slide show of Martire presentation 4-14-11

1. CENTER FOR TAX AND BUDGET ACCOUNTABILITY 70 E. Lake Street  Suite 1700  Chicago, Illinois 60601  direct: 312.332.1049  Email: [email_address] Tax Increases, Spending Caps and the FY2010 General Fund Budget in Illinois For: Campus Facility Association University of Illinois (Urbana-Champaign) UIUC YMCA 1001 S. Wright Street, Champaign, IL Presented by: Ralph Martire, Executive Director Thursday, April 14, 2011; 4:00 pm

2. Illinois’ Worst Fiscal Crises Since Great Depression The Starting Point

5. New Annual Revenue Under P.A. 96-1496 Item New Annual Revenue to General Fund Inc rease Personal Income Tax Rate from 3% to 5% $6.05 B Increase Corporate Income Tax Rate from 4.8% to 7% $770 M Decouple from the Federal Repeal of the Estate Tax $182 * Temporarily Suspend the Net Operating Loss Carry Forward for Corporations $250 M Annual Net to General Fund $7.252 B ** * In FY2013 and FY2014, GOMB increases this estimate to $240 M. **NOTE: in FY2011 GOMB estimates the aforesaid tax increases will generate $2.88 B in new General Fund revenue.

7. WHICH CREATES: STRUCTURAL DEFICIT Illinois Structural Deficit Assuming FY2000 to FY2008 Economic Conditions and FY 2000 Balanced Budget Appropriation (adjusted for Inflation and Population Growth)

10. IS ILLINOIS PROFLIGATE? WELL - - - - - - The ongoing Deficit Problems were Not Caused by Wasteful Spending * NOTE: That after accounting for Inflation and Population Growth, the FY2011 GF of $24.94 B was 5% less than GF spending in FY1995, under Governor Jim Edgar

11. HEADCOUNT

12. Medicaid spending by Funding Source (Federal, State and Local) AS FOR HEALTHCARE, WELL…….

13. Amount by Which Illinois General Fund State Spending on Human Service Programs Falls Short of Keeping Pace with Inflationary Costs and Population Growth From FY2002 to FY2010 THE REAL IMPACT: $4.4 BILLION LOST HUMAN SERVICES

14. CORPORATE TAX RATES

15. Meanwhile, Pre-Tax Increase

16. Meanwhile, “Post-Tax Increase” Share Own-Source Revenue as a Percentage of Personal Income Increase or Decrease in IL GF Revenue Revenue if Illinois Had Equal State- Based Tax Burden as a Percentage of State Income Illinois* 8.8% Indiana 9.8% $5.5 Iowa 9.7% $5.0 Kentucky 10.7% $10.5 Missouri 7.6% ($6.7) Wisconsin 10.1% $7.2 2) Increases based on BEA 2008 Illinois Personal Income. * This overstates the actual new tax burden. Sources: IL State Own-Source Revenue Under Neighboring State Revenue Shares FY 2008 Current $ Billions After Passage of the 2011 Tax Increase 1) 2008 State and Local Revenue as a Percentage of Personal Income, Federation of Tax Administrators, updated July 19, 2010.

17. LOOKING FORWARD. . . .

18. Projected Annual Revenue Shortfalls Under Spending Caps (Current $ in Billions) Which is Funny — Because:

20. Despite Recent Tax Increase, The FY 2012 Budget has an Operating Revenue Shortfall of over $ 1 Billion But a Remaining Operating Deficit of Over $ 1 Billion

22. Human Services would suffer $ 471 M (-8.7%) cut if FY 2011 $ 260 M supplemental to Human Services is passed. FY 2012 Proposed Nominal Dollar Change from FY 2011

24. In 2008 Illinois was 13 th in per capita income but 34 th in per capita human services funding Cuts in specific Department of Human Services Programs

25. Every Major Category of Real Funding for Current Public Services has been Cut Since FY 2000 FY 2012 Proposed Appropriations Compared to FY2000 Actual Appropriations Adjusted for Inflation and Population Growth ($ in Millions)

26. FUTURE PRESSURES

27. THE RAMP

29. JOB LOSS

34. CUT EDUCATION —REALLY? $ Difference in Per Pupil Foundation Level Funding EFAB vs. ACTUAL

37. Illinois GDP Growth Lags THE ILLINOIS ECONOMY Source: Bureau of Economic Analysis, US Dept. of Commerce

41. “ THE BURDEN IS TOUGH” *NOTE: It’s a fixed cost for business as well.