The document summarizes Illinois' budget challenges including rising pension costs due to past laws and market losses, more people qualifying for Medicaid, and growth in the state's unfunded pension liability. It discusses Illinois tax rates compared to neighboring states, and details how a 2011 tax increase aimed to stabilize the budget and correct the structural deficit by temporarily raising income tax rates for four years.

2. What we’ll discuss
• Some of the successes we’ve had despite
the economic downturn
• The state of the current budget
• And what path we can take in the
upcoming budget year

5. What Illinois Encountered
• Climbing Pension Costs Due to 1995
Pension Law and 2008 Market Collapse
• More People Qualifying for Entitlement
Programs Like Medicaid

7. Active Membership, Years of Service in the
Big Three Systems
Active Membership, Years of Service Distribution*
As of June 20, 2011
System/Years % of
< 15 20-24 25-29 30+ Total
Service Total 15-19
TRS 67.4%
92,836 17,753 11,384 7,827 7,911 137,711
SERS 54.9%
36,463 8,971 9,734 6,118 5,077 66,363
SURS 74.1%
56,344 8,123 6,515 3,531 1,486 75,999
Total
185,643 66.2% 34,847 27,633 17,476 14,474 280,073
66% of all Active Members have 15 or fewer years of service in TRS, SERS or
SURS
*JRS has 966 total actives. GAS has 180 total actives. No distribution available in the
actuarial reports.

8. Pension Cost as % of Total GRF
Spending

10. Growth in Unfunded Pension Liability

11. Growth in Unfunded Pension Liability:
Impact of Market Collapse

12. Medicaid Full Benefits Enrollment

13. Medicaid Full Benefits Enrollment – Type of
Enrollees

16. State and Federal Contributions to the Medicaid
Program Including Federal Match Rate

17. What Did the 2011 Tax Increase Do?
• Purpose: Budget Stabilization and
Correcting the State’s Structural Deficit
• Increased for four years the State’s
personal income tax rate by 2 percentage
points
• Increased for four years the State’s
corporate income tax rate by 2.2
percentage points

18. 2011 Budget Stabilization Plan
Personal Income Corporate Income
Tax Rate Tax Rate
Prior Rate 3.0% 4.8%
2011-2014 5.0% 7.0% (not 9.5%)
2015-2024 3.75% 5.20% (not 7.75%)
2025 3.25% 4.80% (not 7.3%)
• There is no personal property tax in Illinois like
in Wisconsin, Indiana, Kentucky, Missouri and
most states.

19. History of Illinois Individual Income Tax
• 1969: Gov. Ogilvie Creates a State Income Tax at a
2.5% Rate
• 1983: Gov. Thompson Raises the Rate to 3%; the Rate
returns to 2.5% in 1984
• 1989: Gov. Thompson Approves Another Temporary
Increase to 3%; the Rate was Expected to Fall to 2.75%
by 1993
• 1993: Gov. Edgar Makes a Permanent Increase in the
Rate to 3%
• January 2011: Gov. Quinn Approves a Temporary
Increase in the Rate to 5%

20. How Illinois Compares to Neighboring States
Personal Personal Corporate Corporate
Income Tax Rates Income Tax Rates
Brackets Brackets
ILLINOIS Flat 5.0% Flat 7.0%
(through (through
2014) 2014)
Wisconsin 5 4.6% to Flat 7.9%
7.75%
Indiana Flat 3.4% Flat 8.5%
Iowa 9 0.36%-8.98 4 6%-12%
%
Missouri 10 1.5%-6% Flat 6.25%
Kentucky 6 2%-6% 3 4%-6%

21. How Illinois Compares to Neighboring States
• Wisconsin: Income over $10,180 is taxed at 6.15% and
up
• Iowa: Income over $13,221 is taxed at 6.12% and up
• Missouri: Income over $9,000 is taxed at 6.0%
• Kentucky: Income over $5,000 is taxed at 5.0% and up
• Indiana: Counties can levy a personal income tax on top
of the Statewide rate

22. How Illinois Compares to Neighboring States
Illinois Remains the
Only State Listed That
Does Not Tax
Retirement Income