Breaking Out of a Circle of Scarcity: The Oregon Business Plan's Challenge f...
Ralph martire slide show 4 14-11
1. CENTER FOR TAX AND BUDGET ACCOUNTABILITY 70 E. Lake Street Suite 1700 Chicago, Illinois 60601 direct: 312.332.1049 Email: [email_address] Tax Increases, Spending Caps and the FY2010 General Fund Budget in Illinois For: Campus Facility Association University of Illinois (Urbana-Champaign) UIUC YMCA 1001 S. Wright Street, Champaign, IL Presented by: Ralph Martire, Executive Director Thursday, April 14, 2011; 4:00 pm
2. Illinois’ Worst Fiscal Crises Since Great Depression The Starting Point
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5. New Annual Revenue Under P.A. 96-1496 Item New Annual Revenue to General Fund Inc rease Personal Income Tax Rate from 3% to 5% $6.05 B Increase Corporate Income Tax Rate from 4.8% to 7% $770 M Decouple from the Federal Repeal of the Estate Tax $182 * Temporarily Suspend the Net Operating Loss Carry Forward for Corporations $250 M Annual Net to General Fund $7.252 B ** * In FY2013 and FY2014, GOMB increases this estimate to $240 M. **NOTE: in FY2011 GOMB estimates the aforesaid tax increases will generate $2.88 B in new General Fund revenue.
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7. WHICH CREATES: STRUCTURAL DEFICIT Illinois Structural Deficit Assuming FY2000 to FY2008 Economic Conditions and FY 2000 Balanced Budget Appropriation (adjusted for Inflation and Population Growth)
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10. IS ILLINOIS PROFLIGATE? WELL - - - - - - The ongoing Deficit Problems were Not Caused by Wasteful Spending * NOTE: That after accounting for Inflation and Population Growth, the FY2011 GF of $24.94 B was 5% less than GF spending in FY1995, under Governor Jim Edgar
12. Medicaid spending by Funding Source (Federal, State and Local) AS FOR HEALTHCARE, WELL…….
13. Amount by Which Illinois General Fund State Spending on Human Service Programs Falls Short of Keeping Pace with Inflationary Costs and Population Growth From FY2002 to FY2010 THE REAL IMPACT: $4.4 BILLION LOST HUMAN SERVICES
16. Meanwhile, “Post-Tax Increase” Share Own-Source Revenue as a Percentage of Personal Income Increase or Decrease in IL GF Revenue Revenue if Illinois Had Equal State- Based Tax Burden as a Percentage of State Income Illinois* 8.8% Indiana 9.8% $5.5 Iowa 9.7% $5.0 Kentucky 10.7% $10.5 Missouri 7.6% ($6.7) Wisconsin 10.1% $7.2 2) Increases based on BEA 2008 Illinois Personal Income. * This overstates the actual new tax burden. Sources: IL State Own-Source Revenue Under Neighboring State Revenue Shares FY 2008 Current $ Billions After Passage of the 2011 Tax Increase 1) 2008 State and Local Revenue as a Percentage of Personal Income, Federation of Tax Administrators, updated July 19, 2010.
18. Projected Annual Revenue Shortfalls Under Spending Caps (Current $ in Billions) Which is Funny — Because:
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20. Despite Recent Tax Increase, The FY 2012 Budget has an Operating Revenue Shortfall of over $ 1 Billion But a Remaining Operating Deficit of Over $ 1 Billion
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22. Human Services would suffer $ 471 M (-8.7%) cut if FY 2011 $ 260 M supplemental to Human Services is passed. FY 2012 Proposed Nominal Dollar Change from FY 2011
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24. In 2008 Illinois was 13 th in per capita income but 34 th in per capita human services funding Cuts in specific Department of Human Services Programs
25. Every Major Category of Real Funding for Current Public Services has been Cut Since FY 2000 FY 2012 Proposed Appropriations Compared to FY2000 Actual Appropriations Adjusted for Inflation and Population Growth ($ in Millions)
34. CUT EDUCATION —REALLY? $ Difference in Per Pupil Foundation Level Funding EFAB vs. ACTUAL
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37. Illinois GDP Growth Lags THE ILLINOIS ECONOMY Source: Bureau of Economic Analysis, US Dept. of Commerce
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41. “ THE BURDEN IS TOUGH” *NOTE: It’s a fixed cost for business as well.
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Notes de l'éditeur
Flawed Tax Policy which created a Long-Term Structural Deficit Irresponsible Fiscal practices using borrowing and diverting payments from public pensions to pay for current services To a lesser extent, the “Great Recession” of 2008-2009. See detailed analysis in CTBA’s Funding Our Future at www.ctbaonline.org which among other things recommended a 2% increase in the state income tax – now implemented.
The state’s lack of revenue remains so significant That the state will not have enough revenue to Spend up to the FY 2012 – FY 2015 Spending caps that were part of the tax bill (P.A. 96 – 1496) , see CTBA’s issue brief on this at: www. ctbaonline.org .
Similarly FFR proposes an additional $ 1.3 B savings from Medicaid cuts (in addition to the recent Jan 2011 Medicaid reforms that targeted cost reduction without compromising health care) by shifting costs to recipients and reducing eligibility “to bring Medicaid eligibility into line with the National Average” (p. 10). FFR acknowledges that these cuts would cause the state to forgo $ 650 M in federal matching funds reducing budget savings to $ 650 M and doubling the health care impact of these cuts to vulnerable Illinoisans.
The FFR proposal for further $ 1.35 B “targeted savings” from pension cuts (in addition to the savings already targeted from the 2009 pension changes for future workers) based on Civic Committee proposals would reduce pension benefits for existing state workers in direct violation of the state constitution. The FFR also proposes that state funding for K-12 education be cut by $ 725 M which would increase the funding gap for an “adequate education” further above its current $ 2000 per child.
Other options include: Decoupling from Federal Bonus depreciation. expanding the state sales tax base to cover consumer services. taxing some retirement income under the state’s personal income tax to generate additional revenue. Over the longer term, repealing the constitutional flat income tax requirement and passing a progressive income tax.