In a 38-21 vote, largely along party lines, the Illinois Senate approved the FY2025 Budget. The bill now goes to the House where it’s expected to pass and be approved by Governor Pritzker.
Included in the bill are the following items…
1 – It doubles the tax from roughly 20% to 40% on sports wagering and video gaming.
2 – A second year was funded for the Smart Start Illinois initiative which will ultimately provide universal preschool to the entire state by 2027.
3 – $182M was allocated for the migrant crisis in Chicago and Cook County.
4 – $44M was apportioned for Medicare Style Health Care to Non-Citizen Adult Residents.
The original budget included a tax decrease of 1% on grocery sales tax revenues. Ultimately this was eliminated due to push back from municipalities that receive a portion of those revenues.
Let me leave you with this…
The Red Lobster Chain of over 640 locations just announced that it would file for protection under the Bankruptcy Laws. The question becomes how did the organization which was once the largest casual dining seafood restaurant chain in the US end up in this position?
Three things happened that put them where they are today.
1 – Widespread Labor Shortages
When the labor market tightened after the pandemic, labor costs increased significantly.
2 – Interest Rate Increases
The chain had sold their real estate in a lease-back transaction to gain the necessary cash for operational cash shortages in prior years. Recent interest rate increases made those leases much more expensive.
3 – The $20 Endless Shrimp Promotion
This used to be a once a year promotion. The new management group made it a permanent menu item which was supposed to be a loss-leader to substantially increase foot traffic at its locations.
Instead, given the cost of seafood, this led to substantial losses which became the straw that broke the camel’s back.
I’m writing about this case because we can all learn from it. Even large companies with rooms full of overly educated managers who have funny letters behind their names can make ridiculous management mistakes in stressful situations.
After losing money over several quarters due to increased labor and rental expenses, they decided to put it all on the line with a loss leader. Rather than closing unprofitable locations, cutting costs, and focusing on proven profit centers, they went it the other direction.
They tried to hang on to all of it, and here they are.
My point is that organizations succeed over time for several reasons. Many times they’ll fail because new managers come in, throw out the old playbook, and fail to focus on what made the organization successful in the first place.
These pressures are a constant with entrepreneurs managing older organizations. Outside factors like technology, laws, style and competition constantly push us in newer directions.
But the job normally comes down to a hybrid management decision of incorporating the new with the solid management decisions of the past. Entrepreneurs capable of these difficult decisions are the ones who stand the test of time.
The rest just file bankruptcy.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
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