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Question of the day

Tuesday, Jan 31, 2006

I apologize for the very long set-up, but it’s a wonky issue and we need to look at the arguments first.

These ten state revenue enhancement options come from Voices for Illinois Children.

1 State fees for new construction
New housing construction attracts families and adds students to local schools, creating a need for more classrooms. Over the past 12 months almost 50,000 single family housing construction permits were issued in Illinois. A state-assessed fee of $1,000 per new unit could provide over $50 million each year. The potentially harmful impact of this fee on the supply of affordable housing could be lessened by structuring the fee as a percentage of the home’s value. Assessing state impact fees for commercial development and housing rehabilitation could be an additional source of revenue. State construction fees would provide an ongoing, common-sense source of funding for state bonds and Capital Development Board grants.

2 State entertainment sales tax
If the state sales tax rate of 5% were applied to arts, entertainment and recreation, the state could raise an additional $100 million each year.

3 Means-test the education expense credit
There currently is no income limit on this credit, which is used to offset expenses for K-12 education. As a result, relatively affluent taxpayers receive most of the benefits from this tax break. Taxpayers with incomes of $60,000 or more account for 65 percent of the tax relief. Allowing the expense only for taxpayers with incomes below $60,000 would recoup an estimated $40 million for the state.

4 Means-test or cap the property tax credit
Currently, state taxpayers may claim a tax credit of 5% of their property taxes. This credit cost Illinois more than $380 million in FY2004. Creating a means-test would preserve the benefit for low- and middle-income families, while reducing the benefits to wealthy homeowners. Alternatively, capping the credit at $300 would accomplish the same goal.

5 Cap the retailer’s discount
This tax break was enacted in 1959 to off-set retailers’ expenses for computing and collecting the state sales tax. Today, the burden is largely eliminated by computerized collection and accounting systems. The retailer’s discount cost the state more than $113 million in FY2004. Capping the discount at the first $1 million of sales taxes collected could provide appropriate protection for small businesses.

6 Reduce the amount of the retailer’s discount
The retailer’s discount currently is set at 1.75% of their sales tax collections. Reducing the amount retailers receive for administrative costs to 1% of their collections would save the state an estimated $50 million.

7 Phase out the income tax exemption for retirement income over $75,000
Illinois is one of only three states that exempt all retirement income from taxation regardless of the wealth of the taxpayer. The exemption applies to income from a CEO’s 401(k) as well as a state retiree’s pension. Currently this exemption costs the state $763 million annually. Taxing some retirement income for high-income retirees could generate hundred of millions of dollars of revenue annually.

8 Collect sales and use taxes from remote vendors (long-term alternative)
Last year, Illinois lost an estimated $180 million in use taxes on internet purchases, and stands to lose more in the future as e-commerce increases. Illinois law requires that consumers report purchases from out-of-state vendors on their state tax returns and pay a use tax, but few taxpayers actually do so. The U.S. Supreme Court’s 1992 Quill decision prevents the state from requiring remote merchants to collect use taxes, but also indicates that Congress is free to change that rule. The Streamlined Sales Tax Project is a national effort to encourage Congress to authorize states to require collection of taxes from out of state purchasers. It currently has 13 member states and six associate member states, but Illinois is not yet a member. We should join this important effort. In the meantime, voluntary use tax collection from retailers without a physical presence in Illinois can be encouraged through an amnesty program for accounting errors.

9 Expand the sales tax base to more services purchased by households
Services are the largest and fastest growing sector of the Illinois economy, yet the state exempts most services from sales tax. Illinois taxes fewer services than all but six other states. Taxing services purchased by households could generate an estimated $1.8 billion in new revenue.

10 Increase the personal income tax rate
Illinois’ maximum personal income tax rate is the lowest in the country, of the 41 states that impose an income tax. Moreover, state income taxes can be deducted from federal income tax obligations, lowering the effective rate of any increase. The increased burden on low- and moderate-income families resulting from an income tax increase can be offset by expanding the Illinois Earned Income Tax Credit to 20 percent of the federal credit. Increasing the personal income tax rate from the current 3% to 4% would generate $2.7 billion, and increasing it to 5% would generate $5.4 billion in new revenue. In addition, the corporate income tax rate could be increased, although Illinois’ existing corporate tax rates are already high when compared with those of other states.

What do you think?

