Illinois: Highest Overall Tax Burden in the Nation

A March 14th, 2017 report has found that the State of Illinois has the highest combined state and local tax burden among all 50 states and the District of Columbia. This report combines state and local  taxes to create an overall effective tax rate for the median household in each state.

According to the report, the median Illinois household pays approximately $8,162 in annual state and local taxes, including sales taxes, property taxes and income taxes. This includes the highest combine state and local tax rate in the nation of an effective 14.76 percent on the average median household. This tax rate is found to be 37.66 percent larger than the U.S. state average.

Wallet Hub also developed an interactive map illustrating the tax burden ranking for each U.S. State and the District of Columbia. The ranking goes from “1” to “51”, with “1” being the lowest tax burden and “51” being the highest. Please click the link below to view the interact map.

Interactive Tax Burden Map

WalletHub used several taxes to calculate Illinois’ percentage; however, the most damning was the property tax. Illinois ranked second-worst in the nation for property taxes. People in homes with the U.S. median home value pay $4,105 annually in Illinois, according to WalletHub. Illinois’ crushing property taxes combined with income and sales taxes make the Prairie State the most taxed in the country. 

And high taxes are driving Illinoisans to the border. From 2006 to 2015, a net 700,000 people migrated out of Illinois. Polling by the Paul Simon Public Policy Institute showed 47 percent of Illinoisans want to leave the state, and the single biggest reason is Illinois’ high tax burden. 

Source: Illinois Policy

State Still Deadlocked on Budget

Illinois will ring in the new year with a familiar tune: Deadlock in the Capitol and no state budget.

The only spending agreement reached in two years between bickering Republicans and Democrats, a six-month temporary fix, expires Sunday.

Not only is there no arrangement to fill the void, Gov. Bruce Rauner and his Democratic opponents controlling the General Assembly have hardly talked about it.

Funding for elementary and secondary education was provided through June. But colleges and universities will see state spending dry up. And even though billions of dollars for Medicaid health care is assured, the backlog of bills is so great that hospitals are having an increasingly tougher time staying ahead.

State workers will continue to be paid, but there’s no money to pay utility bills or buy commodities; vendors continue to wait for payment. Those needing mental health, addiction treatment, or senior-living programs will likely wait, too. The private agencies that provide those services continue to wait months for checks to arrive.

“In a lot of areas, things are just breaking apart,” Senate Appropriations Chairwoman Heather Steans, a Chicago Democrat, said.

Rauner spokeswoman Catherine Kelly insisted lawmakers must jump aboard with the governor and his agenda for reducing business costs, freezing property taxes and limiting politicians’ power. Those will save money and boost Illinois commerce, says Rauner, a wealthy former private-equity investor.

She challenged Democrats to “break from” House Speaker Michael Madigan “to reach a bipartisan, balanced budget with reforms or continue to force a crisis and higher taxes.”

The two sides have met just a handful of times since last fall and Democrats criticized Rauner for canceling a scheduled conference Dec. 12. He wanted a spending plan from Democrats, but as Madigan spokesman Steve Brown said Thursday, “We need to hear from the people who are actually going to spend the money on how they want to spend it and how much they want to spend.”

Madigan, the steel-willed Chicagoan, says Rauner’s ideas shouldn’t be tied to a budget deal.

The Legislature returns to Springfield on Jan. 9 for two final days of the current session before a new General Assembly is sworn in.

John Patterson, spokesman for Senate President John Cullerton, said the Chicago Democrat was surprised by the governor’s nixing the last meeting but hopes they’ll sit down again soon.

“Businesses that work and provide services on behalf of the state deserve to be paid,” Patterson said. “We need to be investing in higher education and preserving our safety net. These are all vital to Illinois being the competitive and compassionate state.”

Source: Springfield, Illinois AP – John O’Connor

Illinois & Local Government Consolidation

In 2016 the topic of local government consolidation became a widespread conversation topic throughout the State of Illinois. While discussions about consolidating units of local government in Illinois was by no means unique to 2016, as rumblings of local government consolidation have been around for decades, but 2016 was different in that the Illinois House passed bi-partisan House Bill 4501, giving authority to consolidate local services and dissolve certain kinds of “unnecessary” government entities to all Illinois counties.

While this bill is now currently awaiting further debate and discussion in the Illinois Senate, there is strong push from numerous government activist groups throughout the state to see this bill through to passage in both congressional houses. Essentially, this bill would take what is already allowed in Dupage County, Illinois and extend it further to each and every county within the State of Illinois. That is, the consolidation of multiple units of local government performing activities in overlapping territories.

Illinois has over 7,000 units of local government, the most of any state in the nation. Undoubtedly, the large number of units of local government is at least partially responsible for the abnormally high property taxes, 3rd highest of any state in the country. Proponents of this bill see this as an opportunity to eliminate large sums of unnecessary property tax and relieve Illinois tax payer burden.

