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Illinois – The State of Our State
J. Thomas Johnson, PresidentTaxpayers’ Federation of Illinois(217) [email protected]
4th Annual Elmhurst College
Governmental Forum Elmhurst, Illinois
January 26, 2011
Per CapitaPersonal Income
US Illinois State Rank
1980 $10,114 $11,005 9th
1992 $20,114 $21,980 9th
2009 $39,138 $41,411 16th
2
Source: U.S. Census Bureau
Percentage of Growth in State GDP 1999-2009
3
Percentage of Growth in Personal Income 1999-2008
4
Percentage of Growth (Decline) in Employees
on Nonfarm Payroll 1999-2009
5
Percentage of Decline of Employees in Manufacturing 1999-2009
6
Barometer of Job Recovery7
Source: Institute of Governmental and Public Affairs , Illinois Economic Review, December 2010.
Illinois Job Recovery 600,000
Average State Tax Impact/Job* $ 4,200
Annual Revenue Impactof Job Recovery $2.5
Billion
*Projected by the Regional Economies Application Laboratories – University of Illinois
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Impact of Job Loss
Big Three Taxes(Personal, Corporate Income Taxes & Sales Taxes)
$ Billions
Actual or Historical Growth Projected Rate
2008 $19.4 $19.4
2009 17.7 20.2
2010 16.0 21.0
Projected 2011 16.5 21.9
$69.6 $82.5
Difference $12.9
9
General Funds Cumulative Deficit
$34 Billion Spending Base(Billions)
Unpaid Bills $6.5 Corporate Income Tax Refund Backlog .9
State Group Insurance Backlog 1.1
Total $8.5
2010 Pension Obligation Bonds $3.5
2011 Pension Notes $3.7
Federal Stimulus through 2011 $4.5
10
Proposed Borrowing Plan
($ Billions)
Debt Consolidation Borrowing $ 8.75 2011 Pension Obligation Notes 4.1
Total 2011 Operating Borrowings $12.85
Annual Debt Service $1.5 Billion for 14 years
11
2012 Structural Deficit
($ Billions)
Spending in Excess of Revenue $6.2 New Debt Service 1.5
Total Structural Deficit $7.7
12
New Enacted Revenues
($ Billions)
Individual Income Tax $6.0 Corporate Income Tax 1.0
(Including NOL Suspensions)
Estate Tax Reinstatement .3
$7.3
13
Illinois Income Tax Rates
Individual Corporate*
2010 3.0 % 7.3 %
2011 - 2014 5.0 9.5
2015 - 2024 3.75 7.75
2025 3.25 7.3
* Inclusive of Personal Property Replacement Tax
14
Other Revenue Issues(not yet resolved)
Gaming Expansion
$1 -1.5 Billion One time Revenues
500 million Annual Recurring
Cigarette Tax
Increase from 98 cents to $1.99 per
pack
$330 million
15
Spending Limits(General Funds)
Billions
2011 $34,285
2012 36,818
2013 37,554
2014 38,305
2015 39,072
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Current Tax Rates – 3.5% Growth Rates
16.3%
41.5%
48.1%
54.3%
60.3%
64.1%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
2000 2010 2020 2030 2040 2045
% o
f Net
"Bi
g Th
ree"
Rev
enue
% of Net "Big Three" Revenue
Pension Bonds and Notes % of Net Revenue
General Obligation Debt Service % of NetRevenue
Retiree Health Care Costs % of Net Revenue
Pension Contribution % of Net Revenue
*Net “Big Three” Revenue comprises Revenue available to the state after applicable adjustments resulting from the state corporate, personal income, and sales taxes.
17
Current Tax Rates – 2% Growth Rates
16.3%
41.5%
54.2%
70.6%
91.1%
104.6%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
2000 2010 2020 2030 2040 2045
% o
f Net
"Bi
g Th
ree"
Rev
enue
% of Net "Big Three" Revenue
Pension Bonds and Notes % of Net Revenue
General Obligation Debt Service % of Net Revenue
Retiree Health Care Costs % of Net Revenue
Pension Contribution % of Net Revenue
*Net “Big Three” Revenue comprises Revenue available to the state after applicable adjustments resulting from the state corporate, personal income, and sales taxes.
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What is Illinois’s Tax CapacityState and Local Taxes as a % of Gross State Product
National Average9.2%
Illinois Pre-Tax (Rank 26th) 9.13%
Illinois Post-Tax (Rank 8th ) 10.20%
16th Place State 9.77%
19
State Government is Primarily a Purchaser of Goods &
Services –
Not a Provider
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– Human Services Providers
– Healthcare Providers
– Local Governments
– Higher Education Institutions
21
State Government Purchases Services from:
Where do we Start to Cut?
Base Spending (Billions)
Pensions $ 4Employee/Retiree Healthcare 2Medicaid 15K-12 Education 7Higher Education 2Human Services 5Local Government Revenue Sharing 5Corrections 1Mass Transit Operating Subsidies .5
22
Re-Engineering State and Local
Government in
Illinois
24
State Programs
Merge Human Services – Integrated Service Delivery
De-Institutionalize
Reduce Prison Population by 1/3
Privatize Higher Education
Re-Evaluate the K-12 Funding
Program
25
$15 Billion of State Revenues go to
Local Governments
Through 230 different programs
Representing 34% of Local Government Revenue
26
DuPage County Taxing Bodies
Countywide 4Townships 9Municipalities 29School Districts 42Community College 1Fire Protection Districts 23Park Districts 35Others 19
162
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