- Posted by Rich Miller        


39 Comments
  1. - Nice - Tuesday, Jan 31, 06 @ 6:36 am:

    They forgot one a huge one: sales tax on internet purchases. Why should those be exempt from sales taxes? People who purchase stuff on the internet without paying their fair share are doing the equivalent of stealing blankets from babies.

    Pop Quiz:
    Historically, giving the government money will result in:

    1) Having all our need met.
    2) Result in them coming back 4 years from now asking for more.

    Answer #2 is why I don’t give booze to alcoholics.

    The state is addicted to your money. Give them more now, they will be back in four years needing more.

    Time Springfield weens itself from its addictions that are dragging us all down.


  2. - mike - Tuesday, Jan 31, 06 @ 6:51 am:

    State revenue enhancement? Gotta love those words.

    You may want to scratch number 6, cause that’s going to pay for laptops for kids.

    According to the Lt. Governor there exists one of those evil “loopholes” in the tax code that when corrected will save the “state” 50 million.

    “The I-Connect Initiative would provide laptop computers to every Illinois seventh grader in public school by closing a long-standing loophole in the Illinois tax code which allows retail merchants to pocket 1.75% of the state sales tax collected by retailers as a collection commission.” (press release - Dec 6,2005)

    loophole - an ambiguity (especially one in the text of a law or contract) that makes it possible to evade a difficulty or obligation

    ambiguity - Doubtfulness or uncertainty as regards interpretation

    Where is the loophole?

    35 ILCS 120/3) (from Ch. 120, par. 442)

    Except as provided in this Section, the retailer filing the return under this Section shall, at the time of filing such return, pay to the Department the amount of tax imposed by this Act less a discount of 2.1% prior to January 1, 1990 and 1.75% on and after January 1, 1990, or $5 per calendar year, whichever is greater, which is allowed to reimburse the retailer for the expenses incurred in keeping records, preparing and filing returns, remitting the tax and supplying data to the Department on request.

    I’m sure a good lawyer or politican can find it, I can’t.

    And by golly that is just the ammount needed for the laptops -at first, haha.

    Or how about cutting spending - like:
    TREMONT AREA PARK DISTRICT (D) (Tazewell Co.) $400,000, to construct a new zero-depth swimming pool,

    What is that, a wet tennis court or a hole to through money in?

    If they can’t cut then at least stop creating new programs.


  3. - Mary Fioretti - Tuesday, Jan 31, 06 @ 7:24 am:

    I agree whole heartedly on the sales tax on internet sales. visit here: http://www.isp-planet.com/politics/2001/e-tax_2001.html shows you the lost revenue of not using internet sales tax. (that’s 2003 numbers)

    I also agree with services. Check this out: “The Disappearance of Manufacturing?”, Chicago Fed Letter, William Strauss and Scott Walster, Number 190, June 2003 and Graph. “Manufacturing’s employment level has been relatively flat when put up against service industry employment, which has multiplied by 4.5 times over the past 55 year.” We do not tax the fastest growing economic sector in our economy.

    The growing sector that we have for human services in Illinois is that of senior citizens. All accross our state we are seeing a gradual asking of senior services at the county levels. This will have to be supported at some point as our seniors get older. A dissadvantage of non taxation on retirement income in Illinois is that it attracts seniors to live here thus potenially creating an increase in senior services.

    Good luck with these Sean and Jerry.


  4. - Anonymous - Tuesday, Jan 31, 06 @ 7:39 am:

    Yeah, let’s drive the remaining business out of here!


  5. - DOWNSTATE - Tuesday, Jan 31, 06 @ 7:50 am:

    I think this governor’s race is going to come down to who is the best with a check book and who can make the wise decisions on which is the best tax to increase or implement that will have the least impact on the people.From what I have seen that leaves this governor out in the cold.His borrow and spend for re-election is one of the biggest problems this state has.If he would of not rehired and created all these jobs for his people when he made cuts in the state agencies we would of been in much better shape.For everyone one at the 40 thosand dollar level he laid off he hired or created a 125 thousand a year job.Sorry but that is not the way to balance the checkbook.


  6. - It's Mine - Tuesday, Jan 31, 06 @ 8:02 am:

    These folks start with the idea that it all belongs to them, and that I get to keep what they let me have.

    As long as they claim that it will help the most pitiful members of society, they have a chance of selling it to the gullible 50%+1 needed to pass.

