By Benjamin Yount | Illinois Watchdog
SPRINGFIELD — Illinois does not have a pension problem. Illinois has a tax problem.
Those two sentences have long been the mantra for the state’s public employee unions.
Now, the idea of taxing Illinois out of its worst-in-the-nation pension problem is getting increased attention from lawmakers.
“It’s very difficult to find a way to solve the state’s pension funding problem,” Martire explained to lawmakers. “Given that (Illinois
has) this structural imbalance between revenue growth, cost growth and its obligation to fund its other debt.”
Martire is saying Illinois has failed to generate enough money to pay the $8 billion per year pension payment and still pay to operate state government.
Marite’s solution? Expand Illinois’ sales taxes and adopt a progressive income tax. Martire calls both “revenue reforms that are necessary to get the state’s fiscal house in order.”
Martire has long repeated calls from Illinois’ biggest public employee unions to increase taxes in lieu of cutting pension benefits. The CTBA supported more taxes in 2012, 2011, and as far back as 2008.
If Illinois has a problem, say Republicans in Springfield, it centers around spending.
“The five years before the (2011 income tax increases) passed were the five highest revenue years the state has ever had,” Palatine Republican Senator Matt Murphy said. “Since the tax increases passed, (taxpayers) are now giving another $7 billion on top of that.”
Republican House budgeteer David Harris, R-Arlington Heights, in June told Illinois Watchdog the state is collecting record amounts of tax dollars.
“The state has never brought in more money, Harris said. “Illinois does not have a revenue problem. We have a spending problem.”
Republicans, however, have a numbers problem. Democrats control the Illinois Legislature, and top Democrats like the idea of a progressive income tax.
“I have long been an advocate of a progressive income tax,” pension committee boss Kwame Raoul, a Chicago Democrat, declared last week.
Raoul has been saying the same thing for months. He told Illinois Watchdog in January the state needs to look at a “comprehensive” tax and pension reform solution as part of a pension fix.
In a last-minute vote in January 2011, Illinois raised income tax rates for individuals and businesses.
People now pay a 5 percent tax on their income, up from 3 percent. Businesses pay 7 percent, up from 4.3 percent.
Those tax rates are scheduled to roll-back in January 2015 — to 3.85 percent and 5.25 percent, respectively, unless lawmakers vote to make them permanent.
There have already been calls to do so.
But Murphy warned supporters that simply raising taxes leaves the state on a dangerous path.
“How much do you think we need, above and beyond the literally billions of dollars that taxpayers have given state government? How many billion more do you think we need?”
Illinois’ pension reform committee will meet again Monday, but lawmakers are not expected to come to terms on a pension reform plan — or a tax reform plan— in time for Gov. Pat Quinn’s July 9 deadline.
Contact Benjamin Yount at [email protected] and find him on Twitter @ILWatchdog.