I grew up just outside of Chicago in Lincolnwood, Illinois. Last year the Land of Lincoln passed a huge tax increase. Personal income taxes increased by 66% (from a 3% rate to 5%); the corporate tax rate was also dramatically raised. Did the extra $7 billion fix the problems?
No.
The budget deficit increased to $5 billion from $4.6 billion, and over $8.3 billion of bills haven’t been paid. Why didn’t increasing the tax rate fix the problem? Because the big issue is the spending of money, not the revenues to the state.
Illinois pension costs are mammoth, but pension are sacrosanct to Democrats in Illinois’ legislature. Bluntly, pensions in Illinois and elsewhere are going to have to be cut; there just isn’t the money to pay for them. And things will likely continue to worsen until the actual cause of the problem is addressed.
Illinois isn’t the only state facing these issues. In Hermosa Beach, California (near Los Angeles) meter maids make nearly $100,000 a year. The chief of police doesn’t want to privatize the service because, “When you outsource, you take away union jobs.” Perhaps Hermosa Beach wants to join Stockton, Mammoth Lakes, and San Bernardino in Chapter 9.
Meanwhile, a committee in the California Assembly approved $100 million for film credits. California voters may wish to remember this when they vote on Governor Brown’s tax increases this fall. (For the record, the film credit passed unanimously. The measure still must pass the full Assembly and the State Senate.)
If you’re a resident of California or Illinois let your elected officials know what you think about this. And if you don’t like the answers you receive, remember that there’s an election in less than three months. It’s the only way that change is going to happen.