Published Online: March 13, 2007
Published in Print: March 14, 2007, as Illinois Governor Recommends Overhaul of State’s Tax System

State of the States

Illinois Governor Recommends Overhaul of State’s Tax System

Illinois

Gov. Rod Blagojevich used his March 7 budget address to unveil a proposal to overhaul his state’s tax system, a move that he predicts would pour billions of dollars in new revenue into Illinois schools.

The Democratic governor, speaking to a joint session of lawmakers, called for replacing Illinois’ corporate income tax—which he described as “loophole-riddled”—with a gross-receipts tax, or a tax on goods and services provided.

Gov. Rod R. Blagojevich

That change would be fairer to middle-income and working-class families, and would relieve local governments and school districts from relying on property taxes, argued Gov. Blagojevich, who was re-elected to a second term in November. The governor said Illinois now has “one of the most regressive tax systems in the nation.”

Such a tax overhaul, he said, would “finally bring an end to the savage inequality in how we fund our schools.”

The proposed tax shift would provide schools with an additional $10 billion over the next four years, the governor predicts. Overall, the K-12 general-fund budget would increase by 23 percent, to $8 billion in fiscal 2008, which begins July 1, from $6.5 billion in fiscal 2007.

For years, education advocates and some legislators have decried Illinois’ system of paying for schools as being too reliant on property taxes, a structure that they say harms tax-poor school districts. Some lawmakers have proposed reducing property taxes and increasing state income taxes, but the governor has rejected that approach.

Clare Fauke, a spokeswoman for A+ Illinois, which seeks to improve school funding and school quality, said her organization supports the governor’s plan. “We think it’s a strong proposal,” Ms. Fauke said. “It’s a good starting point.”

The governor also proposes leasing Illinois’ state-run lottery to help close a gap in the state’s pension fund, which supports teachers and other state employees’ retirement and has an unfunded liability of $41 billion.

For More Info
Read a complete transcript of Gov. Rod R. Blagojevich's 2007 budget address, posted by Illinois' Office of the Governor. Also, video and audio of the governor's speech is available. Requires Adobe Acrobat Reader
See Also
See other stories on education issues in Illinois and data on Illinois' public school system.

Vol. 26, Issue 27, Page 20

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