Businesses regularly have to make difficult budget decisions. We understand that those decisions can be painful, but they are necessary. Today, Illinois passed its first full and balanced budget in three years. The budget will provide stability and the necessary foundation to address Illinois’ budgetary challenges. This budget needs to be the first step in what must be years of reforms and vigilant budgeting to come.
The final budget is a mix of spending cuts, tax increases, and reforms, all of which were proposed by both parties. Here’s an overview:
• $36 billion budget
• $3 billion in spending cuts, including a 36% cut to human services
• $5 billion in new revenue from raising individual income tax to 4.95% and corporate income tax to 7% as well as expanding some service fees
• $1.3 billion in savings from significant pension reform by creating a new tier that moves away from fixed-pension to matching-401k
• Reinstates the R&D credit
• Reinstates Domestic Production Activities Deduction, which gives an incentive for businesses that produce most of their goods/service in the United States
• Makes permanent the manufacturing machinery and equipment exemption and reinstates graphic arts under that
• 10% cut in downstate transit funding
• $100 million from the downstate Road Fund to cover Chicago and downstate transit
• Authorizes $6 billion in bonds to begin addressing the State’s $15 billion unpaid bills
• Creates a $3 billion surplus directed at paying bills/debts
There are many components of this budget which the Chamber is deeply concerned about, not the least of which is the tax increase. The Chamber is committed to advocating for tax and regulatory policies which make our communities competitive while also working to ensure adequate investments are made in education, workforce, and infrastructure. All of these are vital to business success and economic growth. All of these felt some pain in the budget.
However, the budget is balanced and allows the State to begin repaying its debts. Without this budget, the State was operating at a $6 billion deficit, and court-ordered expenses were expected to overtake revenue this August. Junk-bond status was a certainty, public universities would have lost their accreditation, thousands of students would have lost all Federal student aid, public schools would have closed, infrastructure maintenance and improvements would have stopped, and local governments would have continued raising property tax to provide essential services.
This budget doesn’t fix the problem, but it does provide stability and the necessary foundation. It is important for Illinois to take the next step on workers’ compensation reform, reduce regulatory burden, and ensure a climate that encourages business growth.
Illinois’ budget problems were caused by years of bi-partisan fiscal irresponsibility. It will take years of bi-partisan fiscal diligence to fix. The Chamber is grateful to all of our leaders that contributed to the budget. We look forward to working with our leaders to ensure policies that support and enable business and economic growth.