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As lawmakers eye spending priorities, new report puts numbers in focus

Illinois Watchdog.Org

Friday, December 21, 2018  |  Article  |  By Cole Lauterbach

Budget--State (8) , Pensions (70) , Revenue , Taxes, misc. (89)
State government researchers released a new report this week detailing how Illinois' taxes and business climate compare to other states as lawmakers study ways to pay for transportation projects throughout the state and Gov.-elect J.B. Pritzker looks to implement the promises he made on the campaign trail.

The nonpartisan Illinois Commission on Government Forecasting and Accountability released a report that profiles Illinois’ tax rates, revenues, spending, business climate and job trends. It also puts that information in context by comparing Illinois to the rest of the nation.

Revenue manager Jim Muschinske said Illinois leans on how much its residents make.

“Our general funds is heavily dependent upon income taxes, personal income taxes and also sales taxes,” he said.

The report includes information on how Illinois taxes motor fuel more than most others, but collects much less per capita because many people who live in Chicago don’t drive cars.

Muschinske said this could become relevant in Illinois’ plans to pay for a new infrastructure bill.

“That seems to be a hot topic right now,” he said.

The updated report comes as Pritzker's transition teams prepare for him to move into the governor's mansion. 

Pritzker has said he plans to build the state's economy by revitalizing small business growth with improved access to capital, infrastructure improvements and investment in higher education, among other efforts. He's also said he favors a graduated income tax and increasing the state's minimum wage to $15 an hour. On the campaign trail, 

Illinois’ has more than $200 billion of unfunded public employee retirement liabilities, and more than $7 billion in backlogged bills. That bill backlog is accruing interest of up to 12 percent a year. The state budget approved this Spring is more than $1 billion out of balance.

In regard to business tax climate, analyst Eric Noggle said Illinois' rank national varies based on the metrics that are used to compared states. However, he said Illinois is generally closer to California in terms of business friendliness than states like Florida and neighboring Indiana.

“We’ve looked at these studies over the past several years and Illinois’ standing hasn’t changed much, consistently staying in that lower half of the rankings,” he said.

In the report, researchers noted that such comparisons and rankings often come under fire.

"As a whole, the most recent results of these studies tend to rank Illinois in the middle to lower half of these rankings, with an average ranking of 39th," researchers wrote in the report. "While the legitimacy of these studies are often questioned, their mere existence is noteworthy because of the negative connotation these studies often give Illinois."

The report also profiled how public services are more commonly funded from local property taxes than other states.