|
 Illinois Gov. J.B. Pritzker is boasting about what
his Illinois Family Relief Plan means, but a little math shows it means $35.52 a
month in savings for the average family at the same time inflation is eating $90
from their budget.
Pritzker’s relief plan started July 1. It suspended the state grocery sales tax
until July 2023, delayed the July gas tax hike until January, offered property
tax rebates for middle- and low-income families as well as minor, temporary
income tax credits.
With a declining state population of 12.67 million, the average Illinois family
of three can count on saving roughly $35.52 per month, based on Pritzker’s
projection of $1.8 billion in tax relief over about a year. A monthly check of
that amount would be quickly eaten by rising state inflation, which took an
additional $90 from Illinois households in June and is trending upward.
Pritzker called the package a “new and creative way” to deliver relief. He also
boasted about his administration’s fiscal record: “We are doing that because
Democrats balanced the budget, eliminated the bill backlog, and the state
government is now running a surplus,” he said.
The problem is, his claims are all false about the budget, backlog and surplus.
None of those fiscal issues have been fixed.
While Illinois families are seeing their incomes eroded by inflation, state
government enjoyed record-high tax revenues topping $57 billion in 2021,
according to data from the St. Louis Fed. Under the generous assumption that tax
revenue remains constant in 2022, $1.8 billion is chump change, representing a
mere 3.16% rebate. No surprise, because the package offers little refuge from
the crippling tax burden faced by Illinoisans.
Pritzker suspends 1% grocery tax, but 6.25% rate on general merchandise remains
Pritzker’s administration estimated $400 million of savings would come from
freezing the state’s 1% grocery sales tax until July 2023. What Pritzker failed
to mention was Illinois is one of 13 states to even have a grocery sales tax.
Suspending it means Illinois, for a year, joins 37 other states that see it as
wrong to tax people’s need to eat.
Worse, the effects will barely be felt. The average Illinois family of three
spending $5,642 annually on groceries can count on saving $4.70 per month, which
buys little more than an extra gallon of milk. A more impactful move would have
been permanently eliminating the grocery sales tax. Cutting back on the 6.25%
sales rate on general merchandise would be warranted, because Illinoisans
already face the eighth-highest combined sales tax burden in the nation.
Gas tax hike freeze: delaying the pain
Illinoisans also should not count on the plan’s freeze on gas tax hikes to
lessen woes at the pump. Although Pritzker’s campaign claimed to have frozen the
entire tax, this policy only delays the automatic increase from July to next
January. This means residents will continue paying the same sky-high prices,
only to be hit with double hikes in 2023.
[to top of second column] |
The state’s gas woes are partly thanks to Pritzker having doubled the motor fuel
tax in 2019, causing Illinois’ gas taxes to rise to the second-highest in the
nation. Consequently, the state will have taken in over $3.5 billion extra
dollars at the pump by the time Pritzker’s first term ends. Rather than
superficial re-election gimmicks, Pritzker should consider suspending the gas
tax entirely until inflation has subsided.
Property tax rebate ineffective in stifling nation’s second-highest rates
In 2021, Illinois ranked second in residential property tax rates for the fourth
consecutive year, hitting residents with a bill worth 2.27% of their home value.
Unfortunately, the Family Relief Plan will hardly dent that rate.While eligible
homeowners may receive up to $300 in refunds from their property taxes, a
50-state property tax analysis shows Illinois needs much more than $300 to catch
up.
For example, the average $217,500 house in Illinois pays between $915 to over
$3,000 more in property tax than equally valued houses in neighboring states.
This means, at best, an Illinoisan owning a $217,500 home can earn $300 back
from their bills. But, living next door in Indiana would have saved them over 10
times their rebate at $3,089.
Even if every homeowner receives the full benefit of the plan, Illinoisans would
still pay the fourth-most expensive property taxes in the nation. They would
barely beat out New Hampshire and Connecticut by less than $100 each.
However, the $300 fails to offset the hike in property taxes Pritzker’s
administration oversaw. Over his first term, the average Illinois household paid
$1,913 more in property tax.
If Pritzker seriously wanted to create a more friendly environment for
homeowners in Illinois, he and lawmakers would pass constitutional pension
reform so state and local governments can sustainably pay down pension debt. By
doing so, property taxes in Illinois can return to the more bearable rates seen
in the 1990s.
Lt. Gov. Juliana Stratton commented Illinoisans “deserve to know that they are
not on their own,” asserting the state works to “ease the burden” of its
residents. But the Family Relief Plan hardly eases anyone’s burden. For every $1
saved, the average family can expect to pay almost $5 in additional taxes
imposed during Pritzker’s tenure. Thanks to these increases, the average family
is short-changed $2,165.
Permanently repealing the grocery sales tax and annual gas tax hikes, cutting
back on the general sales tax, and passing constitutional pension reform would
provide a real family relief plan.
|
