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An historic Tax
Fairness Plan that closes corporate loopholes and gives the
middle class the relief it deserves;
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A record new
investment of $10 billion in schools over the next four years --
nearly three times bigger than any increase in state history;
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"Illinois Covered"
-- an affordable, reliable healthcare plan to cover the 1.4
million uninsured adults in Illinois and provide assistance to
millions of middle-income families and small businesses
struggling to keep up with health insurance costs;
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Addressing the
state's long-time pension deficit and ensuring secure
retirements for thousands of workers by leasing the Illinois
Lottery and investing the proceeds toward the pension debt;
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And a billion
Capital Budget to make important investments in schools, roads,
bridges and other critical infrastructure.
"Today, we will begin the biggest, most fundamental change, in
our 4 year effort, to put middle class and working families at the
center of who we fight for. It is a change long overdue and
desperately needed," said Gov. Blagojevich.
"For decades, it's been the middle class and working families of
Illinois that have shouldered more and more of the tax burden. And
while they have paid more, the wealthiest corporations in our state
have paid less and less. The impact of this imbalance weakens our
economy, burdens our families and holds our state back," continued
the Governor. "And the saddest irony of all, the very people
burdened by an unfair tax system -- middle class families and
working families -- were hurt by the under-funding of education,
healthcare and pension funds."
Governor Blagojevich's plan for Fiscal Year 2008 takes historic
steps to change the Illinois tax structure -- one of the most
regressive and unfair to working families in the nation. In 1977,
the corporate share of the state income tax was 21%, while
individuals paid 79%. Today, the corporate share is 12% and people
pay 88%. In fact, the average taxpayer in Illinois pays $1,500 in
state income taxes while over 12,500 of the largest companies that
do business in Illinois pay on average $151 in corporate income
taxes. Gov. Blagojevich unveiled his Tax Fairness Plan that closes
corporate loopholes and allows for new investments in healthcare,
education and pensions.
"The choice is simple: higher property taxes or having companies
pay their fair share. It will allow us to expand healthcare for all,
to help small businesses with the cost of healthcare and to improve
the quality of care. The choice is simple: we can ignore healthcare
or have companies pay their fair share. It will allow us to fund our
pensions, removing this long-created threat to our fiscal health.
The choice is simple: we can let the pension challenge worsen or
have companies pay their fair share. We can take this historic step
now because for the past 4 years, you have rejected the old politics
that accepted failure," Gov. Blagojevich said to the joint session
of the General Assembly.
Helping Kids Learn
Through past decades, Illinois schools have been chronically
neglected and consistently under-funded, but in the past four years,
Governor Blagojevich provided $3.8 billion in new dollars to
Illinois schools which boosted education funding to record levels.
Continuing his commitment to schools, the Governor presented his
Helping Kids Learn plan that will boost education funding by an
unprecedented $1.5 billion in Fiscal Year 2008. The Governor's
Helping Kids Learn plan:
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Increases general
state aid to schools by $800 million, raising the Foundation
Level by $686 to $6,020;
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Builds new schools
by investing $1.5 billion in a capital construction plan for
projects to improve and upgrade classrooms and schools so
children can learn and teachers can teach in a more conducive
environment. The state would also provide nearly $600 million
for capital projects at public colleges and universities;
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Helps schools
afford special education teachers with $200 million in new
spending that will increase the state's reimbursement rate for
special education teachers -- the first increase districts have
seen since 1985. Fully funding 'mandated categorical' programs
with $153 million, which primarily reimburses school districts
for special education and transportation costs;
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Accelerates
implementation of Preschool for All with $69 million in
state support and dedicating additional resources for school
districts that provide full-day kindergarten;
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Provides $100
million to support underperforming school districts that invest
in after school tutoring, curriculum and textbook enhancements,
longer school days or other proven strategies that raise student
achievement.
"My Tax Fairness Plan will allow us to invest a record $10
billion more into our schools over the next 4 years. $10 billion to
improve schools, to support our teachers and help our kids learn.
This increase in funds is nearly three times bigger than any
increase in state history. $10 billion new dollars that will help
relieve the pressure on local property taxes and finally bring an
end to the savage inequality in how we fund our schools. A
permanent, dedicated, sustainable source of revenue. No short term
fixes. The money our schools need... money to help build new
classrooms, for more teachers, more training, more technology and
better results," said Gov. Blagojevich.
