$Account.OrganizationName
12th District E-Newsletter State Budget
Monday, March 15

Dear Neighbor:

As you may know, last week the Governor gave his annual budget address which outlines his approach to the budget for the coming fiscal year and serves as a jumping off point for the legislature's task of creating a budget. This budget is particularly daunting - Illinois' projected deficit is approximately $12 billion - due in large part to non-payment into pension funds, skyrocketing healthcare costs, loss of federal funding for state programs, dramatic decreases in both income and sales tax revenue and an unreformed, unresponsive tax system.

In the past the legislature has attempted to address the state's financial problems but to no avail. We slashed $3.2 billion from the budget last year and decreased the number of full-time employees in the state by 14,000 over the last nine years (Illinois has the smallest ratio of state employees to citizens in the country). The problem is that these singular approaches simply aren't enough and the legislature has turned to borrowing money to make up the difference. Moving forward the three must haves for a sustainable budget for Illinois are: pension reforms, spending reforms, and the modernization of our tax system.

Pensions are a particularly heavy burden on the state. In 2009 the state had $62.4 billion in unfunded pension liabilities.1 Although we have been making our payments in recent years, we have been borrowing money to do so. As such, last year alone Illinois borrowed $3.5 billion to make its payments and another $4.1 billion is due in the next fiscal year. The constitution prohibits us from changing pension payments and agreements made in the past. However, discussions about reforming pensions affecting future hires include ideas such as an increased retirement age for state employees, creating a tiered pension benefit system, attaching increases in benefits to inflation rates and capping pensionable income at $150,000.

Further spending cuts are going to be an important component of a sound budget, although the complications are fourfold. Firstly, debt service payments are numerous, non-negotiable and must be paid. Secondly, due to federal matching funds, cutting one dollar from the budget often results in a net loss of two for the program. Additionally, Illinois spending is already low (we have the 5th largest population but rank 45th in spending).2 Lastly, demand for services has, logically, increased dramatically as the economy has worsened. Human and social service programs and providers have already been stretched to the limit and we cannot neglect to pay money owed to and cut funding for vital services - basic human needs in many cases - for our own neighbors; especially when not doing so has a devastating multiplier effect on government assistance demand in general. Spending cuts will require a close analysis of state programs so that we may trim those that are the least effective and efficient without losing federal match or cutting vital services.

Finally, there is no doubt we need to restructure the state's antiquated tax system and increase revenue. There are a few things to note about our tax system that has hamstrung Illinois as compared to most other states:

  • No Progressive Income Tax - Illinois is constitutionally prohibited from using a graduated income tax. Therefore, increases to the income tax have an equal burden on all income classes rather than the more popular graduated income tax system where the higher income bracket an individual is in the higher their tax burden.

  • Low Income Tax - Illinois has the lowest income tax of any state that has one (only Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming don't have income taxes.)3

  • No Tax on Retirement Income - Many states levy a tax on retirement income, including all of the states that do not have an income tax. Illinois does not.

  • Shifting Economy - Since the early '90s our tax base has been skewing to services and away from manufacturing (42% of our states Gross State Product is service-related).4 The shift itself is not as large of a problem (in terms of revenue anyway) as the fact that we haven't restructured our system to accommodate the change. Illinois has always had a relatively low and non-inclusive service tax and we now rely on it for revenue more than ever. Of the 164 taxable services, Illinois only taxes 17 of them (mainly industry taxes on utilities) while other states tax many more: Delaware (142 services taxed); Hawaii (160 services taxed); New Mexico (156 services taxed); South Dakota (146 services taxed).5

  • Illinois is a "Donor State" - For every dollar Illinoisans send to the federal government by way of taxes, the state receives only $0.75 in federal spending.6 This number is so unbalanced that we rank 47th nationally. Per dollar of federal taxation, Illinois's return of $0.75 per dollar isn't even close to what our neighbors get in return for their dollar: Wisconsin ($0.86)7, Iowa ($1.10)8, Missouri ($1.32)9, Kentucky ($1.51)10 and Indiana ($1.05).11

  • Gas Tax - As of July of last year, Illinois ranks sixth in the nation when it comes to gas tax ($0.338 per gallon).12 Although this in and of itself isn't a disadvantage, the consequences are real and have a negative impact on manufacturing, investment and everyday decision-making. For example, anyone near an Illinois border that needs gas can buy it (along with everything else they spend money on at the gas station) nearby in another state for less. Companies that rely heavily on gas can either buy it elsewhere or locate outside the state altogether even though we have a desirable workforce in need of jobs. Illinois' neighboring states all have lower gas taxes: Indiana ($.0297)13; Wisconsin ($.329)14; Missouri ($.173)15; Iowa ($.22)16; Kentucky ($.225, but fluctuates with price)17.

  • Low Overall Tax Burden - The overall tax burden in Illinois is low despite our reputation for high state (and in some cases local, i.e. Chicago) sales taxes. Considering state and local taxes, Illinois ranks 30th in the nation in overall tax burden18. As such, our reputation isn't aligned with reality and Illinois' relatively low tax burden only fuels the fiscal crisis.

