Senate Democrats pass tax increase/unbalanced budget

Senate Democrats pass tax increase/unbalanced budget

Continuing their annual tradition, Senate Democrats went back to their old tax-and-spend playbook, advancing another unbalanced budget reliant on the state’s second largest tax increase ever.


After months of good-faith negotiations with members of the Senate Republican Caucus, the Senate’s majority party stepped away from negotiations to muscle through permanent tax increases – 4.95 percent tax rate for individual taxpayers and 7 percent tax rate for corporate entities.


As a result of the stalled-out negotiations on meaningful reforms to provide residents and employers with an economic respite through significant property tax relief and workers’ compensation, the real reforms Senate Republicans have been working toward remain out of reach.


Though Senate Democrats have taken a step back from the progress made during the months of good-faith negotiations, Senate Republican lawmakers continue to advocate for property tax relief and common-sense reforms to make Illinois more business-friendly. They emphasized that passing massive tax increases without significant, accompanying reforms will only exacerbate the state’s stagnant job growth and fleeing population.


In addition to raising income taxes, the Senate majority dug a little deeper into the pockets of Illinois’ families by leveraging even more revenues through an expanded, permanent tax on services. Laundry services, storage facilities, security systems, pest control, and several other body modification services are just a few of the classes of services that would be subjected to the traditional 6.25 percent sales tax.


Additionally, two brand new classifications would assess fees and taxes on satellite TV and radio, Internet-based streaming services, and other entertainment products.


Tax-and-spend ways continue


Every year since 2003, the General Assembly, over the objections of legislative Republicans, has passed unbalanced budgets that are predicated on either higher taxes, a scheme of skipping scheduled payments to the state’s retirement systems and vendors, or raiding dedicated funds. The proposed Fiscal Year 2017 and Fiscal Year 2018 budget “fix” continues that same old playbook, after legislative Democrats walked away from the negotiating table early this week.


The spending plan was largely passed on a partisan roll call, with all Senate Republican lawmakers voting against yet another unbalanced budget.


“Watered-down” workers’ compensation


Senate Democrats also walked away from the negotiating table when it comes to passing meaningful reforms to fix the state’s broken workers’ compensation system.


Instead of continuing talks on a real workers’ compensation reform that will reduce costs for employers, the Democrat majority moved forward with House Bill 2525, which some contend will actually make the current system worse. The proposal removes flexibility for insurers and their customers, while adding unnecessary delays and imposing significant resource demands and costs. Employers say it doesn’t go far enough to address other aspects of workers’ compensation reform—there are no limits on employer liability, no substantial changes to indemnity awards and no rebalancing of the fee schedule.


They then pushed through poorly-written legislation to put the state into the workers’ compensation insurance business. The problematic bill creates a government-backed insurance agency, putting Illinois taxpayers on the hook for a $10 million loan to create a new workers’ compensation insurance company. 


For many years, Illinois employers have argued that the Land of Lincoln is at a severe economic disadvantage in terms of recruiting and keeping employers in the state, in no small part due to much higher rate of workers’ compensation insurance paid by Illinois businesses. Illinois employers already pay 27 percent more than the average state when it comes to workers’ compensation insurance rates. Illinois’ average payroll cost is $2.20/$100, while the national average is $1.85/$100.

Chapin Rose

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