    What else to expect from “Voices for Illinois Children”?


  7. - BIG R.PH - Tuesday, Jan 31, 06 @ 8:07 am:

    The only ones that make any sense are #3, #7, #8 & #9.


  8. - SouthernILRepub - Tuesday, Jan 31, 06 @ 8:46 am:

    Interesting there is no talk of cutting the current levels of education spending on useless things. The state keeps adding $250 here and there to say “we are spending more on education,” but the real sceme is that more money gets dumped into Chicago’s failing schools. The suburbs get more money from the state than the need. Southern IL ends up the big loser because the special funds for buildings, and transportation get raided. Who are the supporters of this group?


  9. - SouthernILRepub - Tuesday, Jan 31, 06 @ 8:51 am:

    Rich, I just educated myself of the issue ,and saw their website. I would say a bonefide democrat supporting if not even liberal group. Please feel free to throw a bone to the other side of the aisle as well. I will give you credit for drawing a large amount of attention to the FOID debacle.


  10. - zatoichi - Tuesday, Jan 31, 06 @ 8:52 am:

    I am surprised these ideas have not come up before, at least publically. Guess you have to be a wonk to get these types of ideas. All of them, except #10, would not be an income tax increase. Just a simple adjustment to a fee or decreasing what can be kept. Still would be a lot more money out of someone’s pocket and into the State. The new programs, roads, buildings, and salaries will fly out the door faster than ever. And when all of these additional dollars are spent ……


  11. - Wildcat - Tuesday, Jan 31, 06 @ 8:55 am:

    Sounds like if your household makes more than $60,000 or $70,000 these folks want you to pay for everyone. I don’t believe that households at this income level should be responsible for the state’s mismanagement and constant borrowing.


  12. - Randall Sherman - Tuesday, Jan 31, 06 @ 9:11 am:

    Your first nine suggestions are either flawed or produce chump change. The state income tax should be raised, but all the gutless wonders in Springfield, from Michael Madigan (whose primary concern is merely to keep his posterior in the Speaker’s chair; to hell with any sort of legislative legacy) to those Republicans who think the calendar is stuck in 1972, a week after Gov. Oglivie lost his re-election bid due to the then new state income tax.

    An increase in the state income tax (particularly if it is coupled with an increase in the individual personal exemption) would be the most progressive way to raise the funds needed to keep state government going.

    RANDALL SHERMAN
    Secretary/Treasurer, Illinois Committee for Honest Government
    Chicago


  13. - VanillaMan - Tuesday, Jan 31, 06 @ 9:37 am:

    Illinois’ children need families that are free to use their income to choose what is best for them. Illinois’ children need to have a state that understands that families make better choices than a government bureaucracy does. Illinois’ children need to have a state that does not tax businesses out of the state, that create entry level jobs and grows in the 21st Century economy. Illinois’ children do not need Illinois’ government, however, Illinois’ government need Illinois’ children if it wishes to play Nanny and have enough income to do it.

    Illinois’ children needs an administration that understands that the money you earn is your children’s, not Chicago’s/Springfield’s.

    I have no idea why these people are claiming to be the “Voice for Illinois’ Children” if all they do is use our children as political one-upsmanship to push their anti-family, pro-government agenda.


  14. - the Patriot - Tuesday, Jan 31, 06 @ 9:49 am:

    That is a terrific set of ideas. We should implement now so the democrats can still blame President Bush when unemployment and wellfare skyrockets. We cannot run businesses out of the state.

    Downstate is right, the main issue we should concern ouselves with in choosing a governor is who can fix this mess. Not sure one person can do it all alone, but only one candidate has experience actually legislating in Springfield and dealing with these specific issues. Bill Brady has to be looking pretty good here.


  15. - CommonCents - Tuesday, Jan 31, 06 @ 10:03 am:

    Wow how about just one proposal. Stop spending so much! Someone once said, “If you can’t live within a budget, no amount of money will ever be enough.” Governments aren’t supposed to be in the “Revenue Generating” business, they’re cost operations. A little economics here people.


  16. - anon - Tuesday, Jan 31, 06 @ 10:26 am:

    Call me when the shuttle lands.
    Puh-leeze.
    A $1,000 state tax on new homes at a time when newly constructed home sales in Illinois and nationwide are slowing.
    Yeah, great idea.
    Oh, and those homebuilders and real estate folks carry no weight whatsoever with state politicians. I’m sure they’ll lay down and roll over to have the budget balanced on their backs.
    C’mon, if we’re going to come up with ideas, let’s have them grounded in some sense of reality in an election year.


