In this and my next "Voices" columns, we’ll look first at some challenges faced by those of us living in Illinois, and then at some issues faced increasingly by those abiding in Iowa. Each will examine how actions or circumstances, particularly at the state level, affect those of us here in our bi-state region.
As to Illinois, among the greatest challenges we face come from two provisions of our state constitution. One prohibits a progressive income tax (Article 9, Section 3). This confines us to a flat tax similar to that of a handful of other states, and deprives us of the revenues realized by a progressive income tax, such as Iowa and 33 other states as well as the federal government already possess. This works a particular disservice to our schools, as it forces higher property taxes to compensate for the lack of state income tax support to education.
Because of the unpopularity of property taxes, this has also prompted some to relocate to Iowa even though Iowa has higher income taxes, and also taxes retirement income which Illinois generally does not.
The second constitutional hindrance arises from the prohibition on reducing pension benefits of state, local governments or school districts (Article 13, Section 5).
Due to some very generous benefits conferred in past years – particularly a guaranteed 3 percent annual increase in monthly payments – this provision is crippling state and local finances and accumulating huge unfunded liabilities. We’re essentially impoverishing our future by paying for our past. This isn’t either reasonable or fair.
Of course, the constitution can be amended. Illinois Governor J.B. Pritzker is committed to addressing the flat tax provision by proposing a constitutional amendment to allow a progressive income tax. His proposal would increase the income tax rates only on those earning over $250,000 a year. This would raise an estimated $3.1 billion to $3.4 billion per year for the state.
From a regional perspective in the Quad Cities, these proposed rates would still be lower than Iowa’s current income tax rates.
If Pritzker's proposal is tied to property tax relief and used to better fund public education as it should be, it could help address three Illinois concerns: (1) reducing budget deficits; (2) allowing better state funding of public education; and (3) providing some property tax relief.
A second major problem experienced in Illinois over the last two decades has been some pretty awful leadership in the governor’s office. Democrat Rod Blagojevich, though a promising and attractive candidate, proved a dismal governor. His poor leadership paved the way for many of our current fiscal difficulties. Republican Bruce Rauner was little better. Though he avoided the orange jumpsuit Blagojevich eventually acquired, Rauner led Illinois into a 2-year budget impasse that caused state debt to soar and further damaged Illinois’ reputation.
Governor Pritzker, in contrast, seems committed to moving in a more positive and responsible direction.
Still, we in the Illinois Quad Cities need to continue reminding those in Springfield of downstate concerns about the quality and cost of government, as we don’t enjoy the same economic velocity that the metro Chicago region has historically possessed.
Illinois has its challenges. However, it also wields a great many strengths. These include a robust economy, strong transportation network, higher median income than all its neighbors and a base of public and private sector amenities among the finest in the nation. With a progressive income tax tied to property tax relief and other reforms, Illinois offers an attractive location for folks of all ages to live, work, raise their families, and to retire.