A new administration will take over next month, but the state of Illinois still has the same financial problems. A budget that’s out of balance by $400 million, unpaid bills totaling $6.4 billion, and $2 billion in tax revenue set to disappear – that’s what the governor-elect will encounter on his first day in Springfield.
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“There are no solutions to our problems that aren’t going to require sacrifice,” says Laurence Msall, president of the Civic Federation. He says Gov.-elect Bruce Rauner won’t be able to fix everything in the first year.
“It’s gonna take a longer-term plan, but the clock is ticking and he can’t afford to wait long to show the credit rating agencies, to show the legislature that he has a plan that is possible to stabilize our finances,” he said.
The income tax rate will fall from 5 percent to 3.75 on Jan. 1. Msall says the state will need revenue, whether it’s from raising the income tax back to 5 percent or from something else, such as expanding the sales tax base or taxing retirement income.
He says cutting spending is not a solution to problems this large because the state has fixed commitments for debt service and pensions that cannot be cut. The state is budgeting $7.5 billion for pensions this year, about $5 billion more than 10 years ago.