  17. - Anon Tax Guy - Tuesday, Jan 31, 06 @ 11:13 am:

    Nothing new in these ideas for the most part. I can’t imagine that any of these would obtain a majority in the General Assembly or the support of the Governor.

    1)This proposal is premised upon the fact that the cost would be buried in a 15 or 30 year mortgage and as a result would be relatively invisible to those who have to pay. It’s like raising the real estate transfer tax. It’s also like the scam that new car dealers use when they charge folks a couple of hundred dollars to etch the VIN number on the windshield as some kind of “anti-theft” protection. I’m sure it would be opposed by the home builders association and realtors.

    2) It couldn’t be a “sales tax” without modifying the Illinois Retailers’ Occupation Tax. The current state sales tax is based on sales of tangible personal property. There’s no constitutional prohibition against expanding the tax base in this manner.

    3)Better yet, just get rid of the educational expense credit completely. It doesn’t do anything other than subsidize the ability of the middle class to send their children to private schools. Including means testing could run afoul of the constitution prohibition against a graduated income tax. The argument would be that this is a backdoor graduated income tax when you begin means testing exemptions and credits.

    4)Same comments as for #3 - get rid of it completely. Subsidizes the middle class and the rich. Poor people generally don’t own their own residences and there is no corresponding rent credit.

    5)Good luck with this one. I’m sure IRMA would be successful in opposing this attempt. The cap would probably be at an entity level so companies with stores in separate legal entities for other legal liability reasons would be able to avoid the cap.

    6)Good luck getting this one through over the opposition of IRMA.

    7)Good luck getting the General Assembly to vote for such a proposal. If this were enacted, there would be the serious constitutional issue as to whether this is imposing a graduated income tax.

    8)The Quill case requires physical presence of a seller in a state in order for the state to impose a sales tax collection obligation. Only Congress has the authority to enact legislation to eliminate the physical presence requirement and Congress hasn’t shown any inclination to do so since the Supreme Court invited them to do so in the 1992 Quill decision.

    The streamlined sales tax project isn’t a panacea. Go look at last year’s report by the Civic Federation of Chicago for a well-reasoned explanation of the problems associated with implementing streamlined in Illinois. Because of the way Illinois taxes leases, among other things implementing streamlined in Illinois would cause about a $300 million decrease in sales tax receipts in the first year of adoption.

    9) Expanding the sales tax base to services makes sense from a policy standpoint, but continues to be a nonstarter politically. It’s an idea that has been around for a long time - there was a study done during Governor Thompson’s administration that went nowhere.

    10)Again, there’s no political will to raise the income tax rates.


  18. - Bubs - Tuesday, Jan 31, 06 @ 11:26 am:

    Rich, it make no sense to speak of “revenue enhancements” until those JERKS in Springfield stop trying to get re-elected by throwing away our money like confetti. The current administration and legislature is a disgrace.


  19. - donchicago48 - Tuesday, Jan 31, 06 @ 2:26 pm:

    OK Folks - In the spirit of fairness… Can we now find ten viable spending cuts? Illinois does not have a revenue problem. Illinois has a spending problem. Revenues have grown recently, due to Governor Blagojevich’s new anti-business taxes and fees, but Blago’s drunken-sailor spending increases have driven the state into deficit. His massive borrowing is even worse, driving the state’s debt load ever higher.

    Hint: Illinois government is NOT run remotely like a business i.e. an entity that fairly and efficiently collects revenues for the goods and services it provides to its clients. Imagine the savings that could be mined from Illinois bloated payrolls and pork-barrel spending projects. In Medicaid alone, the potential savings from restructuring and modernization would be huge and growing.
    The real issue is not IF the State of Illinois must cut its profligate spending, but HOW.


  20. - Cassandra - Tuesday, Jan 31, 06 @ 2:39 pm:

    Sigh. I’m looking these over. Thanks to anon Tax Guy for helping understand some of the layers of implication.

