Illinois Finally Has a Budget

Published September 1, 2004

On July 24, the Illinois legislature completed the state’s budget for fiscal year 2005, which began July 1.

The new budget raises taxes on businesses for the second year in a row, but several of the state’s leading business groups feared much worse.

“The Illinois business community emerged very well, considering the threats we faced to the tax climate just a few short months ago,” stated Timothy Bramlet, president of the Taxpayers Federation of Illinois (TFI), in the group’s July 27 TFI Report to members.

According to TFI, the budget deal includes $135 million in higher taxes on business, but it was passed only after businesses were brought into the process and accepted the tax increases, which were considerably less than the estimated $500 million in new fees Governor Rod Blagojevich (D) had originally deemed necessary to balance the budget.

“In the end,” the report said, “it was Speaker Michael Madigan (D-Chicago), House Minority Leader Tom Cross (R-Oswego), and Senate Minority Leader Frank Watson (R-Greenville) who formed a coalition against the governor’s call for more business tax increases.”

Business Leaders Applaud Budget

The Illinois Coalition for Jobs, Growth, & Prosperity likewise expressed its satisfaction with the final outcome. The organization’s July 26 news release stated, “Illinois working men and women should applaud the state’s final FY05 budget. Thanks to a cooperative effort between Coalition members and a bipartisan group of lawmakers, Illinois avoided a repeat of last year’s job-crushing tax increases on job providers, and began the process of retracting FY04’s increases.” The tax hike on business in the FY04 budget, according to the Illinois State Chamber of Commerce, exceeded $1 billion.

“The business community’s efforts to bring about a budget that will give Illinois employers a fighting chance to compete were a qualified success,” said Coalition Chairman Ronald J. Gidwitz. “The governor’s original budget proposal inexplicably contained nearly $500 million in tax increases on employers.

“When the Coalition pointed out the long-term harm to job creation last year’s business tax and fee increases had on Illinois, many lawmakers stood with us against further damage to Illinois’ economic future,” Gidwitz noted. “While we applaud legislators who fought for the future of this state’s working men and women, there is much left to be done to assure Illinois employers can prosper and thrive for the benefit of all.”

Tax Credits Restored

The new budget agreement completely or partially restores several tax breaks, such as the Manufacturers’ Purchase Tax Credit ($20 million), Graphics Arts Tax Credit ($4 million), and Research and Development Tax Credit ($15 million). The budget agreement also reduces Industrial Commission fees by $19 million. The state also will phase in an elimination of fee increases forced upon commercial trucks in the FY04 budget.

“There is no way to view these tax-credit restorations and fee reductions as anything other than a victory for those who create jobs in Illinois,” Gidwitz stated. “Our monthly employment growth data show Illinois lags the nation and our neighboring states. Springfield and the public are beginning to understand that working men and women need help and help doesn’t mean creating disincentives for job retention and growth in Illinois.

“Statistics aside, we’re in a battle with neighboring states aggressively marketing their pro-employer economic environments to our businesses,” Gidwitz continued. “While we’re not out of the woods yet, it is very encouraging that Democrat and Republican lawmakers are acknowledging that the state can help Illinois workers by improving the environment for Illinois employers.”

The Coalition was founded by the Chicagoland Chamber of Commerce, Illinois Business Roundtable, Illinois Civil Justice League, Illinois Manufacturers’ Association, and Illinois State Chamber of Commerce. The organization represents firms employing more than one million Illinois workers.

John Skorburg ([email protected]) is managing editor of Budget & Tax News.