Instead of addressing the state’s problems, lawmakers are hoping voters can be bribed into ignoring years of harmful tax hikes and unbalanced budgets.
Instead of addressing the state’s problems, lawmakers are hoping voters can be bribed into ignoring years of harmful tax hikes and unbalanced budgets.
A fter the economic pain caused by Covid-19, many state governments decided to offer residents some relief in the form of tax cuts. Kansas permanently reduced its grocery tax. Idaho, Indiana, Iowa, and Utah cut their income taxes, and Mississippi flattened and cut its income tax.
Yet while many red states pursued permanent tax relief, blue states such as Illinois went a different route, opting for temporary relief. Illinois enacted short-term cuts to gas, grocery, property, and other taxes, many of which expire shortly after Election Day, and all of which will expire by July 2023, save for an expansion of the Earned Income Tax Credit.
Lots of politicians employ policy gimmicks in election years, but Illinois has turned the practice into a high art. Its fiscal year 2023 budget is riddled with sweeteners that make for good campaign promises but will leave taxpayers disappointed after the year is up.
Earlier this month, Governor J. B. Pritzker, who faces reelection in November, touted an estimated $1.8 billion in taxpayer relief. Included in Pritzker’s temporary, election-year plan is:
- A one-year suspension of Illinois’ 1 percent grocery tax.
- A six-month delay — not suspension — of the next automatic gas-tax hike, which shields lawmakers from any accountability for doubling the state gas tax to 38 cents from 19 cents in 2019.
- An expansion of the Earned Income Tax Credit for low-income residents, making it more generous and available to more workers. This is the only permanent change in the package.
- A one-time income-tax credit for joint filers making up to $400,000 a year, worth $100 in tax for joint filers plus an additional $100 per child.
- A one-time, $300 property-tax rebate for state residents.
On April 9, Illinois lawmakers stayed up until 6 a.m. to pass this plan alongside the state budget, racing to meet an artificially imposed deadline — the constitutional deadline for passing a budget is May 31 — so they could switch into campaign mode before the June 28 primary. They cobbled together a $46.5 billion budget running to more than 3,200 pages, and passed it within one day of its public release. You could hardly expect most lawmakers to know what’s in a package that big having had so little time to read it.
The most egregious provision of the plan is a new measure requiring gas-station owners — private businesspersons — to post signs alerting customers that the automatic annual gas-tax hike is delayed. Those who refuse will be fined $500 per day. Meanwhile, two months after the election is safely over, drivers will be hit with the hike, and will then feel even more pain at the pump when the gas tax automatically goes up for the second time in a year on July 1, 2023. All told, the gas tax will have increased from 19 cents in 2019 to 39 cents in 2021 and 2022 to 45 cents by mid 2023.
The law recommends a sign be displayed at grocery stores about the one-year suspension of the 1 percent grocery-sales tax, but grocers who fail to comply won’t be hit with a fine as gas-station proprietors will.
Forcing businesses to spread your political message isn’t a function of government; it’s corrupt, and possibly even illegal. If Pritzker wants Illinoisans to thank him for suspending an automatic gas-tax hike he approved just two years ago, perhaps he should be more forthcoming about all the tax pain he’s inflicted during his tenure.
Instead of making tough spending decisions or using federal windfalls to help solve long-term fiscal problems, Pritzker is opting for budgetary band-aids that will sound good in campaign ads. To take just one example, lawmakers failed to close the deficit in the state unemployment-insurance trust fund or repay a related federal loan, instead making a partial $2.7 billion payment on the $4.5 billion balance. They could have used a little over $6 billion of the nearly $11 billion the state received under the CARES Act and the American Rescue Plan to repay the federal loan and bring the trust fund back to its pre-pandemic balance of $1.9 billion. Instead, they spent the money on pet projects for their districts and other one-time uses designed to help them win reelection.
Failing to fix the trust fund has left the state with another time bomb set to explode right after the election: payroll-tax hikes on small businesses and other job creators.
The budget does suspend so-called “speed bumps” in state law — automatic tax increases and across-the-board benefit cuts designed to close fiscal gaps — but only until January 1. Workers and businesses will both get hit with those tax hikes and benefit cuts next year, because there’s no federal aid left and virtually no alternative. Because Illinois will still have an outstanding unemployment loan from the federal government on November 10, the federal payroll tax paid by state businesses will shoot up 0.3 percent two days after the election.
It’s important to remember what Pritzker did in the years he wasn’t facing voters. Pritzker’s record includes 24 tax and fee hikes, totaling more than $5.4 billion. Since he took office, everything from vehicle-registration fees to parking-garage taxes to online-sales taxes and state and local gas taxes has gone up.
So, while the Illinois Democratic Party is handing the typical family $556 in one-time tax cuts and rebates before voters head to the polls, it isn’t undoing the years of damage Pritzker has inflicted, which add up to $2,721 more paid annually in taxes by the average family. What’s more, Pritzker originally campaigned for governor on the promise of substantive property-tax relief for Illinois families, who have instead seen their annual property taxes go up by an average of $1,913 more on his watch.
The main culprit behind Illinois’ high taxes is its unfunded pension liabilities, which take up 26 percent of the state budget — the highest percentage in the nation. Permanent tax relief for residents is impossible without constitutional pension reform. A “hold harmless” pension-reform plan would save the state $2.4 billion in the first year and more than $50 billion by 2045. It would also fully eliminate pension debt in that time while preserving all promised benefits to public employees for work already performed.
If lawmakers are serious about improving the state in the long term, they should be focused on that — not on attempting to bribe voters into overlooking years of harmful tax hikes and unbalanced budgets long enough to reelect them.