    How come Voices for Children and similar organizations never say anything about cutting government expenses when they present these things. What about cutting the excessive number of managers in state government, having the overpaid state bureacracy pay into their health and retirement funds, holding teachers accountable for all that money we are pouring on them and so on. And why do all their solutions involve soaking the middle class in every way they can and making it harder for businesses to keep going. I guess it’s because their leaders make salaries well into the six figures and they won’t even feel all these tax increases that they want to put on the rest of us. And they are nonprofits, so immune to how business-friendly Illinois is and how many jobs go or stay. Won’t affect their nice paychecks.

    Nonprofits have no credibility with me. It’s just another way of playing Robin Hood at the expense of the middle class.


  21. - steve schnorf - Tuesday, Jan 31, 06 @ 2:39 pm:

    donchicago:

    OK, start listing your cuts and how much money they will save.


  22. - Bill - Tuesday, Jan 31, 06 @ 2:46 pm:

    Cassie,
    You are so strident in your teahcer bashing and so hateful and greedy when it comes to the less fortunate. Maybe you should invest in therapy. There might be a good state program if you can’t afford it.


  23. - Cassandra - Tuesday, Jan 31, 06 @ 3:18 pm:

    Uh, Bill, how do you know I’m not one of the “less fortunate” myself. Not all of the not-wealthy see government subsidies as the solution to all of their problems.

    If asking teachers to be formally accountable for the educational achievement of their students, in other words, for doing their job,
    is widely viewed as teacher bashing, apparently the teachers’ unions have been successful beyond their wildest.


  24. - Yellow Dog Democrat - Tuesday, Jan 31, 06 @ 6:13 pm:

    Thanks Steve, for the reality check.

    I do have a suggestion for a cut though: the legislature should implement the recommendations of DCEO’s campus energy efficienct study, which would save $25 million per year.

    These suggestions aren’t bad public policy, with some tweaking. The major criticism folks have is that there are political problems with each. Unfortunately, political problems require a political solution, and until the individual and corporate philanthropists who fund the endless parade of white papers and policy forums realize they are going to have to bust some political heads — starting with the Tribune Editorial board — they can go on publishing white papers and hosting policy forums and not one thing will change.

    By the way, I’ve seen estimates for the internet/direct mail sales tax that ranged as high as $1 billion per year, not $180 million. And it can be done without Congressional authorization, provided it meets the standard of being uncumbersome to merchants.


  25. - Slash - Tuesday, Jan 31, 06 @ 6:15 pm:

    >OK, start listing your cuts and how much money they will save.

    3% across the board cuts. Everyone gets affected equally. No politics, no bureaucratic in-fighting, no “I’m more important than him”, no “think of the chil-run”, no throwing the less political under the bus. 3% across the board. All departments, no exceptions.

    See how easy that is? And the sun would still come up tomorrow.


  26. - Smitty Irving - Tuesday, Jan 31, 06 @ 6:38 pm:

    Ah, the conventional wisdom is obscuring some relevant facts. First, ever since Big Jim signed legislation converting the state utility tax from percentage (like the sales tax) to per unit (like the liquor and tobacco tax), Illinois general revenues have not kept up with the cost of living. This is not new news - when Dep Dir Dick Kolhauser left BoB under Big Jim, he wrote an article on this subject for a business journal at U of I that showed for each 1.0% increase in income, Illinois State Government general revenues increased by 0.8%. And that has not changed in the nearly 20 years since. So, Mr. Slash, if you cut 3% across the board to balance the budget, next year you will be 0.2% short - again - and every year thereafter. So, donchicago48, what business would set its prices (i.e., taxes) in such a manner that those prices always increased less than costs?

    Second, Mr. Schnorf - from your time at BoB, was there EVER any serious discussion, from either Governor or the General Assembly, about fixing the State’s inelastic revenue structure? Until the per unit taxes (liquor, cigarettes, insurance, residential energy, etc) are replaced with a tax that increases with the cost of living, Illinois State Government will be underfunded - and windfalls will be squandered on legislative pork / special purpose tax breaks … .


  27. - NIEVA - Tuesday, Jan 31, 06 @ 7:03 pm:

    ALL I CAN SAY IS WHAT WILL IT TAKE TO GET THE STATE OF ILLINOIS TO LIVE WITHIN ITS MEANS. WHERE DOES IT SAY THAT WE HAVE TO GIVE EVERYTHING TO EVERYBODY?


  28. - genxpundit - Tuesday, Jan 31, 06 @ 7:33 pm:

    Why should childless people be taxed to educate other people’s spawn?


