Illinois Senate Passes $37.4 Billion Budget, Fueled by $5.4 Billion Tax Increase

State Capitol:  The Illinois Senate, on a party line vote, passed SB-9, Wednesday, that would increase the state’s income tax to 4.95%, from the current 3.75% and would extend a sales tax to some services, where a sales tax is not currently collected.  The Senate also passed a spending plan that would budget $37.4 Billion for the new fiscal year that begins on July 1.

The tax increase is estimated to bring in the state an additional $5.4 Billion, if it survives to become law.  But that faces a big hurdle, as the bills will have to pass the House, and then face Gov Rauner’s possible veto.

The Senate’s Democrat majority passed SB-9, and other bills, as the legislature is rushing toward the end of the month deadline for passing a budget.  That’s something that hasn’t happen for two years, and as a consequence, the state of Illinois now has a bill backlog of some $14 Billion.

With the pressure growing for the state to pass a full-year budget, the Democrat leadership in the Senate gave up trying to pass the so called “Grand Bargain” series of bills, and pushed through bills, saying the time for passing a budget was now.  They passed a spending plan that calls for $37.4 Billion in spending, all with no Republican senators voting for the bill.

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A Spokesman for House Speaker Madigan issued a statement by the Speaker following the Senate’s action,
“The appropriations measures passed by the Senate will be thoughtfully considered by the House Democratic Budget Working Group headed by Representative Greg Harris. Since the beginning of the session, a working group made up of Representatives Harris, Carol Ammons, Kelly Burke, Kelly Cassidy, Fred Crespo, Will Davis, Robyn Gabel, Will Guzzardi, Lisa Hernandez, Elaine Nekritz, Elgie Sims and Michael Zalewski has worked diligently on state budget issues, including passage of a Lifeline Budget. They will thoroughly review the Senate’s proposal and consider it as part of our efforts to pass a full-year balanced budget that will end the budget impasse.”

Gov Rauner responded to the bill saying, “The biggest issue that now stands in the way of us reaching an agreement is resistance to freezing your property taxes, and giving you the ability to control whether your property taxes go up or down in the future,” Governor Rauner said. “We will always stand on the side of taxpayers and homeowners and make sure we get an agreement that is fair to you.”

What was not part of Wednesday’s action was a freeze on property taxes, nor any bill that would reduce the cost of Workers’ Compensation, which has been a major goal of Illinois businesses, which face higher costs on workers’ compensation insurance than the vast majority of other states.  It’s estimated, the Illinois Workers’ Compensation insurance costs Illinois businesses around $3 Billion annually

Greg Baise, Illinois Manufacturers’ Association President file photo

Following the vote, the Illinois Manufacturers Association released this statement from its President, Greg Baise, “Simply raising $5.4 billion in new taxes is not the answer to fixing Illinois’ problems that have led to a huge loss of manufacturing jobs and a massive exodus of Illinois residents. Today’s action in the Senate will only make Illinois less competitive and lead to the further loss of our middle class.

 It is imperative that Illinois policymakers address the root causes of our economic woes including the high cost of workers’ compensation, strengthened education and workforce development systems, and excessive property tax rates while restoring fiscal stability and predictability.

For many months, the IMA applauded the bipartisan work of Senate President John Cullerton and Republican Leader Christine Radogno.  It’s unfortunate that the Senate Democrats chose to walk away from the negotiations in the final days when a bipartisan agreement was in sight.  There is still time remaining and we urge them to pass property tax relief and workers’ compensation reform.”

 

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