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Wednesday, March 7, 2007 10:18 PM CST
Local business leaders balk at governor’s plan
By DAVE FOPAY and NATHANIEL WEST, Staff Writers dfopay@jg-tc.com -- nwest@jg-tc.com
Some local officials fear Gov. Rod Blagojevich’s call for the largest tax increase in Illinois history, which the governor outlined in his State of the State address Wednesday, ultimately will hurt the very schools that would receive a funding boost from the proposed tax on business transactions.
Blagojevich said the $7 billion in new revenue from a “gross receipts tax” would pay for a 23-percent increase in school funding next year. His office indicated previously that small companies would be exempt from the tax, the Associated Press reported.
Even so, local business leaders said there is cause for concern.
“Illinois has a reputation now of being a non-business-friendly state,” said Patty Peterson, president of the Mattoon Chamber of Commerce.
“With this additional tax, I’m afraid to see what will happen. It could potentially devastate businesses that are (just) hanging on.”
If the loss of these businesses materialized, coupled with an increased difficulty of recruiting new industries, Peterson said local school tax bases could shrivel.
“You would lose property taxes,” she said. “I don’t know if it’s a win for anybody ... I just don’t think that’s the answer to bringing in more money for the state.”
Local education officials are cautiously optimistic about parts of the governor’s spending plan, but skeptical about the proposed funding mechanisms.
Charleston school Superintendent Gary Niehaus said he was surprised by the amount of additional education funding the governor wants, but he wondered about the success of the proposals.
“This is good news for us,” Niehaus said. “My question is, where are the revenue sources and will he be able to get those through the legislature?”
Niehaus added that he liked the governor’s call for more state money to pay for special education teachers and aides, an allocation that he said hasn’t had an adjustment in about 20 years. He also said school officials were already expecting an increase in the state’s per-pupil spending but he didn’t expect Blagojevich to call for an even larger increase.
“That would really go well in most budgets across the state,” Niehaus said.
He said he thinks the proposal will lead to at least some improvements in school funding. Blagojevich’s plan to add a new business tax “won’t go well in the business community,” but that part of the budget plan “might not be the final verdict,” he said.
Larry Lilly, superintendent of the Mattoon school district, was not available for comment Wednesday.
The Charleston Area Chamber of Commerce issued a statement Wednesday urging business to contact state lawmakers “to put a stop to Governor Blagojevich’s record breaking tax increase.”
“This ‘pyramiding’ of taxes will embed higher costs in the price for all products and services. Illinois products will be priced out of competition and consumers will be burdened with higher prices for goods and services,” the chamber’s statement said.
Contact Dave Fopay at dfopay@jg-tc.com or 348-5733. Contact Nathaniel West at nwest@jg-tc.com or238-6860.
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Congrats! wrote on Apr 10, 2007 9:35 AM: