Friday, September 07, 2012
Springfield – Insinuations by House Speaker Michael Madigan (D-Chicago) that following the November election, state Democrats may take advantage of some lawmakers’ lame-duck status to advance pension and cost-shift changes without Republican support prompted a quick response from House and Senate GOP leaders, according to State Sen. Ron Sandack (R-Downers Grove).
In other news, a review of a recent U.S. Census of Governments reveals Illinois has more units of local government than any other state in the nation, and as gas prices edge higher, Sen. Sandack provides an in-depth look into how Illinois’ local motor fuel taxes are determined.
Also this week, Sen. Sandack was awarded with the Guardian of Small Business Award by the National Federation of Independent Business/Illinois. The award, given every two years, is based on a score of how legislators voted on small business legislation in the General Assembly. The NFIB has over 11,000 small business members in Illinois and counts on lawmakers to foster a competitive business environment through limited government, fewer regulations and market-driven public policies.
Senate Republican Leader Christine Radogno (R-Lemont) and House Republican Leader Tom Cross (R-Oswego) responded to implications during the week that Democrats are considering unilaterally passing pension changes in January with Democrat-only votes. Pointing to the Democrats’ 2011 tax increase, which was passed in the waning hours of a lame-duck January session, the GOP leaders expressed concerns that without a bipartisan solution, Democrats would rely on a massive property tax increase to shore up the state’s dismally underfunded state employee retirement systems.
The state’s leaders agree that comprehensive pension reform is necessary to ensure the solvency of Illinois’ five state retirement systems; however, reform negotiations hit a roadblock late in the spring when Gov. Pat Quinn, Speaker Madigan and Senate President John Cullerton (D-Chicago) introduced a proposal that would shift the responsibility of pension payouts for teachers and university employees from the state, to local school districts and universities. Most Republicans oppose the idea, noting the shift is not true “savings,” but simply shifts the burden of the pension obligations onto local taxing bodies, which is expected to drive up the costs of property taxes for suburban and downstate taxpayers.
The Republican leaders noted that Illinois can no longer continue “throwing new revenue” at the state’s problems at taxpayers’ expense. Instead, they advocated for bipartisan cooperation in negotiating a comprehensive pension reform plan that would not rely on another burdensome tax increase.
Usually bringing up the rear in most polls, Illinois has reached a number one position on a national list. According to the U.S. Census Bureau’s 2012 Census of Governments, Illinois boasts more units of government than any other state in the country. There are five basic types of local governments considered in the census: counties, municipalities, townships, special districts, and school districts. Illinois has 6,968 local governments, 2,000 more units than Pennsylvania, which came in at number two on the list. With a mere 21 local governments, Hawaii has the fewest of any state.
The increase in local government units over the years is attributed to the changes made to the Illinois Constitution in 1970, when debt limits were placed on units of local governments. As a result, new units have been created as a way to circumvent those limitations. Since the Census Bureau’s last count in 2007, only 26 units of government in Illinois have ceased to operate—a less than one-half percent decline over the last five years.
These entities provide services, but at a cost to taxpayers. Often local governments are plagued by costly duplicative services, and lack the oversight and transparency necessary to monitor how taxpayer funds are being spent. At a time when Illinois faces severe financial troubles, a number of public officials and others have called for a leaner, more streamlined, more efficient government.
“People need only to look at their tax bill to see that there is far too much government in Illinois,” Sen. Sandack said. “From townships, to sanitary sewer districts, mosquito abatement districts, library districts, airport districts, park districts, forest preserve districts, and many more – taxpayers fork money over to several districts each year and a lot of it is entirely inefficient.”
Sen. Sandack said that we should lessen the number of units considerably and increase efficiency.
“Now more than ever, Illinois needs lean and efficient units of government,” he said. “Taxpayers need governments to think far differently and aim for every opportunity to do things efficiently.”
Currently, there is a bipartisan, bicameral Local Government Consolidation Commission that is reviewing units of local government throughout the state and exploring ways to consolidate. A report is expected next year. Gov. Pat Quinn has proposed consolidating school districts, and many local governments are looking at ways to operate more efficiently.
Travelers may have noticed prices at the pump increase this past Labor Day holiday. Illinois motorists who wonder at the variations in gas prices across the state might be surprised to learn that local, state and federal taxes account for some of the differences.
