STATE BUDGET PROBLEMS CONTINUE TO GROW
According to a report by Illinois Comptroller Dan Hynes' office, the state has backlog of outstanding bills totaling more than $1.7 billion, compared to the $1.33 billion the state owed at the same time in 2006. In addition, it is taking 34 business days to pay bills once they land in the comptroller's office, up from the 22 days it took a year ago. This backlog and the number of days delayed represent record levels for the midpoint of the fiscal year. This is even before the state dives into crafting a new budget, which should begin July 1, 2008. This also does not take into account current obligations such as pension payments, increased health care costs for state employees, or any new spending being proposed by the administration.
The report says there are several factors behind the backlog, including the decline in corporate income tax revenue, insignificant sales tax revenue growth and the failure of the General Assembly to transfer money from restricted accounts into the state's general fund. It also cautions that tax collections tied to the economy such as the sales tax and corporate income taxes point to an apparently slowing economy.
Needless to say, this makes CICI and the business community very nervous about potentially upcoming new and increased business taxes and fees to settle this debt and cover new programs. Eliminating economic incentives has been one of the cornerstones of Governor Blagojevich’s administration and 2008 will be no different, as the following incentives have been targeted for elimination:
$70 M - Eliminate Single Sales Factor for non-service companies
$10 M - Repeal Research & Development (R & D) Tax Credit
$30 M - Eliminate the Manufacturers’ Purchase Credit (MPC)
$100 M - Decouple from federal accelerated depreciation
$30 M - Include Puerto Rico/outer continental shelf in definition of U.S.
$4 M - Income tax on gaming winnings over $1000 from non-residents
$53 M - Decouple from qualified production activities deduction
$90 M - Repeal deduction for foreign/domestic dividends by corporations
$9 M - End deduction for company owned life insurance
$65 M - Tax canned software
$15 M - Extend the insurance tax to industrial insurance
$45 M - Tax fuel transported to out of state destinations
$100 M - Limit retailers sales tax discount
Overall, this would be a $621 million impact to the state’s businesses, $521 million of it reoccurring every year. CICI will know more of the state’s finances and any attempts to derive new revenue to pay for its ever increasing spending when the governor delivers his budget address in mid-February. | 
