Illinois’ budget deficit equals half the state’s total general revenue spending, the vast majority of which funds education, healthcare, human services and public safety. The new law raises Illinois’ personal income tax rate from 3% to 5%, and the corporate tax rate from 4.8% to 7%. Even with the increase, the personal tax rate remains lower than such nearby states as Wisconsin, Minnesota, Iowa, Missouri and Kentucky. The rates will remain in effect through 2014, decrease partially in 2015 and then again in 2025.
In recent years, Illinois has addressed its declining revenues and structural deficit through short-term fixes and budget cuts. For example, the state’s four main homeless programs have suffered a 48% spending reduction, from $28.4 million to $14.8 million. And, the Illinois Affordable Housing Trust Fund has lost more than $40 million from transfers since FY03, and faced a hold on spending since September 2010.
Advocates are pleased with the revenue increase, but issues remain. RBC calls for tax exemptions and credits to offset the impact of the tax increases on lower income households remain unheeded. Further, a proposal to pay off unpaid bills through a bond-financed debt restructuring was not undertaken. RBC members will continue to work on these challenges in 2011.
RBC is a coalition of 300 community groups, social service providers, labor unions and faith-based organizations representing millions of Illinois residents. As an RBC member, Housing Action Illinois has advocated and organized for more than five years for revenue increases that the state government must undertake to meet its moral and legal obligations.
“After years of work, we are encouraged that the legislature has taken the necessary action to help ensure that every individual – including children, seniors, people with disabilities and the poor – has the opportunity to thrive,” said Bob Palmer, policy director for Housing Action Illinois. “While there are still several million dollars in unpaid bills to service providers and there will undoubtedly be more budget cuts next year, this action brings the end of the state budget crisis within sight.”
For more information: Bob Palmer, Housing Action Illinois, firstname.lastname@example.org