comptroller and DHFS, these revenue slowdowns have clearly had a negative impact on the state's fiscal health.  The state is likely to be holding several hundred million more in bills at the end of this fiscal year when compared to last year. Lack of robust revenue growth will make the creation of next year's budget even more difficult as program costs continue to increase at all levels of state government.

 
Calendar of Events  
 

 

WHAT? Center for Tax and Budget Accountability and the Paul Simon Institute at Southern Illinois University Annual Downstate Symposium

 

WHEN? April 23, 2008

Details to Follow

 

 

WHAT? Immigrants and Public Benefits & Putting the Pieces Together

WHEN? March 19, 2008

WHERE?Naperville, IL

Presented by the DuPage Federation on Human Services

Register Here

 

WHAT? Housing Action Illinois 2008 Convention:  The Changing Landscape of Affordable Housing - Finding Our Way Together

WHEN? May 1 - 2, 2008

WHERE? Naperville, Illinois

 

WHAT? Making the Connection Basic Training

WHEN? Tuesday, June 10, 2008

WHERE? Naperville, IL

Presented by the DuPage Federation on Human Services the session contains practical information in an easy to understand format regarding many programs available to assist low income persons.

Register Here

 

 
 
 
 
Do you have something to share in the Weekly Review?
 
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