U of I study predicts more than pension reform needed for balanced budget
Champaign -- Pension reform will be a top priority for Illinois lawmakers as they round out the fall veto session this week, but a new study from the University of Illinois says more needs to be done if they want a balanced budget.
Economists say the legislature must address the $100 billion in unfunded pension liabilities. However, that is just one step towards resolving the budget crisis. They predict the state's deficit will jump from $1 billion in 2014 to $14 billion by 2025 if lawmakers do nothing. To avoid the drastic increase, they say more spending cuts and tax increases should be considered.
Income and corporate taxes were increased in 2011 to help with debt, but those rates are set to expire next year. Economists believe making them permanent could cut the deficit in half.
Although some local residents think it could drive down business in Central Illinois.
"With the higher tax rate that discourages people to be here, that's a big discouragement and it's been a big discouragement to industry as well," said Illinois resident Robert Wetzel. "And the idea that we're going to tax ourselves into success here is kind of a problem"
A proposal to keep ADM in Illinois might make its way through the state legislature this week. A $24 million tax incentive for the company is expected to be considered during the fall session.