As predicted the Illinois Senate voted to approve the one-third tax hike in the personal income tax and as predicted Gov. Rauner has vetoed it. Politico reports:
Attempting to avoid becoming the first state ever to see its bond rating downgraded to “junk†status, the Illinois legislature on Tuesday sent Republican Gov. Bruce Rauner a $36 billion spending plan in a dramatic showdown that culminated in an extraordinary Fourth of July vote.
Rauner, who called the legislature into a special session to pass a budget, quickly vetoed the measure, citing its permanent income tax increase; the governor, who is attempting to salvage his precarious 2018 reelection prospects, has sought a temporary tax hike and a property tax freeze.
The Illinois Senate already voted to override the veto and the House is expected to follow suit Tuesday afternoon, setting up stability for the state as markets reopen Wednesday.
One of the lawmakers had this to say about the measure:
“We are in a moment in time,†state Sen. Toi Hutchinson, among the Democratic leaders in negotiations said on Tuesday. “We are faced today with the fierce urgency of now.â€
It’s been three years since Illinois has had a budget. The legislators didn’t even bother meeting about the budget until June of this year. Under those circumstances “now” has a way of sneaking up on you.
The Democrats wanted a tax hike and, presuming the House votes to override the governor’s veto as is expected, they’ll get it. The last time the personal income tax was this high they did nothing to straighten out the state’s finances. It’s hard to believe they’ll do any better this time around.
What’s easier to believe is that Ilinois’s higher taxes will drive more people and businesses out of the state. Illinois is not California. We don’t have mountains or ocean or a benign climate to attract people. Illinois’s tax base is falling and its expenses aren’t. The state legislature needs to come to terms with that reality.
Politicians don’t think about effects of their policies in the long run. It’s usually in increments of how long is the next election. I think at least Rauner was attempting to inject some sanity in the already too high taxes. But, there are simply too many bureaucrats and political bedfellows at the legislative helm for anything reasonably constructive to prevail.
As I said in an earlier post, why would Rauner even want to run again, encircling himself with more of the same entrenched corrupt politicians?
Illinois’s sales and property taxes are high relative to other states but its income tax is still in the middle of the pack even with the increase.
The problem I’m trying to highlight is that Illinois’s situation isn’t the same as that of high tax states like California or New York. We have net outmigration and few assets with which to attract new residents.
When I compare Illinois with CA it is done with an eye on which party is in power. Both states are Dem controlled – CA with a super majority legislature, it’s governor and every state office holder being a Democrat. When we have elections the top vote getters go head to head in the GE, which currently leaves Republicans out of competition, entirely.
Basically, there’s no chance for any policy to succeed, other than one promoted by the Dem party. There is actually an intraparty dem disagreement, dealing with pushing state debt even further in the hole, because a single payer healthcare bill was pulled instead of going forward without any funding ideas in place – a plan that would be twice as costly as the state budget! The unions are livid over the bill being stopped, for now. With over-generous public sector pension deficits, having one of the biggest welfare populations to support, advocation of open borders and sanctuary protections throughout the state, local sales tax @ 10 1/2 %, state income tax one of the highest in the country, business regulations galore, the only bright light is the sanity of Jarvis tax oversight still in place giving some temperance to property taxes. Otherwise, despite the geographic and climate gifts afforded CA, I see us going down the same road as Illinois, with the same destination of fiscal collapse as a future endgame.