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Illinois's Spending Binge Continues to Harm Taxpayers, New Analysis Shows

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(Alexandria, VA) -- Massive tax and spending hikes greet Illinois taxpayers each year as officials continue to pile massive new entitlements onto the state's overburdened finances, according to a new study from the non-partisan National Taxpayers Union Foundation (NTUF). After reviewing years of data, NTUF found that government growth in Illinois has continued unabated without regard to taxpayers' interests.

Study author Sam Batkins noted, "In a 10-year period from 1994 to 2003, annual state revenues increased on average by 3.9 percent. Expenditures, however, quickened at an average yearly pace of 7.4 percent, leading to the current structural deficit. Moreover, in a nine-year period from 1995 to 2003, revenues increased 3.1 percent on average, while expenditures rose twice as fast (6.2 percent)."

The study found that if Illinois had restrained spending to population growth plus inflation (about 3.12 percent) over the last ten years, the state's budget would be approximately $43.5 billion, rather than the $55.3 billion budget Governor Blagojevich submitted. Taxpayers could have saved up to $11.8 billion (approximately $900 per capita) if Springfield had enacted spending limits.

To illustrate how Illinois's spending machine hums along without regard to economic conditions, Batkins showed that from FY 2000 to 2002, yearly net revenues actually declined 15.3 percent. During the same interval, however, annual spending jumped 19.3 percent. "With that kind of record, Springfield should look to its profligate spending to address budget deficits, not taxpayers' wallets," he said.

These record spending increases have been met with large tax hikes for residents of the Land of Lincoln. In the past three Fiscal Years, Illinois has raised taxes by more than $1.6 billion. Although state leaders have attempted to avoid large increases in sales or income taxes, citizens are still left without $1.6 billion of disposable income. Few states in the nation have increased taxes and fees as dramatically as Illinois in the past few years. The current FY 2007 budget also calls for a 67 percent tobacco tax increase.

Batkins noted that the introduction of massive new health care and education entitlements will only further burden state finances, and increase the likelihood taxpayers will be tapped to fund this new spending. For example, the state's five retirement systems are chronically under capitalized. Under Governor Blagojevich, the state's bonded debt has doubled, and Illinois has borrowed more money during his administration than in the last 185 years.

"For every bleak fiscal reality in Illinois, the Governor and Legislature seem to defy logic and implement discordant policies that exacerbate long-term debt and take from taxpayers what should be devoted to the private sector," Batkins concluded. "It is not clear why Illinois chose to further burden state finances and enact $1.6 billion in tax hikes, but what is now crystal clear is the state's poor financial outlook and anemic economic growth record."

NTUF is the research and educational arm of the 350,000-member National Taxpayers Union. Note: NTUF Issue Brief 153, Illinois's Fiscal Picture: A Portrait of Profligate Spending is available online at www.ntu.org.

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