Illinois has many different taxes on the sale of motor fuel including various federal, state, and local motor fuel taxes, as well as various sales taxes. The state taxes include the flat 19 cents per gallon motor fuel tax on gasoline/gasohol (21 cents for diesel), the 1.1 cents per gallon in environmental fees, and the state sales tax of 5% of motor fuel sales (imposed on the price before the inclusion of the state motor fuel tax). By state law, only 80% of the price of gasohol is subject to the state sales tax.
Many lawmakers think the state’s sales tax on motor fuel sales is bad public policy because, the way the tax is calculated, it’s actually a tax on a tax. The price of a gallon of fuel includes the price of the product plus a separate motor fuel tax. The sales tax is figured on that total price.
The state’s share of the sales tax is 5 percent, while local governments receive 1.25 percent. Some municipalities pile their own sales taxes on fuel in addition – ranging from 0.25 percent in some small communities to 3.5 percent in the city of Chicago.
In terms of the state motor fuel tax, Illinois has the 31st highest rate in the nation at 20.1 cents per gallon (including environmental fees). In comparison to neighboring states, Illinois’ rate is lower than the tax rates of Wisconsin (32.9 cents per gallon), Kentucky (25.9 cents) and Iowa (22.0 cents), but is higher than Michigan (19.0 cents), Indiana (18.0 cents), and Missouri (17.3 cents).
Illinois had only the 41st highest rate of motor fuel tax collections on a per-capita basis at a rate of $103 per capita. All states neighboring Illinois (except Michigan at $99) had higher per-capita rates than Illinois (Indiana $118; Iowa $146; Kentucky $152; Missouri $121; and Wisconsin ($172). However, if Illinois included sales tax revenue from motor fuel, its per-capita value would rise from $104 to $149 per capita and its ranking would rise from 41st to 18th. The ranking would likely be even lower if it were not for the amount of public transportation available in the Chicago metropolitan area that limits the amount of revenue collected from motor fuel related tax revenues, thus, keeping the per-capita values artificially high.
In its latest report (July 2012), the American Petroleum Institute shows Illinois having the fifth highest gasoline tax total (including all state, federal, and local taxes) in the nation at 58.1 cents per gallon. Only California (67.7 cents), New York (67.7 cents), Hawaii (66.7 cents) and Connecticut (63.4 cents) had higher rates.
Neighboring states Indiana (56.5 cents) and Michigan (57.9 cents) were close behind Illinois. Not surprisingly, all of the highest-ranked states also imposed some sort of sales tax on motor fuel in addition to their standard motor fuel tax. However, some other states adjacent to Illinois have notably lower taxes, with Wisconsin at 51.3 cents, Iowa at 40.4 cents and Missouri at 35.7 cents.
Opponents of reducing/eliminating the state’s sales tax on motor fuel sales note that it would create a significant dent in state and local government coffers throughout Illinois. In the summer of 2000, the state suspended the 5% state portion of the sales tax applied to motor fuel and gasohol, for the period July 1, 2000, through Dec. 31, 2000. The Commission estimated that the suspension of sales tax on motor fuel cost the state approximately $157 million. However, at today’s prices, the cost to the state for a similar six-month suspension could be as high as $400 million.
Without these taxes, replacement revenues would have to be found or equitable spending cuts would need to follow.
Mark your calendars for Oct. 6 when Sen. Sandack and State Rep. Chris Nybo (R-Lombard) host the Mortgage Relief Project in Downers Grove. The event will be held at Downers Grove North High School from 9:00 a.m. to 1:00 p.m. The project can help you take advantage of programs to help you lower your mortgage, avoid foreclosures, and keep your home. Free housing counseling will be available and you will also learn how to recognize the tell-tale signs of mortgage fraud. To register for the event or for more information, please call toll-free at 1-800-532-8785 or visit www.idfpr.com. You can also view the flyer by clicking here.
Lastly, twelve cases of West Nile virus have been reported in DuPage County, and one death has occurred in Lombard. It is important to understand what the West Nile virus is, how to prevent getting it, and what symptoms to be aware of. To learn more about the West Nile Virus and how you can protect yourself and loved ones, visit the DuPage County Health Department website.