Combine all this with the fact that the single largest revenue source in the State of Illinois is property tax (which declines when the economy falters forcing cuts when services are needed most), it is clear that we need to modernize our tax system. Therefore, I am advocating for a most serious effort to come to terms with the realities of our broken tax system and realign it with our revenue goals and with sound tax policy. Illinois needs a tax system that is in-line with what the Center for Tax and Budget Accountability calls the "four elements of sound tax policy." They include taxation that is 1) responsive to growing economic sectors, 2) fair, 3) stable through tough economic times and 4) has minimal impact on taxpayer's decisions. Our heavy reliance on sales tax and on our prohibitively-burdensome property tax (mainly administered locally and used to fund a failing education system) doesn't fit the bill and must end.

I will keep you updated on the budget and other legislative initiatives throughout the legislative session. In the mean time, feel free to email or call if you have any questions or need anything at all.

Very Truly Yours,
Sara Feigenholtz
State Representative, 12th District

  • Shopping Spree to Benefit Lakeview Pantry
  • LakeView Village
  • Free Tax Assistance
  • Community Events
  • Citations

  • Shopping Spree to Benefit Lakeview Pantry



    On February 26 I participated in the Kane County Farm Bureau's "Food Check-Out Challenge Shopping Spree" to benefit a pantry of my choice. I chose and paired up with Lakeview Pantry and spent five whirlwind minutes grabbing as much food off the shelves at Jewel as I could. Gary Garland, executive director of Lakeview Pantry, assisted me in choosing appropriate food items and together we were able to walk away with almost $900 of food donations for the pantry. Thanks to the Kane County Farm Bureau for hosting the event and for paying for the donations. I would also like to thank Lakeview Pantry for their great work supporting those in our community with unmet nutritional needs. Please visit their website's "10 Ways to Help" page and consider volunteering or making a donation of food, clothing, money or other items in this time of need when donations are down and need is up.

    Or, if running is your thing, consider joining the Chicago Marathon's Charity Runner program and run for Lakeview Pantry. For more information contact Ashley Cullins, Development Coordinator for Lakeview Pantry at (773) 525-1777 x17 or ashley@lakeviewpantry.org


    LakeView Village

    LakeView Village is a non-profit organization that provides local seniors with at-home services such as transportation, home maintenance and repairs and social programs. They are currently conducting a survey to determine how their services can best support the area's senior community. If you or a family member live in zip code 60613 or 60657 and want or need to utilize LakeView Village's resources, either now or in the future, please take a minute to complete their survey. The Survey will be open until April 23 and, upon completion of the survey, you will be entered into a drawing to win one of six $50 Lakeview East Chamber of Commerce gift cards.

    LakeView Village's boundaries are Diversey, Irving Park, Ravenswood and the lake.


    Free Tax Assistance

    The Center for Economic Progress provides free tax preparation assistance for individuals with incomes of $25,000 or less or families with incomes of less than $50,000. For more information visit their website.

    The City of Chicago, with the help of non-profit programs the Tax Counseling Project and the Tax Assistant Program, is offering free tax preparation for eligible individuals. For more information visit the Office of Budget and Management's Income Tax Assistance website.


    Community Events

    Fifth Third Bank's First Time Homebuyer Seminar
    Tuesday, March 16, 6:00pm, 3601 N. Broadway Ave.

    Fifth Third Bank is hosting a seminar for first time homebuyers. Learn about the benefits of owning, special loan and down payment options, and what to expect from your lender and realtor.


    Fund Raiser for Weisman Park Renovation Project
    Friday, March 19, 6:00pm - 9pm, 3216 North Sheffield.

    Weisman Park Advisory Council is pleased to announce on Friday, March 19, 2010 Trader Todd's Bar and Restaurant is hosting a fund raiser to support the renovation efforts for Weisman Park. Come on out and shake off your cabin fever while supporting the neighborhood community project. The party begins at 6 pm and goes to 9 pm.

    Tickets are available at Trader Todd. You may purchase them ahead of time or at the door the day of the event. Tickets are $30.00 per person and include a three hour open bar and buffet. There will be a silent auction and a Karaoke Stage for those who choose to share their talent. Proceeds from the event will go to the park renovation.

    Virginia Carstarphern, co-owner of Trader Todd's located at 3216 North Sheffield, says "I'm happy to be working with the Weisman Park Advisory Council and contribute to the fund raising effort on this community project."

    Weisman Park is located on the 900 block of Oakdale at Mildred. The park serves more than 5000 residents in the area. Fund raising for this $750,000 renovation began in spring 2008, to date approximately $315,000 has been raised. Groundbreaking is planned for later this year.

    To make a donation, purchase a brick or to discuss how you can host a benefit at your establishment contact mariepoppy@comcast.net. The Weisman Park Advisory Council appreciates all the support from the community and local business helping to make this community project possible.


    Buena Park Neighbors - Buena Bunnies
    Sunday, March 21, 3:00pm - 6:00pm, Nick's Uptown, 4015 N. Sheridan Ave.

