One day after telling Springfield legislators they face a stark choice between making the “temporary” income tax hikes permanent or slashing spending on education and social services, Gov. Pat Quinn joins us to discuss the tough choices facing the state, and how he plans to defeat Republican gubernatorial candidate Bruce Rauner in the November election.
Gov. Pat Quinn touted the need to maintain current income tax rates that are set to decrease January 1, 2015, during his budget address.
In 2011, a state income tax increase was passed, raising the individual income tax rate from 3 to 5 percent, and the corporate income tax from 4.8 to 7 percent. When approved, the roughly 67 percent tax increase was billed as temporary.
If these rates are allowed to expire in 2015 as originally planned, the individual income tax rate will decrease from 5 to 3.75 percent, and the corporate income tax will decrease from 7 to 5.25 percent.
In his speech, Quinn said the decline in revenue would lead to drastic spending cuts for government programs and services. To illustrate how this reduction in revenue would impact the state, Quinn included a budget that factored in this loss of revenue, in addition to his proposed budget that maintained the current income tax rates.
Under Quinn’s proposed fiscal year 2015 budget, total state operating revenues and transfers in from other state funds for General Funds are estimated to total $38.575 billion. If the state income sales tax were allowed to decrease, the state would only be bringing in an estimated $34.934 billion, which would be a decrease of 4.9 percent from projected fiscal year 2014.
The individual income tax, corporate income tax, and state sales tax are the state’s three largest revenue sources, and collectively, they are estimated for fiscal year 2015 to be $25.725 billion– a $1.5 billion decrease compared to projected fiscal year 2014—if the scheduled reduction in individual income tax and corporate income tax comes to fruition.
On the expenditure side for General Funds, total state expenditures and transfers out are estimated to be $34.579 billion if the current income tax rate is decreased. This amount would be a 5.6 percent decrease from fiscal year 2014. Under Quinn’s proposed fiscal year 2015 budget, total state expenditures and transfers out for General Funds would be $38.095 billion and would include $1.275 billion in property tax relief to homeowners.
Quinn also provided a five-year blueprint for Illinois’ financial future.
Quinn based his five-year stabilization plan on the following objectives: increase employment, increase investment in education, tax relief for homeowners and working families, continue Medicaid transformation, continue rebalancing to community-based care, eliminate bill backlog, and restrain state spending and ensure stable, predictable state finances.
In order to achieve his objectives, Quinn is calling for fiscal reform measures that will include spending caps, a “rainy day” fund, and the passage of The Grant Accountability and Transparency Act, which would require uniform grants reporting and public disclosure for recipients of all state grants.