Illinois, like the U.S. government has spending problem

A recent post discussed the perennial debate between those who advocate for smaller government and those who advocate for bigger government. The debate usually centers on the question, “Does the government have a spending (debt) problem or a revenue (income tax) problem?”

The U.S. government has seen its revenues increase in the last five years from $2.015T to $2.9T, an increase of almost 38% or 7.5% per year, while federal government spending increased over 8% on top of the revenue increase, for a total increase in spending of 46%!

How many taxpayers do you think got a 7.5% raise in each of the last five years and wouldn’t be able to live within their means?

Illinois’ proponents have a similar debate and the state’s debt and subsequent credit downgrades place it at the bottom of the overspending pile of states.

In 2012, the state collected more than $35B in tax revenue, a 43% increase from 2010, a three year period. Buoyed by the tax increase in 2011, personal and corporate income tax revenues collected by the state increased by 79%.

The entire tax increase is going to the state’s underfunded pensions. In 2012, the state collected almost $20B dollars in personal and corporate income tax revenue. However, the state’s backlog of unpaid bills increased by 60% and the unfunded pensions went up by 13% over that same period.

The state has obviously got a spending problem as has the federal government. The temporary 2011 increase in state income taxes is scheduled to be reduced from 5% starting in 2015 and ultimately reduced to 3.25% in 2025.

A bill has already been introduced by Lou Lang (D-Skokie) to make the temporary 2011 personal and corporate tax increase permanent – no honor among thieves.

Representative Dan Kotowski, (D-Park Ridge) isn’t even satisfied with the funding received by the state in the last few years. Representative Kotowski thinks that some of the special funds, approximately $2B, should be raided to pay some of the state’s bills and to stop the $400M cut in education funding.

Most of the increase in income tax revenue for 2013, another $1B over last year, will only pay for the increase due in public union pensions again this year. The current funding is about $8B per year going into the 5 pension funds.

The annual increase in pension payments is taking money away from all other areas of state government and will continue to do so, until the legislators reduce the pension plan benefits or raise the income taxes even higher.

Boards of Education around the state have been warned that a 9% reduction in General State Aid is forthcoming, and it’s not all going to the pension funds. The governor is now rumored to be giving a 4% wage increase to the American Federation of State, County and Municipal Employees, the AFSCME union.

It’s obvious that Illinois, like the federal government, has a spending problem, not a revenue problem and what they are doing to the residents of this state borders on malfeasance in office.