    Join the Buena Park Neighbors for their 9th annual Buena Bunnies event. Bring an empty basket, treats, and other Easter goodies to be donated to St. Mary of the Lake Church. One winning basket will be chosen to win the "Finest Buena Bunnies Basket" Award.


    Park West Community Association's Egg Hunt

    Saturday, March 27, 12:00 p.m. - 2:00 p.m., Park West Playlot at Wrightwood and Burling

    The Park West Community Association's Annual Egg Hunt is a great event for neighborhood children to participate with others in an egg hunt and visit with the Easter Bunney. The event costs $5 per child (payable at the event). Parents planning to attend with their children should drop off a dozen plastic eggs per child to Alderman Vi Daley's ward office (735 W. Wrightwood) by Friday the 19th.


    Lakeview Chamber of Commerce Eggstravaganza
    Sunday, March 28, 1:00 pm - 3:00 pm, Southport Ave. between Roscoe St. and Irving Park Ave.

    Lakeview SSA 27 is treating neighborhood families to an afternoon of Balloon Artists, Face Painters, and a Magician...as well as a colored egg hunt, prizes, refreshments, and a visit from the special big Bunny! There will be activities at Sheil Park (3505 N. Southport Ave) and an egg hunt along Southport.


    Race to Wrigley 5k Run
    Saturday, April 24, Wrigley Field
    6:30am: race day registration
    8:00am: start time

    The 5th annual Race to Wrigley will begin and end at Wrigley Field and proceed through the streets of Lakeview. Runners can pre-register and ambitious runners can sign up for a chip-timed run. Proceeds from the event will benefit Chicago Cubs Charities and all personal fundraising proceeds will benefit Children's Memorial Hospital. For more information and to pre-register, visit the Chicago Special Events website.


    Citations

    1. Patterson, John. 2010. State auditors report pension debt. Daily Herald, February 16.
    2. Mancini, Chrissy. "Issue Brief on the Illinois Property Tax." Center for Tax and Budget Accountability. http://www.ctbaonline.org/All%20Links%20to%20Research%20Areas%20and%20Reports/Budget,%20Tax%20and%20Revenue/property_tax_page.htm.
    3. Gaines, Brian J. and James H. Kuklinski. "Perceptions of the Tax Burden." University of Illinois Institute of Government and Public Affairs. Available from http://igpa.uillinois.edu/opinion-monitor/taxes.
    4. Illinois Association of Chamber of Commerce Executives. 2009. Taxation of Services in Illinois. Report presented at the 2009 Legislative Summit, Springfield, Illinois, January 26, 2009.
    5. Illinois Association of Chamber of Commerce Executives. 2009. Taxation of Services in Illinois. Report presented at the 2009 Legislative Summit, Springfield, Illinois, and January 26, 2009.
    6. The Tax Foundation. "The Facts on Illinois' Tax Climate." The Tax Foundation. Available from "http://www.taxfoundation.org/research/topic/26.html.
    7. The Tax Foundation. "The Facts on Wisconsin's Tax Climate." The Tax Foundation. Available from ttp://www.taxfoundation.org/research/topic/67.html.
    8. The Tax Foundation. "The Facts on Iowa's Tax Climate." The Tax Foundation. Available from http://www.taxfoundation.org/research/topic/28.html.
    9. The Tax Foundation. "The Facts on Missouri's Tax Climate." The Tax Foundation. Available from http://www.taxfoundation.org/research/topic/39.html.
    10. The Tax Foundation. "The Facts on Kentucky's Tax Climate." The Tax Foundation. Available from http://www.taxfoundation.org/research/topic/30.html.
    11. The Tax Foundation. "The Facts on Indiana's Tax Climate." The Tax Foundation. Available from http://www.taxfoundation.org/research/topic/27.html.
    12. The Tax Foundation. "The Facts on Illinois' Tax Climate." The Tax Foundation. Available from http://www.taxfoundation.org/research/topic/26.html.
    13. The Tax Foundation. "The Facts on Indiana's Tax Climate." The Tax Foundation. Available from http://www.taxfoundation.org/research/topic/27.html.
    14. The Tax Foundation. "The Facts on Wisconsin's Tax Climate." The Tax Foundation. Available from http://www.taxfoundation.org/research/topic/67.html.
    15. The Tax Foundation. "The Facts on Missouri's Tax Climate." The Tax Foundation. Available from http://www.taxfoundation.org/research/topic/39.html.
    16. The Tax Foundation. "The Facts on Iowa's Tax Climate." The Tax Foundation. Available from http://www.taxfoundation.org/research/topic/28.html.
    17. The Tax Foundation. "The Facts on Kentucky's Tax Climate." The Tax Foundation. Available from a href="http://www.taxfoundation.org/research/topic/30.html.
    18. Illinois Policy Institute. "Budget Facts vs. Budget Myths." Illinois Policy Institute. Available from http://www.illinoispolicy.org/news/article.asp?ArticleSource=1113.




    phone: (773) 296-4141
    Email Marketing by