Governor's Tax Relief, Education Spending Still Not Good Enough

Thanks to CapitolFax, we now know that the Governor's Gross Receipts Tax has been sugarcoated with $1 billion in property tax relief. I say sugarcoated because the Governor's proposal provides only a fraction of the tax relief included in House Bill 750. And while Blagojevich still hasn't made the details of how his property tax relief plan would work, my bet is that he will be following President Jones' edict that property tax relief only goes to low-income families.

A property tax relief plan that fails to recognize that skyrocketing property taxes have hurt middle class families and Illinois employers is a failure in my book.

The two plans compared:

Blagojevich Gross Receipts Tax:

$1 billion in property tax relief, targeted to low-income families

• Only 9.2 percent of Illinois families are below the poverty level, and an estimated 50% or more of them rent and would not receive property tax relief;
• No property tax relief for middle class families;
• No property tax relief for employers.

House Bill 750:

$2.7 billion in property tax relief to every homeowner and employer in Illinois

• Every homeowner and employer receives a 20% - 25% rebate on their property tax levy for local schools;
• Property tax relief is spread across the state:
• 15% of property tax relief goes to Chicago;
• 27% of property tax relief goes to suburban Cook County;
• 32% of property tax relief goes to Collar Counties;
• 24% of property tax relief goes to Downstate Illinois;

• Property tax relief offsets net increase in corporate income taxes, so that Illinois employers see a net decrease in direct taxes paid by $100 million.

$900 million in additional direct tax relief for bottom 60 percent of family taxpayers

• Expansion of Family Tax Credit is fully refundable;
• Ensures low-income renters enjoy tax relief;
• Guarantees that bottom 60% of all taxpayers will see no net increase in tax burden.
  

At the end of the day, the Governor's plan calls for $8.6 billion in new taxes, with only $1 billion in tax relief, for a net increase in taxes of $7.6 billion. Funding for K-12 classrooms will increase $1.5 billion the first year, bringing foundation level funding to schools 6% below recommended levels. Higher education will see a meager $50 million increase.

House Bill 750 generates $9.05 billion in new taxes, but provides $3.6 billion in tax relief, for a net tax increase of only $5.45 billion, or 30% less than the Governor's plan. House Bill 750 provides $3.9 billion for K-12 classroom instruction in the first year -- 260% more than the Governor's plan, bringing the foundation level funding for schools up to 100% of recommended levels. In addition, HB 750 provides $300 million more for higher education, 600% more than the Governor's plan.

In the final analysis, only 20% of the net new spending in the Governor's plan goes to education, while 72% of House Bill 750's net new spending goes to education. Granted, this doesn't include new spending on school construction, and I'll post comparisons of both school construction plans as soon as they are available.