  29. - genxpundit - Tuesday, Jan 31, 06 @ 7:58 pm:

    That’s easy Genxpundit — to educate the doctors and nurses who will take care of you when you can no longer wipe.


  30. - genxpundit - Tuesday, Jan 31, 06 @ 8:35 pm:

    identity thief!


  31. - steve schnorf - Tuesday, Jan 31, 06 @ 9:49 pm:

    A 3% across the board cut (which I doubt could be passed by any general assembly I’ve ever seen) would save about $750m, not enough to pay our pension payment increase that comes due in ‘08, much less our other expenses. We will not cut our way out of this problem, the will isn’t there.

    Pie in the sky proposals are what we have too much of now, and not enough truth facing.

    Dog, I think there are still small savings out there, some are things like you suggest, others are policy decisions: $25m here, $3m there, and so on are real money and state government should be looking for every one of them. But you and I both know that the scope of our problem is such that we will not solve it that way.

    There are only two short term answers: massive cuts which no one will be willing to make, or some combination of large tax increases.

    The problem can be ameliorated somewhat by not letting spending grow by a billion each year, but that isn’t easy, especially for a D gov and GA.
    Don’t think I’m being partisan here, because no R in the last three years proposed any solution that could realitically have been implemented that would have solved the problem either. I personally think Rs might have done a little better around the margins (not so much spending growth) but not enough that our fiscal problem would be solved by now.


  32. - Anon Tax Guy - Tuesday, Jan 31, 06 @ 11:08 pm:

    Yellow Dog’s comment of 6:13 is incorrect. States have no authority to require out of state sellers who have no physical presence in that state to collect that state’s sales taxes. This is true, irregardless of whether the sales tax meets some standard of being “uncumbersome to merchants” whatever that might be.

    With respect to the estimates of untaxed sales via the Internet, there are all kinds of wild assertions many of which have no basis in reality. The total amount of sales taxes collected by the Illinois Department of Revenue during FY 2005 was about 8.75 billion, according to the IDOR annual report. A loss of a billion in tax to Internet sales means that there would have to be 16 billion in non-taxed Internet sales to Illinois residents. According to the 2000 census there were 12,419,293 people in Illinois. Based on the 2000 population each resident would have to make $1288.00 in untaxed internet purchases. Even accounting for an increase in Illinois population over the past 5 years, that will still remain a large amount. Think about the type of items that may be purchased tax free over the internet. You can’t purchase cars or other big ticket items like appliances tax free. You can purchase bookd, cd, dvds, electronics, but more and more of these items are sold by companies that have presence in Illinois and are required to collect Illinois sales tax.

    Businesses do not avoid sales taxes by purchasing items tax free over the Internet because most businesses, unlike individuals are subject to state tax audits. If businesses purchase items tax free, they self assess the tax and pay the tax to the State.

    So when you factor out all of the various types of purchases that aren’t made over the Internet and business purchases, you see that the estimate of $1 billion in untaxed Internet purchases is just unrealistic.

    I don’t agree often with the current Governor, but he has shown the good sense not to pursue the pie in the sky promises of the streamlined sales tax proponents.


  33. - Aaron - Tuesday, Jan 31, 06 @ 11:18 pm:

    In the name of preserving our local tax bases, I would agree with others on the sales tax on the Internet. I’d be a liar if I said it didn’t occasionally effect my shopping decisions.

    There’s a push to get this done in a lot of states not named Illinois –> http://www.streamlinedsalestax.org/

    Illinois, as one might expect, is back-assward on this. I’ve talked with Illinois’ rep to this organization (from the Dept of Revenue), and it is my understanding that there’s no push anywhere in the state to move on this and it’s going to take a monumental shift in administration (collection, statutes) and political backing to get in line with all the other states adopting the streamlined sales tax initiatives.

    I imagine the State will continue to fail to curb spending, increase revenues and fund it’s long term obligations (pensions) appropriately, which is why I’m losing the desire to hang around my home state much longer since I have a lot of years left to live. In 30 years, either my wife’s downstate teacher pension will be cut deeply, the contribution rate will skyrocket or our taxes will rocket to make up for today’s failure to properly fund the system. With all the new funding initiatives, like the kids health care, the need to overhaul school funding, and two inept, corrupt political parties, I don’t see Illinois solving its budget problems anytime in the near future.


