The state’s temporary income tax increase rolls back on Jan. 1. A few weeks ago, Illinois Senate President John J. Cullerton authored an opinion piece in the Chicago Tribune explaining why the temporary increase was approved, how the money was used and where the state now stands.
Setting the record straight: Temporary tax increase used to pay down state debts
I get a kick out of reading Tribune editorials in which editorial writers appear to wade through the state archives to unearth the very words of the sponsor of the temporary tax increase. The writers offer them up to the public as some kind of historic artifact that they painstakingly interpret for the modern masses.
It's too bad, I often think, that we can't just talk to the guy who was the sponsor.
Oh, wait, we can. It's me, still — at the moment — alive and well and just a phone call away.
With my interest piqued, I went to the General Assembly's website (ilga.gov) to read for myself my comments from January 2011.
I did say this:
"The purpose of this bill is to raise enough money so that we can continue to pay our pensions without borrowing the money, to pay off our debt, to have enough money to pay the interest on that debt, and for the first time ever, establish caps on how much we can appropriate."
All of those things happened.
The value of the higher rates approved in January 2011 is approximately $31.6 billion. Since 2011, the state has used that revenue to pay approximately $3.6 billion in old bills, pay off or pay down $8 billion in bonds issued to make pension payments during the worst of the recession and make more than $21 billion in payments to the state's pension systems.
There it is. No great secret or mystery. All of the money has gone to pay our bills and pension debt.
And it's not like we stopped with the tax vote. We've done a lot of other things to control state spending.
For example: We approved a pension reform plan that could save billions. The Tribune endorsed that plan. We approved a multibillion-dollar Medicaid overhaul known as the SMART Act.
Still, critics claim there's increased spending in the budget thanks to the tax increase. Yes, there is. Paying bills is spending money! It's disingenuous to criticize the state for ignoring its pension payments for the better part of 100 years, and then, once it starts making them, to essentially criticize us for making them.
And since I've got the files open, let's see what else I said in January 2011.
I repeatedly pointed out during that debate that this increase is temporary.
There was this: "So, this is very straightforward — for a temporary period of time, a four-year period. And we'll make the decision after the next governor's election as to whether or not you want to continue."
And this: "That would be a decision that the General Assembly would make on how to deal with it in 2015."
And this: "This is going away unless somebody votes to increase it."
In case that wasn't clear, allow me to clarify: The tax law expires on Jan. 1, 2015. The Illinois income tax rates will drop on that day — by law. No ifs, ands or buts about it.
And so that's where we find ourselves today. We are in the final months of 2014, awaiting the expiration of the temporary tax while in the midst of a race for governor with two candidates who've both said they in some way want higher tax rates in 2015.
It's no secret that I'm inclined to agree with them. Here, again from my January 2011 floor speech, is why:
"The fact is that we have been falling behind, in my opinion because of a structural deficit because our income tax rates are so much lower than (those of) other states. We've looked at states like New Jersey. We've looked at states like Indiana. And it turns out, they have higher taxes than we do. They have more money that comes in, even Indiana; $5.7 billion more we would have if we had their tax rates. So we fell behind. We are in desperate need to improve our bond ratings. We will do that by raising this money, and we acknowledge that a future General Assembly will decide whether they should be extended."
In summary, we did what we said we would do, and, four years later, we are where we said we would be.
John Cullerton, D-Chicago, is president of the Illinois Senate.