SPRINGFIELD - Small manufacturers - an endangered species in once highly-productive Illinois - will be hit once again if the budget plan becomes law when the legislature returns in February.
Still stinging from the budget hit they are taking from higher utility bills dumped on them last fall via the General Assembly's recent Exelon bailout plan, small manufacturers could bear the brunt of several tax-increasing aspects included in the proposed budget plan.
The Technology & Manufacturing Association, a group of more than 800 small manufacturers that employs more than 30,000 taxpayers, says they are opposed to any budget compromise predicated on raising revenue without significant structural reforms.
The group's president, former Senator Steve Rauschenberger, expressed disappointment in the current budget proposal in a notice to members last week.
"What is apparently not included in the proposal is any explicit pension reform nor any spending reform of Medicaid, K-12 School Spending, higher education spending, or the General Assembly's spending budget," Rauschenberger wrote.
"And what we get in return is minor changes to the workmen's compensation system and a two year freeze on property taxes."
Those minor changes simply will not balance what the plan will weigh on Illinois small manufacturer's already tight budgets.
The association's government relations committee is concerned about ideas such as the proposed replacement of the franchise tax ($200 million) with a new "business opportunity tax." The plan is a graduated tax on monthly payroll from a base of $250 to a cap of $15,000. It is estimated to raise $750 million, costing businesses an additional $550 million.
The proposed tax cap will hit smaller businesses much more than larger businesses, which are able to absorb, and actually benefit from the $15,000 cap.
This proposed new payroll tax would be added on top of another Senate proposal of increasing the state's corporate income tax rate 1.75 percent to 7.0 percent, setting Illinois as the fourth-highest corporate rate in the U.S.
Smaller businesses will also be required to pay new taxes on services such as landscaping and cleaning, among many others, estimated to raise another $400 million for the state's deficient revenue.
Smaller manufacturers will also be forced to increase minimum wage on their workers to $11 per hour.