Sunday 17th December 2017

Lawmakers blame poor policy decisions for Illinois’ near-worst income growth

Lawmakers blame poor policy decisions for Illinois’ near-worst income growth

ILLINOIS NEWS NETWORK

Nearly every state in the union has outpaced the rate of personal income growth in Illinois since the recession set in a decade ago, according to recent economic data.

The personal income figures for all U.S. states have rebounded to surpass pre-recession levels, the Pew Charitable Trusts reported last month, but Illinois’ 0.8 percent annual rate of income growth was the second slowest pace nationwide, just ahead of Nevada. By contrast, North Dakota had personal income gains averaging 4.5 percent a year.

“When you run a state as poorly as we do, that’s going to happen,” Rep. Mark Batinick, R-Plainfield, told Illinois News Network.

Young people, including millennials who could become tomorrow’s high-income taxpayers, are leaving Illinois in droves, leaving an aging population that faces rising property taxes and a continuing budget stalemate in Springfield, said Batinick, who wants the state to adopt a two-year budget.

State lawmakers reconvened for a special session of the legislature Wednesday in an attempt to find a compromise budget agreement to stabilize the state’s economic climate.

Many states have experienced a decline in income growth or just very slow growth over the past year, Ruth Mantell, an officer at the Pew Charitable Trusts, told Illinois News Network.

“A bunch of these states have been hit by lower mining earnings,” Mantell said, adding that farm earnings in some of these states have also taken a dive.

But that trend was not as pronounced in Illinois. Industries that have performed strongly over the past year in Illinois include finance, insurance, health care and scientific and technical services, she said. Weaker performances in the state were turned in by local and state government, retail trade and nondurable goods manufacturing, according to Mantell.

Personal income refers to residents’ paychecks, Social Security benefits, income generated from rental properties and assistance payouts from Medicaid and Medicare, among other sources, according to the Pew Charitable Trusts.

The news about the lackluster income growth did not seem to surprise Illinois state lawmakers. Batinick said the delivery of public services in the state remains expensive, noting that before the two-year budget impasse the state was funding higher education at twice the national average. Medicaid waste, high state government staffing levels and onerous regulations continue to take a toll, he said.

High property taxes that fund public education represent another obstacle to healthy growth in the state, Batinick said. Manufacturers need sizable footprints to house their operations, and the high property taxes combined with workers compensation costs tend to drive away or kill such high-paying employers, he said, noting that the result is downward pressures on overall incomes.

But some pro-business policies could turn the state around to a point where it outpaces its neighbors, according to Batinick.

“With the right policy, it would be like buying a stock at bottom before it’s about to skyrocket,” he said.

State Sen. Dan McConchie, R-Hawthorn Woods, echoed some of those sentiments. Every time he speaks to citizens or business owners in the state, they complain that the tax burden is too high and regulations are too extensive, McConchie said.

“If we had pro-growth policies, we would have things in our favor that would make Illinois a shining star in the Midwest,” he told Illinois News Network.

McConchie would also like to hear more debate about a Republican compromise budget plan that would include a temporary income tax rate hike, a four-year property tax freeze, government consolidation, workers compensation reform, pension reform and term limits for legislative leaders.

“The property tax freeze is insufficient,” he said. “We need to move toward property tax reform.”

Any plan to bolster the economy – which economists say is reflected in the personal income numbers – needs to address root problems, such as excessive levels of government and bureaucracy and a debt-ridden state pension system, McConchie said.

Sen. Jil Tracy, R-Quncy, also sounded off on the personal income data this month in a post on her website, suggesting that the sluggish growth is positive proof that the state needs to adopt structural reforms that Republicans are pressing for.

“While Illinois trails behind the likes of even low-growth states such as Connecticut and Mississippi, the average U.S. state has doubled Illinois’ income growth rate,” Tracy said. “In fact, its neighboring state of Indiana has grown at more than two times the pace of the Land of Lincoln.”

The U.S. Commerce Department’s Bureau of Economic Analysis also published economic data last month showing Illinois falling behind the nation as a whole in gross domestic product growth. Between 2006 and 2016, Illinois’ compound GDP growth stood at 0.4 percent annually, compared to a national annual GDP growth rate of 1.1 percent.

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