Providing Affordable Healthcare for All
While the Blagojevich Administration has expanded access to
healthcare to more than 500,000 working families with Illinois'
FamilyCare and All Kids programs, access to quality
healthcare continues to be a concern for more than 1.4 million
adults statewide who remain uninsured today. And this number
continues to grow: As the cost of healthcare for business has been
growing five times faster than the rate of inflation, the number of
firms offering health benefits to their employees has fallen by at
least 8% since 2000.
John and Peggy Means of Mason City, who attended the Governor's
budget address today, and their 13 full- and part-time restaurant
employees are just some of the victims of this serious problem. John
and Peggy are unable to afford health insurance for themselves or
their employees. The Means had insurance, but dropped it when their
health provider would not cover medical expenses for pre-existing
conditions. Since then, they have been unable to find healthcare
coverage that would cost less than $600 or $700 a month, more than
half their income. Today, Peggy is currently in remission from
breast cancer and requires expensive tests every six months to
ensure her cancer does not return. Because the Means are paying for
all of the tests and their healthcare expenses out-of-pocket, they
expect to be in medical debt well into their 70s and may have to
shut down their business as a result.
To help protect Illinoisans like John and Peggy Means, Governor
Blagojevich proposed Illinois Covered -- a plan that will
ensure all 1.4 million uninsured have access to quality, affordable
healthcare, and that will help many middle-income families and small
businesses that are currently enrolled in health insurance plans
save thousands a year on healthcare costs. The plan will also reform
the existing healthcare system to improve quality and require more
accountability. The primary components of Governor Blagojevich's
Illinois Covered plan include:
Choice: Creates a new, affordable comprehensive
insurance plan that anyone without employer-sponsored health
insurance in Illinois can purchase. This statewide pool of
coverage will offer Illinoisans lower and stable rates. Business
groups will be able to connect many of their members with this
new affordable insurance, and small business owners can also
purchase this product on behalf of their employees.
Illinois Covered
Rebate: Lowers premiums for moderate to middle-income
Illinoisans ($20,000-$80,000 for a family of four) to help them
afford their health insurance. The rebate will vary based on
income, and those with lower incomes would get a larger rebate.
[to top of second column] |
- Illinois Covered
Assist: Similar to FamilyCare and Medicaid,
individuals or couples who are very low-income will now have
access to full coverage through the state (individuals currently
making less than $10,210 annually, and couples making less than
$13,690).
"At the heart of our plan is one simple goal: everyone should
have access to affordable, quality healthcare," Gov. Blagojevich
continued. "So here is the choice we now face: ignore the needs of
the working families struggling to pay for healthcare, burden our
small businesses costing us jobs and deny healthcare to hard working
families -- or improve healthcare by having the biggest corporations
pay their fair share. We have made historic progress on healthcare.
Let's now finish the job."
The Governor also proposes expanding the existing FamilyCare
program to 400% of the federal poverty level for those who do not
have access to employer sponsored coverage, to expand health
benefits for workers with disabilities, and to allow dependants to
retain coverage until age 29. Additionally, the state will work with
both consumers and healthcare providers to develop a Roadmap to
Health that will improve the state's overall healthcare system and
promote wellness, while better managing chronic conditions, the most
important component for driving down overall healthcare costs.
Meeting Our Pension Funding Obligations
The State of Illinois' increasing pension obligation remains its
most pressing structural deficit challenge. Thirty years of
under-funding the state employee pension system, combined with
passing billions of dollars in unfunded pension sweeteners, has
created the largest state pension debt in the nation. While Governor
Blagojevich invested $13.3 billion in the state's pension system
four years ago -- more than any other administration in Illinois
history -- the pension debt remains at $40.5 billion today.
Governor Blagojevich laid out a landmark plan that would use the
proceeds from a long-term lease of the Illinois State Lottery to
provide an immediate infusion of at least $10 billion into the
state's pension system. He also proposed issuing $16 billion in
pension obligation bonds that will help put the system on stronger
fiscal footing. Altogether, by refinancing $16 billion of the
pension debt with lower interest rates and infusing $10 billion
immediately, the state will save more than $60 billion between now
and 2045. This will also immediately improve the fiscal position of
the pension system from 60.5% to 83% funded -- 34 years sooner than
outlined in the state's current 50-year pension plan. The cash
infusion will also allow the state to restructure its pension
funding plan to reach a 90% funding ratio in 2040, five years
earlier than the current funding plan.
