Report: Deficit Expected Even If Tax Hike Stays
Even if Illinois keeps its higher income tax rate, a new report projects the state is headed toward deficit spending.
Illinois residents are paying a 5-percent tax on their income. It's been that way since 2011.
According to a new report from the University of Illinois' Institute of Government and Public Affairs, that tax money helped balance Illinois' budget this year.
But economist David Merriman, who directed the project, says that won't last.
"We expect that expenditures will grow faster, based on historical patterns, expenditures will grow faster than our revenues will. And we're going to move into deficit," he said.
Merriam says that'll be the case even if the current income tax stays in place. Unless legislators change the law, the tax rate is set to drop in January 2015. Merriman says if that happens, Illinois' annual deficits could become much larger -- he predicts that by 2025, they will reach $14 billion a year, "a very large percentage of the budget, and would be probably an intolerable situation. We wouldn't be able to have contractors work for us because we wouldn't be able to promise to pay them the money we owe them."
While he won't say what lawmakers should do about the tax situation, he does have advice for voters: pay attention.
"I think it would be unwise for the people of Illinois to vote for a politician who said he, or he or she, was going to allow the tax rate to expire without also telling us what they're doing to do on the expenditure side of the budget," he said. "How are they going to control expenditures?"
Merriman says politicians should be ready to offer an itemized list of drastic spending cuts.