Kadner: Illinois can’t afford another tax holiday
Phil Kadner email@example.com | (708) 633-6787 August 3, 2011 11:10PM
Updated: November 2, 2011 6:51PM
Attention, back-to-school shoppers:
There will be no sales tax holiday in Illinois this year.
With great fanfare, Gov. Pat Quinn held a news conference last year to announce he was signing legislation creating the first-ever sales tax holiday in Illinois.
“Back-to-school shopping can be expensive and difficult for families that are already struggling to make ends meet,” the governor announced in July 2010. “From Aug. 6 through 15 the sales tax holiday will boost Illinois businesses while helping every child in Illinois get the school supplies they need to succeed in the classroom.”
Apparently, businesses don’t need a boost this year and children don’t need the state’s help to succeed in the classroom.
The Legislature did not pass a tax holiday bill, so there was nothing for the governor to sign.
A cynic might note that 2010 was an election year and 2011 is not.
State Sen. Toi Hutchinson (D-Olympia Fields), who was a sponsor of the original tax holiday bill, told me Wednesday that Illinois simply can’t afford such generosity this year.
“We have $8.7 billion in unpaid bills,” Hutchinson said. “We’ve made unprecedented cuts in the state budget that are very painful.
“As much as I would like to help families and schoolchildren in Illinois, this is simply something the state cannot afford to do this year.”
I noted that last year the state was not only drowning in red ink, but had yet to pass a 67 percent income tax hike. Still, the Legislature thought the sales tax holiday was a good idea.
“Sometimes you do things for political reasons that are not good public policy reasons,” Hutchinson said.
I give Hutchinson high marks for honesty. Most politicians wouldn’t have answered that question in such a direct manner.
“When they (legislative leaders) came to me last year and asked me to carry this bill, I thought it would be a good thing to do to help people who were struggling in this economy and had children in school,” Hutchinson said.
“I have since learned a lot more about the budget process, and as much as I would like to help people with children in school again this year, it just doesn’t make sense.”
Hutchinson said she has three children in public schools herself and is facing fees of $320 “for each kid” just to enroll them.
She said she realizes expenses hit families hard at this time of year.
“It’s gotten to the point where my husband and I plan for August the way we do for Christmas,” Hutchinson said.
“You know your family budget is going to take a big hit and you save for it.”
Susan Hofer, spokeswoman for the Illinois Department of Revenue, said the state estimates that consumers spent $323 million on school supplies during last year’s 10-day tax holiday, for a sales tax savings of $16 million.
That’s far short of the $60 million in savings some politicians were predicting when the bill waiving the 5 percent state share for sales tax for school supplies passed.
As for the business stimulus the legislation was supposed to create, Hutchinson said, “After studying some of the figures on tax holidays, I’m not sure people spend more. I just think it impacts when people spend instead of how much they spend.”
Some of the people who complained to me about the lack of a sales tax holiday this year said they were under the impression it would be an annual event.
I can’t find any comments by public officials that could be interpreted in that way.
But once you give people a tax break, they tend to expect it again and again.
Hutchinson said people tend to be unreasonable when discussing the state’s financial situation.
“There are people who say we shouldn’t borrow more to pay our unpaid bills,” Hutchinson said.
“But we’re already borrowing that money by refusing to pay the vendors, the small businessmen, the nonprofits who have contracted with the state to provide their services.
“When we refuse to pay them for those services, we’re borrowing that money to run the government.
“And that forces them to cut their payroll and increase the number of unemployed people in Illinois. In some cases, it forces them to go out of business entirely.
“That’s not fair. It’s not right. But Illinois is borrowing at their expense and some people want to call it something else.”
As for the income tax increase passed earlier this year, Hutchinson said, “No one could reasonably expect that money to cover the $15 billion budget hole this state was facing.”
No one who understood the extent of the financial problem expected that, but for years Illinois governors and lawmakers played games with the budget and that probably had something to do with the public being misinformed or uninformed.
There shouldn’t have been any tax holiday last year. But it sure was a popular idea.
And that’s all anyone cared about at the time.