What we’ll discuss

• Some of the successes we’ve had despite the economic downturn

• The state of the current budget• And what path we can take in the

upcoming budget year

What Illinois Encountered

• Climbing Pension Costs Due to 1995 Pension Law and 2008 Market Collapse

• More People Qualifying for Entitlement Programs Like Medicaid

Active Membership, Years of Service in the Big Three Systems

Active Membership, Years of Service Distribution*

As of June 20, 2011

System/Years Service

< 15% of Total 15-19

20-24 25-29 30+ Total

TRS

92,836 67.4%

17,753

11,384 7,827 7,911

137,711

SERS

36,463 54.9%

8,971

9,734 6,118 5,077

66,363

SURS

56,344 74.1%

8,123

6,515 3,531 1,486

75,999

Total

185,643 66.2%

34,847

27,633 17,476 14,474

280,073 66% of all Active Members have 15 or fewer years of service in TRS, SERS or

SURS*JRS has 966 total actives. GAS has 180 total actives. No distribution available in the actuarial reports.

Pension Cost as % of Total GRF Spending

Growth in Unfunded Pension Liability

Growth in Unfunded Pension Liability: Impact of Market Collapse

Medicaid Full Benefits Enrollment

Medicaid Full Benefits Enrollment – Type of Enrollees

State and Federal Contributions to the Medicaid Program Including Federal Match Rate

What Did the 2011 Tax Increase Do?

• Purpose: Budget Stabilization and Correcting the State’s Structural Deficit

• Increased for four years the State’s personal income tax rate by 2 percentage points

• Increased for four years the State’s corporate income tax rate by 2.2 percentage points

2011 Budget Stabilization Plan

• There is no personal property tax in Illinois like in Wisconsin, Indiana, Kentucky, Missouri and most states.

Personal Income Tax Rate

Corporate Income Tax Rate

Prior Rate 3.0% 4.8%

2011-2014 5.0% 7.0% (not 9.5%)

2015-2024 3.75% 5.20% (not 7.75%)

2025 3.25% 4.80% (not 7.3%)

History of Illinois Individual Income Tax

• 1969: Gov. Ogilvie Creates a State Income Tax at a 2.5% Rate

• 1983: Gov. Thompson Raises the Rate to 3%; the Rate returns to 2.5% in 1984

• 1989: Gov. Thompson Approves Another Temporary Increase to 3%; the Rate was Expected to Fall to 2.75% by 1993

• 1993: Gov. Edgar Makes a Permanent Increase in the Rate to 3%

• January 2011: Gov. Quinn Approves a Temporary Increase in the Rate to 5%

How Illinois Compares to Neighboring States

Personal Income

Brackets

Personal Tax Rates

Corporate Income

Brackets

Corporate Tax Rates

ILLINOIS Flat 5.0% (through 2014)

Flat 7.0% (through 2014)

Wisconsin 5 4.6% to 7.75%

Flat 7.9%

Indiana Flat 3.4% Flat 8.5%

Iowa 9 0.36%-8.98%

4 6%-12%

Missouri 10 1.5%-6% Flat 6.25%

Kentucky 6 2%-6% 3 4%-6%

How Illinois Compares to Neighboring States

• Wisconsin: Income over $10,180 is taxed at 6.15% and up

• Iowa: Income over $13,221 is taxed at 6.12% and up• Missouri: Income over $9,000 is taxed at 6.0%• Kentucky: Income over $5,000 is taxed at 5.0% and up• Indiana: Counties can levy a personal income tax on top

of the Statewide rate

How Illinois Compares to Neighboring States

Illinois Remains the Only State Listed That Does Not Tax Retirement Income