Capitol Report | Summer 2020
Responding to Illinois' Double-Headed Crisis
As the state’s health crisis stabilizes, its economic crisis is only beginning.
Marty Green, Esq.
Senior VP and Legislative Counsel, Illinois CPA Society
When the pandemic first hit, our state and federal governments focused on responding to
the public health implications, taking such major steps as transforming Chicago’s McCormick
Place Convention Center into an overflow hospital and executing a statewide stay-at-home order.
But as the infection curve flattens and public health operations stabilize, the focus has pivoted
to the magnitude of the economic crisis. While many of us have seen firsthand the enormity of
the COVID-19 crisis, we are just beginning to glimpse the real economic challenges that lie ahead.
In my career, I have responded to natural disasters as an Air Force judge advocate and as an
assistant to former Gov. Jim Edgar, and I have learned that imperfect circumstances result in
imperfect solutions. Moving forward as trusted and strategic advisors to individuals and
businesses, we must understand the State of Illinois is in a very imperfect situation, which
will undoubtedly lead to solutions that are themselves far from perfect. By embracing that
broader perspective, we can best serve and advise our clients in these difficult times and
those that lie ahead.
Even before COVID-19 hit here, the major bond ratings firms were warning that Illinois was ill-prepared
to withstand an economic downturn. Fitch, Moody’s, and Standard & Poor’s all stated
that Illinois’ public finances had not rebounded from the 2008 economic recession or resolved
its public pension debt. In mid-March, Gov. J.B. Pritzker and his budget office estimated that
the state was looking at a combined $7.4 billion budget gap for fiscal years 2020 and 2021.
Prior to the COVID-19 outbreak, Pritzker’s “Fair Tax” amendment, moving Illinois from a flat tax
rate to a graduated rate, was viewed as a philosophical panacea to cure Illinois’ economic
woes. Now that COVID-19 has driven the loss of significant tax revenues, an economic
downturn, and investment losses by public pension funds, Illinois’ economic environment is
even more desperate. It’s clear now that additional tax revenue and any federal assistance
money the state may receive will not do much to fill the budget gap.
While it can be argued that these economic circumstances lay the groundwork for the passage
of the “Fair Tax” amendment this November, it will not be enough. The need to close the structural
budget deficit, address our public pension system’s shortcomings, and fix the high rate of
property taxes necessitates the need for the General Assembly to look for additional revenues.
What does all of this mean for the CPA profession? It means potential risk to our practice areas.
Many think tanks and advocacy groups have proposed the need for Illinois to expand its tax
base. When the Illinois General Assembly begins looking for new revenue lines, they will likely
revisit the idea of taxing professional services. As recently as 2017, in the budget standoff
between former Gov. Bruce Rauner and the Illinois House and Senate, the Senate passed a bill
that taxed a number of consumer services. While that particular item did not pass the House
then—instead, increased income tax rates for individuals and corporations were signed into law—
a tax on services is likely to come up again now.
The services considered may be consumer
services or professional services. Last
summer, Chicago Mayor Lori Lightfoot talked
about placing a value-added tax on large law
firms and international accounting firms. In
response, we established a coalition of
stakeholders and pursued several strategic
lines of effort to discourage any legislation to
authorize a municipal professional services
tax. We were successful—no such legislation
was introduced. If such a proposal presents
itself again, our advocacy processes are
in place to represent the CPA profession.
My message is this: The extent of the
damage that COVID-19 has inflicted on
Illinois’ economy—and the nation’s—is yet
unknown. Restarting the economy with the
existing budget gap will present enormous
challenges for all of us. The “Fair Tax”
amendment is only the beginning of a long
struggle to right the ship. Let us hope that the
governor and the General Assembly will use
this crisis to address the structural changes
needed in state government with the delivery
of services, public pension funding, and long-term
COVID-19 has changed our lives, but during
the worst of times, we see the best in
people. We have learned to work remotely,
using technology to do business and stay in
touch. Healthcare professionals, at great
risk to themselves, have worked tirelessly to
provide care and compassion. Communities
and neighbors have reached out to those in
need, working with food banks, assisting
their neighbors, and supporting local
businesses. We are a resilient people. By
working together, our state and country
will emerge from the economic crisis. CPAs
will play an important role, serving as
essential strategic advisors to individuals,
businesses, and the government, both in
weathering COVID-19 and achieving long-term
But overcoming the current crisis and the
long, tough road ahead depends on us
continuing to work together and show our
best selves. It reminds me of these words
from General Dwight Eisenhower, issued
upon the Allied victory in 1945: “[L]et us
remind ourselves that our common problems
of the immediate and distant future can best
be solved in the same conceptions of
cooperation and devotion to the cause....”
Eisenhower’s call for cooperation in the wake
of worldwide struggle is a reminder that
together we can overcome the double-headed
crisis before us.
Author’s Note: This column includes my personal observations of the evolution of the legislative environment and are not necessarily the views of the Illinois CPA Society.