"My Tax Fairness Plan will make paying down the principal a
reality. Our plan will free up an asset like the Lottery -- lease
it, generate $10 to $12 billion and put that toward our pension
obligation. That, along with another pension bond refinancing will
put an infusion of $26 billion into the system and bring down our
liability from $41 billion to $15 billion. And most important of
all, it will make a big dent in the principal and finally put an end
to the many-headed monster of out of control interest payments,"
said Gov. Blagojevich.
Promoting Tax Fairness
In Illinois, the share of state revenues coming from individual
income taxes has consistently increased during each of the last
three decades. The state income tax burden lies primarily with
individuals -- many who are struggling to make ends meet -- while
the burden on businesses has gone down, even while corporations are
posting record profits. Governor Blagojevich today unveiled a Tax
Fairness Plan that will reverse that trend.
Many large corporations pay little or nothing in corporate income
taxes and are not paying their fair share to meet the state's
ongoing infrastructure, education, healthcare and public safety
needs.
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According to the
Illinois Department of Revenue, 37 of the 99 'Fortune 100'
companies that filed taxes in Illinois paid no state income
taxes, despite the fact that they averaged $1.2 billion in sales
during 2004.
-
During 2004 alone,
these 37 firms were able to forgo paying over $160 million in
Illinois income taxes, yet reported $95 billion in total
national profits.
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On average, 48% of
corporations that generated $50 million or more in annual sales
in Illinois paid no income taxes from 1997 through 2004. In 2004
alone, 54% of corporations that filed an Illinois income tax
return and made $257 billion in U.S. sales, paid no Illinois
corporate income taxes; these firms represent 54% of the state's
Gross State Product.
"When large corporations don't pay their fair share to the State,
our schools are under-funded, our healthcare needs go unmet. Local
governments suffer and property taxes go up. This is grossly unfair.
It's unfair to individuals who play by the rules, who go to work,
who pay their taxes. It's unfair to homeowners trying to afford
ever-rising property taxes. It's unfair to small and medium size
businesses who don't have fancy accountants or powerful lobbyists.
It's grossly unfair that 20% of businesses pay 96% of the corporate
taxes. Any tax system that allows this is flawed, broken and needs
to be changed. Let's change this system. The time to do it is now,"
Gov. Blagojevich said.
The Governor's Tax Fairness Plan implements a Gross
Receipts Tax (GRT) that has been embraced by many economists because
of its broad base and low rates. States including Washington,
Delaware and Hawaii have had a GRT for years, and recently, Ohio and
Texas have adopted a form of the tax. The tax will better reflect
the changes in Illinois' economy since the Corporate Income Tax was
implemented thirty years ago when goods dominated the state's
economy. Today 'new economy' businesses -- primarily services --
represent the majority of Illinois' business activity. In fact,
goods-based businesses make up only 35% of Illinois' economy, but
pay 53% of the corporate income tax; services-based businesses make
up 65% of Illinois' economy, but pay only 47% of the corporate
income tax.
The GRT will only apply to businesses that make more than $1
million each year, which means that small businesses -- 75% of all
businesses in Illinois -- will be exempt. The GRT will tax service
industries at a low 1.8%, while manufacturers, construction, retail
and wholesale companies will be taxed at an even lower .5%. Exports
will not be taxed. The plan also mitigates costs being passed on to
consumers by excluding certain goods, such as retail food and
pharmaceuticals. By transitioning to the GRT, Illinois will rid
itself from loopholes that major corporations have exploited and
used to their advantage to avoid paying their fair share of taxes to
the state, and is expected to generate $3 billion in new revenue in
fiscal year 2008, and more than $6 billion during its first full
year in effect.
"By eliminating the loophole-riddled corporate income tax and
replacing it with the GRT, we will generate $6 billion in recurring,
new revenue. This will give us the funding we need for schools and
healthcare and allow us to commit the Lottery to the pension funds
-- no games, no ifs, no buts, we pay as you go, and the biggest
corporations that have burdened the middle class finally pay their
fair share," Gov. Blagojevich said.
"As I said when I took my oath of office, I want to work for the
people who work hard and play by the rules, for the families without
lobbyists, inside deals, stock options and hedge funds," Governor
Blagojevich said. "Let us be the ones -- let it be this General
Assembly -- that solves the school funding crisis, that gives
everyone access to healthcare, that makes fundamental tax fairness a
reality. Let it be this General Assembly that rises to the challenge
and does what others were unable to do. Let it be said by the school
teacher, the parent, the nurse, the factory worker, the shop keeper,
that in this great chamber, at this unique time, we had the courage
to do great things for the people of Illinois," the Governor urged.
[Text copied from file received from
the
Illinois Office of
Communication and Information]
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