DECATUR – On the fourth day of his “Investing in Families” bus tour, Governor Rod R. Blagojevich today met with owners of small businesses at Barry’s American Cycles in Decatur to talk about how his ambitious budget proposal will benefit small businesses. The Governor’s plan would give every Illinoisan access to affordable health coverage, would dramatically increase the state’s investment in education and provide tax relief for working families by asking big businesses to pay their fair share. Barry Geogehegan, owner of Barry’s American Cycles, told the Governor about how he struggles to afford healthcare for his son, his employees and himself.
“Barry is facing the same challenges as thousands of other small business owners across our state. They work hard, they create jobs and contribute to their local economies, and they’re paying their share of state taxes to cover important services. But too many small business owners can’t afford to get health coverage for their workers, and sometimes even themselves, and so every time someone gets sick or hurt, they worry that it could jeopardize the very business they’ve worked so hard to build. That’s wrong,” said Gov. Blagojevich. “We have an opportunity to help small businesses – the backbone of our great economy – have an easier time. By making sure wealthy corporations are paying their fair share of the tax burden, we can make sure Barry and his employees are able to get health insurance.”
“I think that it is commendable that the Governor is trying to make healthcare at least manageable with regard to availability and costs,” said Barry Geogehegan, owner of Barry’s American Cycles & Barry’s Storage in Decatur. “I currently pay almost $700 dollars a month just for my son and myself to have healthcare coverage and can’t afford to pay for my employees’ healthcare. Not being able to cover my workers makes me fear that I will lose my employees to another employer who can provide for their healthcare,” he added. “Gov. Blagojevich’s Investing in Families initiative is a fair way of providing for everyone in the state, not just those who have the most.”
Geogehegan is one of thousands of small business owners who face the overwhelming challenges of owning a business. As the cost of healthcare for business has been growing five times faster than the rate of inflation, the number of firms offering health benefits to their employees has fallen by at least 8 percent since 2000. This causes a significant problem for business owners because employees consider health insurance the most important employee benefit. A recent survey found that two thirds of workers say health care benefits are a very important reason to stay with their company. While the Blagojevich Administration has expanded access to healthcare to more than 560,000 children, seniors and working adults with programs like FamilyCare and All Kids, access to quality healthcare continues to be a concern for more than 1.4 million adults statewide who remain uninsured today.
For small businesses like Geogehegan’s, the Illinois Covered plan will make it affordable to provide health insurance for their workforce. The primary components of Gov. Blagojevich’s Illinois Covered plan include:
- Illinois Covered Choice: Creates a new, affordable comprehensive insurance plan that anyone without employer-sponsored health insurance in Illinois can purchase. This statewide pool of coverage will offer Illinoisans lower and stable rates. Small business owners can also purchase this product to cover their employees.
- Illinois Covered Rebate: Lowers premiums for moderate to middle-income Illinoisans ($20,000-$80,000 for a family of four) to help them afford their health insurance. The rebate will vary based on income, and those with lower incomes would get a larger rebate.
- Illinois Covered Assist: Similar to FamilyCare and Medicaid, individuals or couples who are very low-income will now have access to full coverage through the state (individuals currently making less than $10,210 annually, and couples making less than $13,690).
Also included in the Governor’s budget proposal is the Helping Kids Learn plan, which continues the Governor’s commitment to schools by boosting funding by an unprecedented $1.5 billion in Fiscal Year 2008. Under the plan, general state aid to schools will increase by more than $800 million, raising the Foundation Level for each student by $724 to $6,058. With more funds per pupil, schools can improve textbook quality, modernize their technology, or invest in teachers. The plan also will increase funds to hire special education teachers and fully fund “mandated categorical” programs like special education and transportation. The plan will accelerate implementation of Preschool for All and dedicate additional resources for school districts that provide full-day kindergarten. Underperforming school districts will get extra funds if they invest in proven strategies that raise student achievement. And funds will also be invested in a capital construction plan to replace or rebuild deteriorating schools.
The Governor proposed a major reform of Illinois’ corporate tax system in order to provide sustainable funding for education and healthcare. In Illinois, the share of state revenues coming from individual income taxes instead of corporate income taxes has consistently increased during each of the last three decades. To reverse that trend, Gov. Blagojevich unveiled a Tax Fairness Plan in his Budget Address earlier last month.
Many large corporations pay little or nothing in corporate income taxes, and they are not paying their fair share to meet the state’s ongoing infrastructure, education, healthcare and public safety needs. Gov. Blagojevich’s plan takes historic steps to change the Illinois tax structure – one of the most regressive and unfair to working families in the nation. According to the Illinois Department of Revenue, 37 of the 99 ‘Fortune 100’ companies that filed taxes in Illinois paid no state income taxes, despite the fact that they averaged $1.2 billion in sales during 2004. On average, 48 percent of corporations that generated $50 million or more in annual sales in Illinois paid no income taxes from 1997 through 2004.
The Governor’s Tax Fairness plan implements a Gross Receipts Tax (GRT) that has been embraced by many economists because of its broad base and low rates. States including Washington, Delaware and Hawaii have had a GRT for years, and, recently, Ohio and Texas have adopted a form of the tax. The GRT will only apply to businesses that make more than $2 million each year, which means 85 percent of all businesses in Illinois will be exempt. The GRT will tax service industries at a low 1.95 percent rate, while manufacturers, construction, retail and wholesale companies will be taxed at an even lower .85 percent. Exports will not be taxed. The plan also mitigates costs being passed on to consumers by excluding certain goods, such as retail food and pharmaceuticals.
Under the Governor’s plan, large corporations that pay little or no state taxes now – many of which can afford luxuries like multi-million dollar bonuses for top executives, private jet service, and huge entertainment budgets – will finally pay their fair share so children can get a better education, homeowners can enjoy property tax relief and small business owners like Barry Geogehegan can afford health coverage.