Naperville-area representatives in the General Assembly may have their partisan differences, but on the issue of the state’s income tax they are unanimous in the desire to let the 67 percent increase enacted in 2011 expire on schedule in 2015.
“I absolutely will not vote to extend it,” stated Sen. Linda Holmes (D-Aurora), during a political forum during the Naperville Area Homeowners Confederation meeting recently.
Holmes joined her Democratic colleague state Rep. Stephanie Kifowit (D-Oswego), and Republican Senate Leader Christine Radogno (R-Lemont), Sen. Michael Connelly (R-Naperville) and state Reps. Ron Sandack (R-Downers Grove), Darlene Senger (R-Naperville) and Jeanne Ives (R-Wheaton) in what has become a traditional annual visit to the homeowners’ group in Naperville.
Holmes said she voted for the 2011 increase because the state of Illinois’ finances left no other option.
Kifowit also opposes making the tax permanent, and there was no argument from anyone on the Republican side.
But Sandack reminded everyone that the expected move to make permanent the increase that was supposed to allow Illinois to catch up on debt, but went primarily to reduce the state’s unfunded pension liability, was likely only the fall-back position of an attempt to place a referendum question on this year’s ballot asking voters if they approved of amending the state constitution to allow a progressive income tax.
The Illinois Constitution enacted in 1970 mandates a flat income tax for all Illinois taxpayers.
“It will be couched in terms of equity and fairness,” Sandack said.
He said he believes the state has plenty of revenue and that the real problem in the budget is one of overspending.
If the referendum effort fails, “plan B is definitely going to be a tax increase,” Sandack said.
Connelly said that a progressive income tax would be an “absolutely unmitigated disaster” for Illinois.
Connelly recounted a story of an Egyptian citizen educated in Illinois and wanting to locate a plant in the state, only to decide to invest the $1.5 billion in Iowa because he “did not believe Illinois can get out of this fiscal mess.”
Although the support for the progressive tax referendum question comes almost exclusively from Democrats, both Holmes and Kifowit were adamant in their opposition.
Kifowit said that “definitely I am against the progressive tax,” while Holmes said it “looks real good” for some to be in favor of increasing taxes on the top earners, but with their ability to shelter their incomes, the progressive tax would begin to affect lower wage earners.
The pension reform signed into law by Gov. Pat Quinn was the source of some disagreement among the participants.
The legislation raises the retirement age, reduces yearly cost-of-living benefits and establishes defined contribution options for new public sector employees.
But Ives pointed out that the original version of the legislation contained language requiring state employees to contribute 2 percent more toward their retirement, while the legislation signed by Quinn actually reduced their contribution by 1 percent.
Moreover, she pointed out that the original proposal planned to trim $187 billion off the unfunded liability, but that the final version included $24 billion less in savings.
She pointed out that the most a taxpayer could receive in Social Security was about $30,000 yearly, while the Teacher’s Retirement System allowed a teacher to retire after 30 years of service with a pension of $72,000, which she criticized as being unfair.
Holmes had some problems with the reform also, but her objection was that it was the public sector employees who were being treated unfairly.
“They were promised,” she said. “It was negotiated what their pensions were going to be ... it’s a moral issue.”
Radogno said she thought the reform was good for Illinois, but would not satisfy those who thought the pensions should be “fully funded tomorrow.”
Connelly noted that with the state constitution containing language that prohibited cutting public sector benefits, the matter will probably wind up before the Illinois Supreme Court.
“That God for that,” Connelly said, welcoming the issue finally being settled.
Indeed, public sector unions have already filed lawsuits challenging the reform.
Another potential headache for suburban and downstate property taxpayers was the idea of shifting the responsibility for the employer’s share of teacher pension contributions from the state back to local school districts.
All the legislators were against it, with Kifowit saying that she had learned that in Springfield, “everything is still on the table,” and Holmes agreeing there was a chance the idea would come up again.
Radogno didn’t think there would be a proposal before the 2014 election, but also saw the issue as far from settled.
“Hold onto your wallet come November,” she said.