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Tax amnesty boosts state finances
$135 million
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[DEC. 5, 2003]
CHICAGO -- As a result of
months of difficult financial decisions, changes in budgeting and
management practices, and forced fiscal constraint, Gov. Rod
Blagojevich announced Thursday that the state's new approach to its
role as custodian of taxpayer money is paying off. Illinois
collected more than half a billion dollars in overdue and
accelerated payments under the recently completed tax amnesty, and a
number of innovative measures being taken by the Office of
Management and Budget are beginning to turn around Illinois' dire
financial situation. Of the amnesty amount, approximately $135
million is over and above the initial amount of $40 million
conservatively estimated by the Budget Office and can be used to
help address the fiscal 2004 budget and the fiscal 2005 deficit.
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"My message today is not that we won't
have to make hard choices in next year's budget, because we
certainly will -- we're not out of the woods yet. My message is not
that we've got $135 million in new money to spend, because we're
still paying for the reckless spending habits of years past. The
fiscal mess I inherited still means we have to keep finding ways to
reduce waste, cut spending and raise new revenues, without
sacrificing our values. The reason why our success in offering tax
amnesty is significant is because it proves that innovation and
fiscal discipline can work," Blagojevich said.
Over the past year, the new
administration has introduced a number of budgeting and management
tools from the private sector to help keep spending in check and to
eliminate waste and inefficiency. Auditing and information
technology services have been consolidated, rather than having each
agency independently do the same type of work. Now agency budgets
are allocated on a quarterly basis to avoid overspending, agency
expenditures are reviewed by the Office of Management and Budget on
a monthly basis, and formal spending reserves are in place in every
agency under the governor to offset any budget variances. In
addition, the state is consolidating its procurement activities and
its drug purchases so it can negotiate better rebates for senior
citizens and taxpayer-funded health plans.
Other changes are improving
accountability and integrity within state government. Early in his
term, Blagojevich appointed an inspector general over his office and
the agencies under his control and established a hot line for
employees and the public to report wrongdoing. Under new ethics
regulations pushed by the governor, every state employee will
receive ethics training, state workers that regulate private
industries or distribute state contracts will be prohibited from
turning around and accepting jobs with those companies, public
officials can no longer use taxpayer-funded advertisements to
promote themselves, and lobbyists will be prohibited from expending
unlimited sums on state officials and workers.
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"The point here is that if we're going
to become a better state, a more efficient state, a cost-effective
state, an accountable state, a state that rewards the people's faith
instead of failing it and falling short time after time, we're going
to have to accept change," Blagojevich said. "That's why our tax
amnesty offering was so significant."
Preliminary totals show that 70,000
taxpayers paid approximately $504 million during the amnesty period
from Oct. 1 to Nov. 17, putting the Illinois program in position to
be the second largest state tax amnesty ever, approaching the $520
million received in New York earlier this year.
Under the tax amnesty, Illinois
taxpayers who paid back-taxes during the six-week amnesty period did
not have to pay penalty and interest charges. Participants were
motivated by the fact that on Nov. 18 -- the day after the amnesty
expired -- penalties and interest doubled. Most of the participation
in the amnesty came from individuals, who accounted for 90 percent
of payments and 5 percent of dollars collected. The average
individual income tax payment was $400.
Besides the cash infusion, the amnesty
broadened the tax base and increased efficiency. Non-filers who came
forward will continue to pay in future years, and resources the
department would have used to collect money paid under the amnesty
is available for other activities.
"Amnesty
succeeded beyond our expectations," said Revenue Director Brian
Hamer. "We kept the program simple, got the word out to taxpayers
and did a good job of generating money for state and local
governments."
[News release from the
governor's office] |
