 Dana Homann, co-owner of Tinsley Dry Goods, an Abraham Lincoln
souvenir store a few blocks from the Capitol, said the nearly 67
percent hike -- from a flat rate of 3 percent to 5 percent -- will
mean another year of small paychecks."It just seems like those of
us who are out here trying to help the economy and really get things
so we're meeting in the middle so we can survive, it just seems like
we keep getting hit harder and harder," Homann said.
Higher taxes also mean the cost of goods could go up, according
to another Springfield businessman.
"No one's going to eat that, a company can't afford to eat that.
So the prices are going to... you're going to have to increase your
revenue, and the way you increase your revenue is you increase...
one way is to increase your prices," said Matt Noonan IV, co-owner
of Noonan True Value.
Instead of hitting taxpayers with higher personal income taxes,
Homann, Noonan and many other business owners said they wish the
state had tightened its own fiscal belt, much like state residents
and business owners have done recently.
"We understand the state is in a dire situation here, but just
like a business owner, we have to cut costs, borrow money to make
things happen and continue to survive. We feel there could have been
some other means or not as drastic," Noonan said.
One suggestion Homann has for lawmakers is to start by cutting
their own pay. It might be a symbolic gesture only, Homann said, but
it could lessen the sting when taxpayers hand over a larger chunk of
their income out of their next paycheck.
And while it might be nice public relations, the move wouldn't do
anything to help the state's finances, according to Fred Giertz, an
economics professor at the University of Illinois at
Urbana-Champaign.
"It's easy to say, ‘Why don't we cut the governor's salary or
reduce the number of people in the General Assembly?’ or something
of that sort. But most of our money goes for programs such as
education or health care, and that's where the big money is, and
that's where the cuts have to be made if we're going to make those
changes," he said.
Doubling the state's original income tax rate of 2.5 percent from
when it was instituted in 1969 is just the cost of keeping the
lights on for local schools and social service providers, the
governor and Democratic leaders have said.
Homann said she knows the state needed to do something about its
finances -- the deficit is on track to hit $15 billion soon -- and
even said she would be happy to pay more in taxes to help out. The
problem, Homann said, is that given the state's history, she doesn't
trust the government to handle the money responsibly.
[to top of second column] |
In an attempt to alleviate concerns like Homann's and Noonan's, a
2 percent limit on growth of the general operating budget was
written into the legislation. If growth outpaces that, the increase
is revoked. Though, as a report released by the Institute of
Government and Public Affairs at the University of Illinois points
out, budgetary smoke and mirrors could be used to get around the
cap.
The personal income tax increase is slated to stay on the books
for only four years. After that, the rate drops from 5 percent to
3.75 percent for 10 years and finally down to 3.25 percent.
Giertz said how the state handles the new revenue during the next
four years will determine whether the increase was a first step
toward healing the state's broken finances or a bandage slapped on
to just get by.
"You could have someone on the verge of bankruptcy and they get a
(loan). Somebody comes to them and they have that available, one
thing they could do with it is say, 'Well, I can go ahead and spend
just the way I used to. I don't have to worry about it.' ... The
other way is they have the opportunity to get (their) affairs in
order: 'I'm going to figure out ways to reduce my spending, figure
out ways to use my income more productively and get on the right
path,'" Giertz said.
Even with the new income tax money -- Gov. Pat Quinn's office
estimates the increase will bring in more than $6 billion annually
-- the state won't be able to dig itself out of its deficit without
cuts, according to the Institute of Government and Public Affairs
study.
Giertz said the state must implement slower growth and limit
spending, something Homann said she will continue to do.
"I guess I keep tightening my belt. Like everyone else in
America, that's what you have to do," she said.
[Illinois
Statehouse News; By ANDREW THOMASON]
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