Gov. Pat Quinn painted a rosy picture Wednesday of a state "making a comeback" and laid out proposals to increase the minimum wage and help the state's most vulnerable, but he conspicuously steered clear of mentioning the state income tax increase set to start expiring at year's end.
In a 40-minute State of the State address clearly drafted to make his case to voters for his re-election, Quinn asked lawmakers to raise the minimum wage from $8.25 to $10 an hour, double the earned income credit for needy families and implement a “birth to five” program expanding prenatal care and early childhood education.
Quinn promoted those and other proposals as part of a five-year blueprint for jobs and economic growth, which despite Quinn’s optimistic speech continues to sputter according to numerous indicators.
Local lawmakers reacted to Quinn’s annual address in similar fashion to his previous four since taking office – that he is divorced from Illinois’ disappointing economic reality. At least until the General Assembly reconvenes jointly in three weeks to receive Quinn’s proposed 2015 budget.
“Today, I was hoping to hear a speech about how we would address unemployment and the unfriendly business
climate in our state,” said state Rep. Mike Tryon, R-Crystal Lake. “Unfortunately, legislators heard a campaign kickoff speech that was heavy on buzzwords and tiresome rhetoric, but lacking in details that would turn things around.”
State Rep. Barbara Wheeler, R-Crystal Lake, was more blunt.
“I don’t think [Quinn] and I live in the same state,” she said.
Quinn advanced several ideas to kickstart small business, which he says accounts for 75 percent of Illinois’ jobs. He said he wants to lower the fee for starting a limited liability company from $500 to $39, and said he will create by executive order a “small business advocate” whose job will be to examine how friendly state policies and laws are to their growth.
“By following the steps I have outlined here today – creating more jobs, making early childhood education a top priority and building an economy that works for everyone – we can create a stronger economy than ever before and reform Illinois for the next generation,” Quinn said.
State Sen. Pam Althoff, R-McHenry, however, said Quinn can’t push to help small business while at the same time pushing to raise the minimum wage.
“It’s very contradictory, and I’m scared that he doesn’t see that – we’re already noncompetitive with our surrounding states, and raising the minimum wage puts another nail in our coffin of growing and retaining businesses,” Althoff said.
Illinois already has the highest minimum wage in the Midwest, along with the highest unemployment rate. The 8.6 percent jobless rate also is the third-highest nationwide.
December’s unemployment figures are one of several statistics released over the past month that show the comeback Quinn touted will not be quick or easy.
Moody’s Analytics projected Illinois’ job growth rate for 2014 at 0.98 percent, or the worst of all 50 states, at about 57,000 new jobs.
For the third straight year, Illinois ranked second in the nation in 2013 for people moving out, according to the annual study released by United Van Lines. Four years ago, Illinois ranked first. The company’s figures were reinforced by a U.S. Census Bureau report released last week concluding that Illinois led the nation in out-migration between mid-2012 and mid-2013.
State Rep. Jack Franks, D-Marengo, has supported past efforts to raise the minimum wage, and opposed others. Now, he said, is not the time to raise it.
“Right now, when you have high unemployment and business is stagnating, I’m not sure a minimum wage increase is the way to go,” Franks said. “[Quinn] may be well-intentioned, but I’m not sure his solution won’t cause a greater problem, or hurt the very people we’re trying to help.”
State Rep. David McSweeney, R-Barrington Hills, expects to hear a more realistic assessment of the state’s finances with Quinn’s budget address Feb. 19. McSweeney expects to also hear Quinn push for a progressive income tax instead of the flat tax, which was temporarily raised to 5 percent of income back in 2011.
Quinn has followed a pattern in recent years of delivering an upbeat State of the State address, followed by a more somber budget address that better reflects the state’s economic woes.
“I hope that he’s very serious about our economic problems,” McSweeney said. “Taxes are too high and spending is out of control. But I expect him to call for more taxes and more spending – exactly the wrong answer.”
McSweeney, like his fellow McHenry County lawmakers, also expects to hear Quinn ask to make the 2011 tax increase – 67 percent on individuals and 46 percent on businesses – permanent. That increase is set to start sunsetting Jan. 1, halfway through the state fiscal year.
While Quinn supports going to a progressive tax, which requires a constitutional amendment, he has not publicly taken a position on letting the temporary tax increase expire as scheduled. But local lawmakers said repeated warnings from his office that the expiration will blow a $1.9 billion hole in the 2015 budget indicate that he will ask for an extension.
“The 67 percent income tax increase imposed on Illinois families in 2011 is set to expire soon, and I see no indication in the governor’s speech that he has any plan to reduce spending accordingly,” said Sen. Karen McConnaughay, R-St. Charles.
Franks, whose House State Government Administration Committee will have a hand in crafting next year’s budget numbers, said he will push for revenue numbers that account for the tax increase expiring as promised.
A motion to put a constitutional amendment for a progressive income tax on the November ballot needs 71 votes in the House – the exact size of the Democratic Party’s supermajority in that chamber – and Franks has been adamant in his intention to vote against it.
The tax increase is not the only budget issue that Quinn may have to grapple with.
Quinn spent part of his address touting the General Assembly’s hard-fought pension reform bill passed last month, meant to rein in the state’s $100 billion unfunded pension liability. But a number of lawsuits have been filed challenging the bill’s constitutionality, the latest filed Tuesday by a coalition of state public sector unions.