By: Ted Dabrowski
States across the country have been cutting taxes over the past two years as their coffers have spilled over, overwhelmingly due to the impact of the trillions in Federal covid relief doled out across the country. We reported in March that 22 states, including every one of Illinois’ neighboring states, had cut income taxes permanently since 2021. Now it’s 24 states, with Oklahoma and North Dakota recently joining the tax-cutters.
But not Illinois. Never mind that its tax coffers have ballooned to record levels. The state’s budget crunchers last week said this: “The FY 2023 General Funds revenue totals, in terms of both base receipts and total receipts, become the highest on record for the State of Illinois.”
Instead of tax relief for Illinoisans, Gov. JB Pritzker and the state legislature are doing what they do best: spend.
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It’s important to know just how much higher tax revenues in Illinois are compared to before covid.
In its 2019 projected budget (July 1, 2018 – June 30, 2019), Illinois expected to take in a total of $37.9 billion. That budget was already bolstered by the 2017 tax hike that raised state taxes on Illinoisans by over $5 billion yearly. Illinois politicians got what they wanted and that hike was supposed to finally “balance the budget.”
Jump to today. The state took in $53.13 billion in tax revenues in the 2023 budget that just ended in June. A record haul. A massive 40 percent more, or $15 billion, than just four years ago. An increase of almost 9 percent a year.
So no relief for Illinoisans? Nothing?
I can tell you this: Most Illinoisans didn’t get four straight raises of 9 percent a year since 2019 to make up for all the inflation and lost opportunities they suffered during Pritzker’s covid lockdowns and restrictions, among the most draconian in the country.
It’s the opposite. We don’t have specific Illinois data, but the Wall Street Journal recently reported that after taking inflation into account, Americans haven’t had a raise in two years. If Americans have been struggling, Illinoisans have had it worse.
Illinois has lagged the country in growth and job creation, as Wirepoints reported recently here. Since Gov. Pritzker took office, Illinois has created no net new jobs, the state’s unemployment rate has consistently been among the nation’s five worst and its GDP among the bottom ten.
So where are all the billions going? To pay off loyal constituencies and to buy off new ones. That’s the Illinois way. The increase in tax revenues is a windfall for Gov. Pritzker and the legislature to spend more and to shore up their political support.
An exaggeration? Take these three good examples.
1. AFSCME just tentatively agreed to a new contract and everybody is reportedly happy. So you can bet they got big increases making sure they got compensated for the higher inflation. A happy outcome is in big contrast to times under Rauner. Love Rauner or hate him (we thought he had a failed tenure…read here), he at least tried to rein in ballooning state costs and government union power.
We have no data to present on AFSCME’s new contract because none has been shared, again as is typical in Illinois. The labor laws protect the negotiators and keep taxpayers in the dark, letting them find out what they’re on the hook for only after it’s too late and the ink is dry.
But we do know what the base for the negotiations were. Wirepoints did significant work to reveal what went on before the last negotiations and the details are here: Six facts Pritzker can’t ignore when negotiating AFSCME’s contract. Avg. total compensation of nearly $110,000. Guaranteed pensions and social security. Free retiree health insurance for career workers, and more.
2. Pritzker just announced another $40 billion in spending in the largest-ever construction program in state history. What can go wrong there? The last big capital plan was a boondoggle organized by a senator who led the Transportation Committee and later got busted for taking bribes for red-light cameras. Oh, and this one fact. Pritzker doubled the gas tax to fund that last capital plan. Illinoisans now pay the second highest gas tax in the country.
We wrote about that last capital plan here: Illinois’ reckless $45 billion capital spending binge
3. Hundreds of millions are being spent on illegal immigrants that are pouring into the sanctuaries of Illinois and Chicago. On top of housing and general care, spending might be over $1 billion in new Medicaid costs. What was “expected” to be just a $2 million expenditure three years ago has skyrocketed to an estimate of over $1 billion. We wrote about that in “New report exposes growing, billion dollar budget fiasco in Illinois’ free Medicaid program for undocumented immigrants.”
Gov. Pritzker says he’s going to limit that spending to $500 million, but let’s see if that ever happens. He’s under a lot of pressure.
Those are just three big ones covering lots of constituencies, old and new. To find the longer list of spending, just google all the spending initiatives Pritzker announces from time to time. You wouldn’t be wrong to mistake all that covid spending as campaign initiatives.
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Ever higher taxes and more spending here, falling taxes elsewhere. It will continue to take a bite on the number of Illinoisans willing to stick around.
Read more from Wirepoints:
Expect no retraction or apology. This what they do.
The state’s existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.
The personal exemption for 2023 was scheduled to have an inflation adjustment. Instead, they voted to keep the 2023 exemption at the 2022 level and have advised that taxpayers might want to adjust their withholding upward to avoid underpayment penalties. In my mind this is an income tax increase. A pox on their house!
Is there no maximum level of taxation that can constrain the Illinois General Assembly in its funding of every social, medical and educational program?
The maximum level is determined by the voters. If there is no outrage by the majority of voters then taxes will continue to rise. The majority of voters seem happy with their government.
Perhaps more accurate to say that a majority of voters have elected the people in charge.
And, as you often note, the people in charge really do need to raise taxes. Johnson actually campaigned on new taxes. Pritzker is cagier about what he says, however his need is just as urgent.
So, as voters get the taxes they elected, we’ll see how happy they are about them.
All residents that are thinking seriously about leaving their state, this (above) is the most important map you will need. It was my starting point when I left Illinois. Next, I considered three additional factors. First was climate. I wanted minimal snow but also not extreme heat. Second was distance from Chicago area. I still have some family/friends there and I would visit at least yearly. Third was transportation. I travel so I wanted to be within an hour or two of an international airport. Today, I write this comment from about an hour north of Nashville Tennessee. It’s about… Read more »
Please remind your new neighbors why they left Illinois and to vote accordingly. I will be there soon.
Some of the reasons I left Taxistan;
Cut taxes and raise pensions. It is called Democratic math, taught in the CPS. A real winner.
Ever more government intervention comes at a steep price. Even $53B isn’t enough. Tax cuts are for suckers.
Don’t forget-Down in Springfield their motto is written in a little black book they carry around and maybe a banner.
It is a revenue problem “NEVER” a “SPENDING” problem!!!