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County to state: Let income tax expire as promised

Published: Friday, May 16, 2014 4:52 p.m. CDT • Updated: Sunday, May 18, 2014 12:32 a.m. CDT

WOODSTOCK – A sharply worded letter from a local government – like its heir apparent, the witty Twitter hashtag – usually has very little power when it comes to changing state and federal public policy.

But once in a while – like when state lawmakers try to renege on a promise that a historic tax increase will sunset as scheduled – it feels good for a government like the McHenry County Board to let Springfield know it's mad as heck.

And with conventional wisdom holding that House Speaker Michael Madigan may not have the 60 votes needed before the end of session May 31 to make the "temporary" increase permanent, every little bit may help.

The County Board on Thursday hastily added an agenda item for its Tuesday evening meeting to pass a resolution opposing state Democratic lawmakers' plan to make the increase permanent. The 2011 tax increase of 67 percent on individuals and 46 percent on businesses is supposed to significantly sunset Jan. 1.

Board Chairwoman Tina Hill, R-Woodstock, said the board assumed the tax increase would not come up until later in the year and the board would have more time to have its say. But several of the county's representatives told the county that a vote could come as soon as next week.

"It's symbolic for us to send a message to the state that McHenry County does not believe [Illinois] has a revenue problem. It has a spending problem," Hill said. "I know that sounds trite, but [the state] has more money coming in now than ever before, and it's still not enough."

The one-page resolution states the tax increase has cost the average McHenry County household $1,160 a year based on median income, and alleges that it has hindered the county's and state's economic recovery in the years since the Great Recession.

"McHenry County residents have paid more into state coffers for this tax increase than they have received in state funding and services, and that state legislators should adhere with the original intention of allowing the 2011 tax increase to expire in order to bring Illinois on track with the rest of the nation through economic recovery," the resolution states in part.

Illinois workers have paid on average an extra week’s salary in income taxes since Democratic lawmakers raised tax rates in January 2011, without a single Republican vote. The flat tax was raised on individuals from 3 to 5 percent of income, and on corporations from 4.8 to 7 percent. When the personal property replacement tax is factored in, the corporate tax rate raised from 7.3 to 9.5 percent.

Democratic lawmakers sold the tax increase as a stopgap measure needed to straighten out state government’s dire finances and pay down a shameful pile of unpaid bills. But it didn’t work – most of the $31 billion the increase is predicted to generate has been swallowed by the state’s ballooning public pension obligations, and the state’s backlog of bills was $7.6 billion at the end of 2013.

Gov. Pat Quinn in his 2015 budget address in March asked state lawmakers to make the tax permanent, lest the state suffer draconian cuts that would hurt its neediest residents. While making the tax permanent is expected to pass the Senate, its prospects in the House are unclear.

Votes taken Thursday toward hammering out a 2015 budget that counts on keeping the tax increase underscore that uncertainty. Despite holding a 71-seat supermajority in the House, Democrats could muster only the minimum 60 votes for many of the appropriations bills it passed.

The County Board resolution was the idea of member Ken Koehler, R-Crystal Lake, who is vice chairman of the Legislative and Intergovernmental Affairs Committee. He said McHenry County has long been a “donor county” that sends much more money to Springfield than it gets back, and it’s time for lawmakers to honor their promise to let the tax expire.

“I think there’s got to be a message sent that we don’t want to pay for any frivolous spending of theirs, and I don’t want to send any money to Chicago at all,” Koehler said.

Other government agencies have made headlines for asking lawmakers to make the tax increase permanent.

The DuPage Mayors and Managers Conference had planned to publicly support making the tax hike permanent in exchange for future “political leverage”, but scrapped the idea and decided instead to stay neutral almost immediately after the Daily Herald made the agreement public.

Other taxpayer subsidized governmental agencies, on the other hand, have not been as discreet and have raised allegations of Illinois pay-to-play politics by watchdog groups. The Illinois Municipal League, the Will County Government League and the South Suburban Mayors and Managers Association publicly support making the tax permanent, provided municipal governments get to keep a larger cut from it.

McHenry County’s five state representatives and three state Senators, Republicans and sole Democrat alike, vehemently oppose extending the tax. But Hill took issue with the idea that the County Board resolution would just be preaching to the choir.

“We’re not preaching to the choir, we’re part of the choir,” Hill said.

The ongoing budget battle comes as a slew of polls and surveys reveal that Illinois residents are becoming more fed up than usual.

Gallup poll results released in April revealed that one Illinois resident in four believes that the state is the worst in which to live, and that half of Illinois residents want to move. Only one resident in four has a “great” or even “fair” amount of trust in state government. Illinois polled the worst of all 50 states in trust and the desire to leave – Rhode Island barely edged it out by one percent as the worst state in which to live.

The polls are reinforced by data from moving companies and the U.S. Census Bureau, whose data in recent years have put Illinois near or at the top of states for out-migration elsewhere.

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