Furthermore, proponents of this consolidation of services see Illinois’ 859 local school districts, which consume nearly two-thirds of the $27 billion in local property taxes collected across the state each year, as candidates for consolidation. According to data from the Illinois State Board of Education, a quarter of Illinois school districts serve only a single school, a third serve fewer than 600 students, and more than 40 percent serve only one or two schools.

Research from the Illinois Policy Institute shows that reducing the number of school districts by half could lead to annual operating savings of $130 million to $170 million and could conservatively save the state $3 billion to $4 billion in pension costs over the next 30 years.

However, this bill would not just affect school districts, the same sort of consolidation could theoretically occur with townships, road districts, mosquito-abatement districts, park districts, library districts, among others. Many of the duties and activities of aforementioned taxing districts would be incorporated into county and/or municipal operations.

While cost savings would undoubtedly occur through local government consolidation, they are also many reasons to not jump on the consolidation bandwagon too quickly. Other state’s have experienced unexpected and unintended issues with the consolidation or centralization of government services. As an example,

  1. Cost savings [from consolidation] are often overstated in order to get legislators (and tax payers) or other officials to agree to the change.
  2. Consolidations are always harder and much more complicated than they seem at first. Additionally, they always take much more time that anticipated. In fact, sometimes consolidation or centralization has to be undone because  either the operations are no longer working out and/or the state may be at risk of forfeiting federal funds meant to provide aid to specific units of local government.
  3. One of the biggest problems associated with consolidation is that the people/governments that are being pushed together may not be happy about the situation. This can cause  dozens upon dozens of problems that are too innumerable to cover in one article.

While both sides of the consolidation spectrum have pros and cons, as does about everything, prior to consolidating these local government services rigorous thought and analysis of the implications and consequences must be considered fully. While arguments for cost-savings and  efficiency may be correct to some extent, a one-size-fits-all solution may not actually “solve” anything but create unintended consequences. Local officials must tread the path of consolidation carefully.

Community Supported Businesses (CSB)

The concept of a Community Supported Business (CSB) is now becoming a much more widely applied way of getting smaller businesses off the ground, especially in rural areas and small towns. CSBs are based on a closer relationship with customers than just the simple commercial transaction involved in the sales of products or services. As the word ‘supported’ implies, CSBs not only have a relational, but also a financial connection with their communities, either directly on a personal basis, through an intermediary, or sometimes involving a public agency. The initial concept began with agriculture, but has grown quite substantially and now involves any and all types of business ventures.

A recent report by the Illinois Institute of Rural Affairs, active through Western Illinois University, discussed CSBs at length, citing specific examples of how CSBs are beginning to pop up all across the country and for the most part, are quite successful. Some examples of CSBs include the following:

Restaurant/Dining

The Gleanery Restaurant – Putney, Vermont (pop. 2,702)
This restaurant uses ingredients from local farmers and producers and is a community-supported restaurant that pays members back in monthly credits at the restaurant. The community supports The Gleanery, The Gleanery supports the local economy, the local economy benefits from a destination restaurant, and more money recirculates through Putney.

Awaken Café – Oakland, California
This particular venue provides live music, an espresso bar, craft beer & wine bar, and organic restaurant in downtown Oakland, California, with the mission to bring people together and launch movements. The owners pre-sold gift cards, which, priced at $1,000, could be redeemed for $1,250 once the café opened.
Although this particular cafe CSB is located in a larger community,  the model that is utilized could be applicable to smaller rural communities as well.

The Bee’s Knees – Morrisville, Vermont (pop. 2,030)
The Bee’s Knees restaurant has functioned successfully  only because of direct community and local support. In exchange for a $1,000 loan, investors receive coupons that they can redeem for meals at the rate of $90 a quarter over three years. This is a meager return on investment, but in the first six weeks of launch, the Bee’s Knees restaurant raised $20,000.

Although there are dozens of different types of CSBs that exist, the above list provides a few that could be easily applicable to rural communities in South Central Illinois. However, as a note, other CSB ventures have included: bakeries, local grocery stores, large fisheries, banks, book stores, community newspapers, art and/or history museums and even some community supported manufacturing facilities.

For even for information about Community Supported Businesses you can review the recent Illinois Institute for Rural Affairs report which can be found here.

A Mother’s Will To Win

It’s easy to get cynical about Illinois politics.

Frustration is the norm in Springfield. Optimism is an emotional liability.

But Lisa Creason doesn’t play by those rules. When it comes to politics in the Land of Lincoln, the single mom from Decatur just pulled off the biggest underdog story of 2016. She drove to Springfield nearly every day of legislative session for two years to fight for her family.

And she won.

Lisa’s story is one of redemption, starting with a crime she committed more than 20 years ago.

