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How Illinois taxpayers are cheated out of federal funds

Mar 28, 2017
In The News

Your recent editorial “What struggling Illinois should learn from fellow blue state Rhode Island's success” failed to recognize the single largest factor in our state’s fiscal woes. Illinois loses $40 billion every year because we pay far more in federal taxes than we get back from the federal government. States like Rhode Island, however, make a profit from the federal government. This “payer state” problem is due to distorted federal spending formulas in the Senate that shape our federal budget. These formulas often favor the small population states like Rhode Island that are overrepresented in the Senate.

Hundreds of billions of dollars are transferred every year from large-population states like Illinois to low-population and rural states. Interestingly, several of Illinois’ border states — Iowa, Missouri and Kentucky — are “taker states” that are net recipients of federal funds. Indiana and Wisconsin go back and forth year to year and are nearly neutral. These funds allow these states to offer tax breaks to lure businesses out of Illinois.

The average citizen of Illinois is unaware of how badly this problem affects us. Do people know that each Illinois citizen receives only $114 each year in federal transportation spending while the citizens of Rhode Island get $213 per person per year? Montana is another good example; its citizens each get $405 per year in transportation funding.

I want people in Illinois to get their fair share of federal funds. Eliminating Illinois’ payer state problem should be the highest priority for all of our representatives in Congress. It would be transformative if Illinois simply came out even in the federal government’s budget instead of losing $40 billion per year. Call me an optimist, but I believe that there are very few problems in Illinois that could not be solved with an extra $40 billion each year.