More than 50 years after Illinois began taxing residents’ income, voters in 2020 will decide whether the structure of the income tax should undergo a major change. The issue is highly controversial, and the decision will have a long-lasting impact on the State’s finances. Since Illinois’ income tax was adopted in 1969, the State has had a flat income tax. Although tax rates have varied over the years, every taxpayer has paid the same rate, which is currently 4.95%. That could change due to a…
Annually the Civic Federation releases a report on consumer taxes in the City of Chicago. Consumer taxes are tied to the use or consumption of certain goods and services that can be charged directly to consumers through retail transactions or passed onto consumers by businesses or governments. Consumer taxes in Chicago are imposed at various levels of government including by the City of Chicago, Cook County, the State of Illinois and federal government. This blog highlights the increases and…
UPDATE: The Cook County Board passed ordinance 20-0658, imposing a 3% cannabis retailers’ occupation tax on recreational cannabis sales within the county. The new tax will go into effect July 1, 2020 and is in addition to state and local sales taxes and other cannabis taxes, as described below. The county projects it will receive $850,000 in revenue from the tax during the last six months of 2020, but the FY2020 Cook County budget does not rely on any revenue from the new tax. Earlier this…
A recent report shows that Illinois’ statutorily required contributions to its five pension funds are expected to total $9.8 billion in the upcoming fiscal year. How much of the State’s budget will be devoted to pension payments? The answer is not as simple as it might appear and has been the subject of some confusion, including here and here. The main reason for the mistake is that most commentators focus on the General Funds budget, while State pension contributions come from other State…
For more than a decade, the Civic Federation has strongly supported consolidation of hundreds of police and fire department pension funds across Illinois to improve investment returns and reduce administrative costs. The step is now being considered by the General Assembly following recommendations in October 2019 by Governor J.B. Pritzker’s task force on pension consolidation. Senate Bill 616 would consolidate the assets of Illinois’ 649 public safety funds, not including those in Chicago,…
Supporters of a graduated income tax have emphasized its potential to stabilize the State of Illinois’ shaky finances and reduce pressure on local property taxes. However, like the previous income tax increases in January 2011 and July 2017, the new tax structure would continue to short assistance to local governments, many of which also face severe financial pressures. Public Act 101-0008, the graduated tax plan enacted in June 2019, is projected to generate an additional $3.6 billion for the…
In the State of Illinois, non-home rule units of government located in counties subject to the Property Tax Extension Limitation Law (PTELL) are limited in the size of their annual property tax extension to 5% or the increase in the Consumer Price Index (CPI), whichever is less. However, the limitation is subject to some exceptions and can be increased by referendum. The Forest Preserve District of Cook County is reportedly considering asking taxpayers for a larger levy to pay for pensions and…
A key Illinois Medicaid panel has recommended that the State move away from costly and often ineffective hospital detoxification services to treat opioid addiction. The Medicaid Advisory Committee on August 2 urged the State’s Medicaid agency to revise its reimbursement practices to discourage traditional hospital detox stays and provide financial incentives for evidence-based care such as medication-assisted treatment. The panel also recommended that the Illinois Department of Healthcare and…
In an earlier blog post, the Civic Federation analyzed the FY2020 budget enacted by the General Assembly. At the time, the State had not yet released a summary of appropriated amounts for capital, and so the analysis offered was preliminary. When Governor Pritzker signed the capital appropriations and revenue bills, the Governor’s Office released a report allowing for more detailed analysis. The most distinguishing feature of the Rebuild Illinois capital plan enacted with the FY2020 budget is…
A new pension buyout plan designed to save hundreds of millions of dollars for the State of Illinois in the fiscal year that just ended actually generated relatively minor savings in FY2019 and does not appear likely to meet the annual cost-reduction target over the next few years. The shortfall has occurred despite robust participation by members of the State Employees’ Retirement System (SERS), the pension fund that was supposed to account for most of the savings. The problem stems from the…