She stole money from a Subway cash register when she was 19 to buy food for her newborn daughter. She spent one year in prison.

A stray bullet killed her fiancé in 2002. She raised three kids on her own, started an anti-violence nonprofit and went to nursing school.

On the day she graduated, she called her mother in tears. She thought she could finally move her children out of Section 8 housing, out of a dangerous neighborhood and off government assistance. She thought her hard work had finally paid off.

But then, it all came tumbling down.

Because of a law passed in 2011, Lisa’s teenage crime denied her the chance to apply for the state license she needed to become a registered nurse.

“To be told after all we’ve been through that I wasn’t good enough … it was devastating,” she said.

But she didn’t give up. Instead, she began fighting for Senate Bill 42, which would allow ex-offenders such as herself to apply for a license to work in the health care field after a post-conviction waiting period.

After an ex-offender’s application is received, the state licensing board would still consider a number of factors in granting the license, such as the seriousness of the offense, overall criminal history, whether restitution was made to a victim and signs of rehabilitation.

But Lisa has bona fides in spades.

Amy Snyder is Lisa’s former caseworker, and frequent co-pilot on her trips to Springfield. She’s proud of the example Lisa sets for others, showing it’s possible to break a cycle of crime and dependency with a positive attitude and a giving spirit.

Lieutenant Shane Brandel of the Decatur Police Department is proud of Lisa’s tenacity. The two have been close since Brandel investigated the death of Lisa’s fiancé.

“I applaud her for her efforts,” he said. “Most people would just give up.”

Unfortunately, hopelessness is a major byproduct of Illinois’ criminal-justice system.

Of the 30,000 people who leave Illinois prisons each year, nearly half return within three years. Studies show as many as 60 percent to 75 percent of former offenders are unemployed a year after their release.

Thankfully, Lisa has been able to work as a nursing assistant for more than a decade. A job can make all the difference between a life of freedom and a life of crime.

Illinois ex-offenders who are employed a year after release have a recidivism rate as low as 16 percent, according to research from the Safer Foundation. It’s concerning then that Illinois has at least 118 professional and business licenses applicants can or must be denied due to their criminal history.

That’s why reforms such as SB 42 are so important. That’s why instead of leaving the state for greener pastures, Lisa stood and fought for more than just herself.

“This isn’t just me,” Lisa said. “There are all types of productive careers that ex-offenders are prevented from pursuing. It’s time we stop beating the same drum. It’s not working, and the music is not pretty.”

It’s been more than a year since SB 42 passed out of the Illinois Senate. On May 26, 2016, it passed the House. And as of June 1, the only hurdle that remains is the governor’s signature.

To Lisa and Illinoisans like her, it’s more than a bill.

In a state that’s short on opportunities, it’s reason to hope.

Austin Berg, writer for Illinois Policy Institute

Illinois Has a Spending Problem, Not a Revenue Problem

Proponents of an Illinois tax-increase have insisted that there is no way to fix the current budget problems without more money. They have suggested that the state’s tax revenues simply are not enough to cover the cost of government operations.

However, a closer look at Illinois revenues and expenditures allude to a much different story. Tax revenues do not seem to be the real issue, but rather persistent overspending and arguably misplaced spending priorities. This budget gridlock looks to be the culmination of years of fiscal mismanagement, but whether it has been deliberate mismanagement is, and will continue to be, up for debate.

The facts are rather simple and provide a pretty reasonable conclusion.

Illinois has more than enough tax revenue

State per capita tax revenues have grown upwards of 70% more than inflation over the past 33 years. As a result, Illinois collected $265 billion more than it would have if per capita tax revenues had only grown at the rate of inflation since 19893. This remains to be true in more recent time periods also. From 2003 to 2016, Illinois collected an average of $5.4 billion a year in additional tax revenues per capita, well above what the state would have brought in if tax revenues had only grown at the rate of inflation since 2003.

Illinois continues to spend more money than the state takes in

Despite the abundant amount of tax revenue, Illinois has not had a balanced budget since 2001. That issue will only worsen as nearly $170 billion in unfunded promises made with respect to state-work retirements come due. Pension costs alone now consume 25% of the entire state general fund budget.

Misplaced spending priorities?

The State of Illinois spends a substantial portion of its budget on worker pay, health coverage and pensions, which has crowded out funding for important, and may I say, essential government services. For example, funding for state-workers pay and benefits increased by nearly 600% from 2000-2015. That is a sharp contrast with funding for other important services, which were quite stagnant during that same time period. Higher education spending is down 8%, human services funding is up only 10%, public safety spending only 12% up, and funding for K-12 education up  just 35%.

