Fiscal Fallout No. 5

January 18, 2011

Fiscal Fallout No. 5

The large tax increase just enacted falls short of closing the state's enormous budget gap


On January 11, 2011 the Illinois General Assembly imposed a large income tax increase, modest caps on spending growth, and approved borrowing to fund the FY 2011 pension payment. The new policies significantly reduce—but do not eliminate— the projected budget gaps. With the higher tax rates in place for the entire year, the projected deficit drops to $4.4 billion in FY 2012. But when the higher rates are phased out the deficit could be close to $10 billion in FY 2016.


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Research Area: Fiscal and Economic Policy

Policy Initiative: none