Solutions for Illinois' broken business climate
Election season is over, but its effects on Illinois' beleaguered business community likely will remain unknown until well after the new Illinois General Assembly members are sworn in Jan. 11.
What is known is that the newly elected legislators will inherit many statewide and national economic problems. Illinois' small business owners feel the pain of both.
A recent Alignable report found that 37% of Illinois' small business owners could not pay their rent in full and on time this past October. The survey's respondents cited nationwide economic concerns such as rampant inflation, rising labor expenses and shortages, and a slowdown in consumer spending as some of the top reasons.
The widespread challenges combined with Illinois' high taxes and ongoing, sluggish recovery from the COVID-19 pandemic hinder Illinois' small business owners more than those in other states. What pro-business, low-tax policies could Illinois' new lawmakers enact to help our business community in such times?
Here's a handy guide with three policy ideas to make it easier to own, operate and grow a business in Illinois:
1. Cut down on unnecessary fees.
Illinois' small business owners and taxpayers pay the second-highest gas taxes in the nation thanks to Gov. J.B. Pritzker's doubled gas tax hike in 2019 and automatic annual increases. Pritzker temporarily delayed the 2022 increase until January 2023 as an election-season promise, which means small business owners will pay for two automatic increases next year - the delayed one in January and the usual increase in July.
That's on top of the estimated $1,483 more the average Illinois worker will pay for gas from 2021 to 2022 because of inflation.
If the annual gas tax hike could be delayed for an election season, it isn't necessary. Permanently cutting unnecessary fees such as the doubled gas tax and automatic gas tax hike would leave business owners with more capital to meet rising supply costs.
2. Reduce burdensome regulations.
Illinois' small business owners not only have to deal with the same inflation concerns as other business owners around the country, they also have to deal with the third-most regulatory restrictions in the U.S. All those restrictions don't help Illinois fix an unemployment rate that remains the worst in the nation.
Trimming Illinois' regulations would free up small business resources, which translate into expansions and hiring more workers. Illinois is still missing 65,800 jobs compared to before the COVID-19 pandemic. Getting people back to work is important for businesses, the economy and Illinois families.
3. Provide stability in state finances.
Businesses look for stability and certainty when deciding where to grow. A decade ago, Caterpillar's former CEO asked Illinois' leaders to pursue fiscally responsible policies. They failed to listen: pension debt has tripled and risen by nearly $100 million during the past 14 years, and Illinois lacks a robust rainy-day fund.
State leaders are now forcing business owners to pay the price for state's latest fiscally irresponsible move.
Illinois still owes $1.3 billion of a federal loan from the COVID-19 pandemic. Business owners will face an automatic unemployment tax hike until the deficit is paid off. In addition, lawmakers hiked taxes on businesses by over $650 million in 2020, with Pritzker undoing a business tax cut he had championed just a year before.
Political leaders who prioritize business growth in Illinois will reap the benefits: more jobs for Illinois workers, more widespread business growth and a more stable economy. It's what our business community and state deserve when lawmakers return next year.
• Matt Paprocki is president of the Illinois Policy Institute, a nonpartisan research organization.