Record tax increases did not fix Illinois’ budget problems

The significant 2011-2014 income-tax increase did not help to solve the Illinois’ financial crisis or fund social services. Rather, the additional tax revenues fueled other spending priorities. While Illinois doubled payments to pensions during those four years, funding for K-12 and higher education actually fell by nearly 10%.

Any additional tax increases will likely only burden further Illinois taxpayers and encourage more residents to seek opportunities in other states. An example of this, from July 2013 to July 2015, Illinois has shown a net population decrease of 32,000 people, while bordering states all showed at the very least minor net increases in population. Furthermore, Illinois already has the fourth-highest state and local tax burden as a percentage of income, and that includes the highest property taxes in the entire nation.

Conclusion

In sum, it is fairly easy to analyze what is occurring in this current state financial crisis, and also at least part of why  it is occurring . It simply comes down to desperate need for a balanced budget. This cannot be overstated. While without a doubt tax increases provide additional funding, how did the tax increases from 2011-2014 work out? And is Illinois along with its politicians willing to continue to increase the already substantial tax payer burden? Without significant reforms to the way the state government operates, abrupt changes to the current financial woes cannot be expected to occur any time soon. A successful balanced budget comes through an honest prioritization of spending and real economic growth, not just a tax increase.

Source: Illinois Policy Institute

 

The Importance of Comprehensive Planning

What is a Comprehensive Plan?

A comprehensive plan, also known as a master or general plan, is a collection of information and materials  designed to guide the future development of a community or county. This type of plan provides a community, or county, with a firm foundation for policy and action that will allow it to function more efficiently and effectively. It can strengthen community policies and legislation, and it also can promote a more certain future.

Characteristics of the Comprehensive Plan

Rather than call for a specific action or encourage any particular legislative strategy, a comprehensive plan provides a framework and policy context within which to make all decisions relating to land use and future development. The plan acts as a reminder of the general policies that a community should consider when making development decisions.

It must be long-range, since one of its most essential components is dealing with issues that are expected to occur as much as decades down the road. While short-term planning is important, it is not within the scope of the comprehensive plan.

Lastly, the comprehensive plan must be physically and functionally all-encompassing. Given that growth and change nearly always affect every aspect of a community or county, it is important that the plan cover all aspects of the community or county’s future.

Comprehensive Plan Implementation

Once in place, a comprehensive plan can be specifically implemented through the use of zoning and other development regulations. This allows the community to control future development through the determination of land use and the precise location where specific types of development will occur. With a plan in place a community/county has a better idea of how to use zoning, budgeting, capital improvements, and all other functions to achieve its goals and allow the area to grow or change in positive ways.

Elements of a Comprehensive Plan

A comprehensive plan is one document with many distinct sections. While these sections cover different aspects of the community, they all are related. Generally speaking, comprehensive plans will include the following:

Introduction:  Description of what a plan is and why the community needs one; the resolution adopting the plan usually appears here, which specifically states the reasons for its adoption; a table of contents and explanation of how the actual plan was formulated are also important additions here.

Historical Section: This section generally provides a brief history of the area and an enumeration of existing conditions. Data on those conditions is generally used to being to make estimates about the future direction of the community/county.  The remainder of the sections can fall in many different orders, each comprehensive plan will be different based upon the community/county.

Land Use: Existing land use should be included along with projections for future use based upon on the goals and projections from the many other areas of the plan.

Transportation: All planned and potential new construction should be discussed in the plan. However, this is not intended to be an exact outline of every future project, that level of detail should be left to the capital improvement plan, a separate document.

Park and Open Space:  This is a fairly easy section to grasp. First, as said before, it is important to discuss the current inventory/use and then discuss changes to the existing system. This should be outlined in decent detail, as well as projections of future park and open space needs based on forecasted growth or decline.

Housing Information: Information here can include provisions for affordable housing, planned residential growth, and building and density requirements if applicable.

Utilities and Services: Should include water, sanitary and storm sewer, and treatment information.

Economic Development: This will also be a necessary component for most communities. Whether geared toward attracting major employers or toward business retention and improvement, an economically strong community is a common goal.

Comprehensive Plan Creation

The creation of a useful comprehensive plan involves a great deal of research, calculation, and stakeholder discussion. The development of many of the plan elements requires a high degree of technical knowledge. For this reason the process is best guided by trained professionals. Either way though, the plan should include significant public participation.

Numerous public meetings should be arranged and special effort should be made to encourage attendance and disseminate information about the process. The entire process can take a year or more to complete.

It is important to realize though that once in place, the comprehensive plan should continue to be malleable. As times and conditions change, and forecasts may prove inaccurate, updates to the comprehensive plan should be undertaken. The plan should not be changed out of convenience however, but should be updated only when necessary so that it continues to provide an accurate picture of how the community wishes to grow.

If your community/county is interested in the development of a comprehensive plan or updating their current comprehensive plan, please contact us for more information!