I actually owe the residents of Illinois an apology. It isn’t the residents who are math challenged – it is the Governor and legislators in Springfield who seem to be math challenged. Let me explain.
As Illinois taxpayers should remember, Illinois legislators pushed through a big state income tax hike in January of 2011 – moving the tax rate from 3% to 5%. [I can’t help but note that the math on that increase shows it was a 67% increase. Of course, Democrats object to describing it that way!]
Two really crucial elements of that tax hike were: 1) the additional revenue received by the state would be dedicated to paying down its massive backlog of $8.5 billion in unpaid bills; 2) the tax increase would only be temporary, with a scheduled “sunset” feature in 2015!
These two aspects of the plan were so integral to the passage of this increase that top state politicians promised that all would handled just as advertised! Additional revenue would pay down the debt and the tax increase would be temporary. Governor Patrick Quinn expressed that promise this way: “We have some temporary tax increases that are designed to pay our bills, get Illinois back on fiscal sound footing and make sure that our state has a strong economy.” And State Senate President John Cullerton made a point of vowing, to both his colleagues and the voters of Illinois, that the tax increase would indeed be temporary!
Many outside observers were amazed that anyone actually believed these Illinois politicians. After all, Illinois politicians have a dismal record for honesty or integrity! (See http://www.ksdk.com/news/article/289933/3/List-of-Illinois-politicians-who-faced-legal-troubles-.) But the people of Illinois appeared to believe their leaders that: “This time is different! We really mean our promises this time!”
It is now 2014, over three years later. How have Illinois politicians performed in keeping their promises? Let’s take a look at the state financial details provided in a March report from the Illinois Policy Institute:
1) During the 2011, 2012, and 2013 fiscal years, Illinois received an additional $18 billion in tax revenue (over and above the original 3% rate);
2) That all-important $8.5 billion in unpaid bills – whose repayment was promised by state leaders as additional tax revenue came into the treasury – is now approximately $7.6 billion!
a. This means that only 10.6% of the unpaid bills have been repaid in the past three years!
b. It also means that only 5% of all that “new” tax revenue was actually used for its intended purpose!
3) By the time of the scheduled “sunset” for this temporary tax increase, Illinois will have received a total of $31.6 billion in “new” income taxes (over and above the former 3% tax rate)!
a. That amount is more than the cost of core state services during any single year!
b. Simply put, it is a huge amount of added revenue!
So, what happened? Did the voters of Illinois get deceived once again? Did state leaders walk off with the $17.1 billion that wasn’t used to pay down the bills they promised to clean up? Or is this simply a matter of Illinois state leaders being so clueless about finances, budgets, and basic math that they should no longer be trusted with the management of Illinois tax revenue?