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State of Illinois FY 2010 Budget Challenge and Responsibility.

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Presentation on theme: "State of Illinois FY 2010 Budget Challenge and Responsibility."— Presentation transcript:

1 State of Illinois FY 2010 Budget Challenge and Responsibility

2  Illinois’ unemployment rate jumped from 7.9 % in January to 8.6% for the month of February – our highest unemployment rate since 1983 *  206,000 jobs have been lost in Illinois over the last year *  State’s housing sales dropped by 27.8 % and home prices dropped by 20.8% from a year ago February †  The Consumer Price Index (CPI) for all foods increased 5.5% in 2008, the highest annual increase since 1990, and is forecast to increase 3.0% to 4.0% in 2009 ‡  During the past 10 years, more than 727,150 people have left our state, ranking Illinois third in the nation in net out-migration °  Record low confidence in state government Sources: * U.S. Department of Labor, † Illinois Association of Realtors, ‡ U.S. Department of Agriculture, ° Aurora Beacon News – 3/20/09 The Crisis is Real People are Hurting

3  Illinois faces a state budget deficit ranging between $7 and $11 billion over the next 2 years  Over the past 6 years, the state’s credit card debt has soared from $7 to $20 billion  Unpaid bills to doctors, hospitals, nursing homes, and pharmacists have risen from $600 million to $2.5 billion  STOP the current mentality in state government of spending money we don’t have The Challenge

4  Since FY 2003 General Revenue Fund (GRF) spending increased by $8.17 billion – an increase of 31%  During the same period GRF revenues increased $6.79 billion – an increase of 25%  To pay for this increased spending, $2.3 billion has been raided from the pension system that pays teachers, state police, and university employees  Budget gimmicks using one-time revenues (sweeping funds, increasing fees, etc.) to pay for ongoing spending How We Got Here State Spending has Outpaced State Revenue

5  Raises income tax rate by 50%, from 3% to 4.5% for working families and seniors and the corporate income tax by 50%, from 4.8% to 7.2% on small businesses and employers  Increases standard exemption from $2,000 to $6,000 per person  Nearly $525 million in one-time fund raids affecting state parks, veterans, and health care programs  This budget increases state spending by $3.6 billion or 7% (Source: Governor FY10 Budget Proposal, Chapter 2) Governor Quinn’s 2010 Budget Proposal

6  Increase state sales tax on coffee and tea beverages from 1.0% to 6.25%  Double the $10 driver’s license fee to pay for construction and projects  Add $20 to the license plate sticker to total $99  Increase the cigarette tax by $1 per pack  Raise the car title transfer fee by $40 to $105 Additional Taxes and Fees on Your Everyday Life

7  Democrat leadership proposed raising the gas tax between 8 ¢ to 16 ¢ (Cost between $500 million to $1.5 billion)  Tax all grooming and hygiene products at a uniform, higher rate including: shampoo, lotion, mouthwash, and toothpaste  Increase Illinois State Fair fees to $2 per child and $5 per adult  Create a $5 entrance fee or $25 yearly pass to parks  Raise fishing license fee from $12.50 to $19.50  $2 fee to swim at the Adeline Jay Geo-Karis Illinois Beach State Park  Increase the State Migratory Waterfowl Stamp from $10 to $15

8  Establishes an equestrian use fee for Illinois Department of Natural Resources trails $5 per day or $25 annual pass  Increases Resident Deer Hunting Permit Fee from $15 to $25  Creates a $500 fee to local governments or private entities seeking environmental consultations  Creates a series of regulatory fees for the IDNR Office of Water Resources ranging from $400 to $5,000 for permits  Creates an annual fee to be collected from boaters

9  Establishes a $3 launch fee per boat, per day for Lake Shelbyville, Rend Lake, and Carlyle Lake Total cost of the Democrat proposed tax and fee increases = $7 BILLION! $7 BILLION!

10  Cashiers earned a median income of $17,284 in 2007. A single cashier would pay higher taxes under Quinn’s plan.  Hairdressers earned a median income of $22,568 in 2007. A single hairdresser would pay higher taxes under Quinn’s plan.  Dental assistants earned a median income of $30,472 in 2007. A dental assistant with one child would pay higher taxes under Quinn’s plan. (Source: Illinois Policy Institute) Impact on Families

11  Fire fighters earned a median income of $50,544 in 2007. A fire fighter with a spouse and one child would pay higher under Quinn’s plan.  Carpenters earned a median income of $57,782 in 2007. A carpenter with a spouse and two children would pay higher taxes under Quinn’s plan.  Agricultural engineers earned a median income of $73,486 in 2007. An agricultural engineer with a spouse and three children would pay higher taxes under Quinn’s plan. (Source: Illinois Policy Institute)

12  Eliminates $287 million in incentives for businesses to locate or expand in Illinois  Increases business tax rate by 50% to 7.2 %. That increase combined with an additional 2.5 % replacement tax pushes the corporate income tax to 9.7% - higher than most border states. Why Jobs Will Leave Illinois Illinois 9.7% Indiana 8.5 % Missouri 6.25 % Wisconsin 7.9 %

13 “Next door in Illinois, they are facing the biggest tax increase in state history. It’s going to drive jobs across the line to Indiana, I guarantee it,” Indiana Governor Mitch Daniels said. (Source: Decatur Herald and Review editorial 3/24/09) Why Jobs Will Leave Illinois

14 Republicans See Opportunities to Put Illinois Back on the Road to Growth, Jobs Creation and Prosperity

15  Both Republican Caucuses are determined to quickly pass a statewide public works program before the construction season begins to address crumbling infrastructure and put tens of thousands of Illinoisans to work – without raising taxes or fees  How do we pay for it? End nearly $700 million in Road Fund diversions; privatize management of the state’s lottery; and enact minor gaming expansions  These options are expected to raise more than $1.5 billion. Revenue of $1 billion each year will allow the state to institute a $12 billion bonding program, with matching federal dollars the entire infrastructure program would account for $26 billion in public works projects Capital

16  Republicans have designed a step-by-step program to get Illinois’ financial house in order  Our proposal does not rely on taxing Illinois citizens to create new revenue, but rather encouraging business to locate in our great state with friendly tax policies and creating good paying jobs for Illinois residents  Support requiring a 3/5th supermajority before any tax or fee increase can be imposed  Support creation of a Sunshine Commission, a partnership between state and business leaders to make recommendations to eliminate ineffective programs and wasteful spending  Establish PAYGO, or Pay As You Go, to require legislators who want to add a new spending program to offset that spending by eliminating an existing and ineffective program Keys to Long-Term Financial Stability in Illinois

17  It took more than 1 year to get into this mess - it may take a couple of years to get out  We have the responsibility to re-examine how we spend money  $8.8 billion in federal stimulus funds should be used over the next couple of years to help our recovery and pay down debt  Raising taxes on families and employers will stop growth – that is the worst thing we can do Conclusion

18 Questions?

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