Photo courtesy Maria for 52 Facebook page
By Ted Dabrowski and John Klingner | Wirepoints
On Tuesday’s Nov. 5 ballot there’s a nonbinding referendum that asks voters if they want the state to tax millionaires a 3% surcharge on the money they make over and above $1 million. In exchange for agreeing to target millionaires, Illinois voters can expect property tax relief, the referendum reads, though the referendum is noncommittal as to how much relief, if any, it would actually provide. The state says the 3% surcharge on millionaires will give the government about $4.5 billion in new revenues.
For the state to provide property tax relief, however, it would have to actually take some of those new tax revenues and commit them to property tax relief. And that’s where Illinoisans should be highly skeptical, we warned a week ago: “Given the upcoming budget deficits…there won’t be any money left over for tax relief.”
Sure enough, it only took a few days for Gov. J.B. Pritzker and his budget office to announce that billion-dollar deficits are on their way.
Pritzker’s team on Friday released its five-year budget forecast and said it expects a whopping $3.2 billion deficit for next fiscal year (2025-2026), a $4.3 billion deficit for the following year, and $5 billion-plus deficits in each of the years 2028 through 2030.
Those deficits effectively swallow up the revenues of the “millionaire’s tax,” leaving little to nothing for property tax relief. The administration would have to raise income taxes by another $4 billion-plus to provide both property tax relief and cover the deficits. How far down into middle-income brackets would Illinois politicians have to hike income tax rates to get that all money?
Not only do the above deficits make the referendum a farce, but they are a major contradiction to the praise the governor has heaped on himself for managing the state’s finances over the last few years, in particular during COVID.
How can the wheels be coming off the bus now, when the national economy is humming along, interest rates are going down, and the governor has managed to “balance budgets”?
There are two big answers to that question. The first one is that Pritzker never actually fixed any problems. No spending reforms. No pension reforms. No tax relief. None.
The second answer to that question is that the governor and his Democratic supermajority used the windfall revenues from the covid bailouts to pay down the state’s bills, and then poured the rest into new spending (more on that below).
The covid bailouts were massive. More than $70 billion was given in loans and grants to businesses. Illinoisans got $30 billion in stimulus checks. State and local governments received more than $30 billion. Billions more went to health care and a host of other programs. All that money also had the knock-on effect of supercharging the state’s tax revenues.
It was all that money, and not Pritzker’s efforts, that covered up all of Illinois’ structural spending problems. Now the covid money is gone and reality is back.
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Read more here.