Faced with a looming budget hole, Illinois lawmakers shied away from addressing tax reform this year -- and elected officials in the state's biggest local government, Chicago's Cook County, now find themselves asking the hard questions state lawmakers avoided. A recent report from the Center on Tax and Budget Accountability shows that the county's current budget hole, estimated at $288 million, reflects a "structural deficit" -- that is, a recurring imbalance between the services a government provides and the revenues it uses to fund those services -- that will grow to over $800 million a year by 2012. The CTBA report explains that the county's heavy reliance on slow-growth property taxes and a narrow local sales tax base make the tax system incapable of keeping pace with the cost of funding important services. County lawmakers have proposed an increase in the county's already-high sales tax rate (without expanding the sales tax base to include currently-untaxed services), which would reduce the deficit but wouldn't directly address the sustainability concerns raised by the CTBA report.
Meanwhile, state and county lawmakers are engaged in a tug of war over whether to extend the county's soon-to-expire temporary caps on the growth of residential property taxes. The Chicago Tribune explains succinctly why such caps are bad policy.