  34. - donchicago48 - Wednesday, Feb 1, 06 @ 12:14 am:

    The 800 Pound Medicaid Spending Gorilla:
    Illinois’ Medicaid program costs over $7 billion per year and is growing at a rate that doubles in cost every nine years. The Medicaid program’s growth rate in Illinois is nearly triple that of the rest of the state budget and is absorbing more new dollars each year than elementary and secondary education funding.
    If left unchecked, Medicaid costs will crowd out other areas of the budget and threaten the ability of the state to fund basic services, including education and public safety.
    As an entitlement program with few checks or balances on growth, Medicaid swallows up half a billion in new state dollars before the General Assembly even begins to debate budget priorities.
    Despite these high costs, Medicaid is a system that:
    - Fails the patients because it does not foster on-going doctor-patient relationships, denying participants the opportunity and advantage of having a medical “home”;
    - Pays low rates to providers in an embarrassingly untimely fashion;
    - Uses medical services inefficiently and ineffectively, allowing patients to visit any provider, at any time, with any level of frequency, with few restrictions and no requirements for physician referrals;
    - Provides financial incentives for the state to “chase” federal dollars, all the while creating a greater burden on taxpayers;
    - Lacks the controls commonly found in health care programs utilized by most private and public sector employees.
    Without major changes, future Governors and General Assemblies will be unable to sustain the level of benefits established during the Blagojevich administration. If reforms are not adopted now, it will be left to a future General Assembly to impose new restrictions and cuts in benefits.
    Market forces prevalent in the healthcare decisions made by individuals covered by private insurance are noticeably absent in the healthcare decisions made by individuals covered by the Medicaid program. Fraud and abuse expenses are significant.
    Only 8% of Illinois Medicais enrollees are in managed care plans. Compare that to Indiana-69%, Iowa-89%, or Wisconsin-47%.
    As an Illinois Senate report concluded, “Illinois’ Medicaid program must be reformed. Illinois can do better. If funding for education, law enforcement, agricultural programs, environmental programs, transportation and higher education are important priorities, then Illinois must do better.”


  35. - donchicago48 - Wednesday, Feb 1, 06 @ 12:41 am:

    You want cuts… I got cuts! Let’s start by implementing immediate department-wide spending cuts, including a freeze of state work force levels, pay cuts for nonunion state workers and preparation of layoff plans as needed. In addition, non-critical retiree positions will remain empty, pending reviews.
    Every department must be reviewed annually, and departments that no longer serve a purpose eliminated or consolidated.
    Capitol spending must be opened up to more competitive bidding. Pork-Barrel projects must be shelved or streamlined. Spending Priorities that reflect the budgetary realities must be established. Capitol spending that is aimed at improving service delivery through better management structures, automation, and outsourcing must be examined and priorities set.


  36. - donchicago48 - Wednesday, Feb 1, 06 @ 12:56 am:

    Thus article sums up much of what’s wrong with state governments… and Illinois is a prime example: http://www.heartland.org/Article.cfm?artId=18406


  37. - Tessa - Wednesday, Feb 1, 06 @ 6:58 am:

    Most of this thread is the reason I’m not posting as much any more. It makes my head hurt. Oy.


  38. - donchicago48 - Wednesday, Feb 1, 06 @ 9:07 am:

    The average state and local government employee now collects 46 percent more in total compensation (salary plus benefits) than the average private-sector employee, according to the nonpartisan Employee Benefit Research Institute.
    Wages average a hefty 37 percent higher in the public sector, but the differences in benefits are even more dramatic. Local governments pay 128 percent more, on average, than private employers to finance workers’ health care benefits, and 162 percent more on retirement benefits.
    A 2001 Rhode Island Public Expenditure Council comparison of private- and public-sector average wages across the nation found the average public-sector wage was higher in 35 states.


  39. - Cassandra - Wednesday, Feb 1, 06 @ 10:15 am:

    Thanks donChicago. I have been saying for some time that all those complaints from state employees that they are overworked and underpaid are bogus, given the increased value of their benefits and the fact that there are way too many of them to do the work that actually needs to be done, leaing to a very relaxed state working environment. Government, especially state government in Illinois, is becoming another welfare system, for its employees.
    Performance or even actually having valid work to do doesn’t count.

    What is astonishing is that the rest of us, mostly unpensioned and paying much more for our health care, are putting up with this.

    Perhaps when the new public accounting rules go into effect in early 07 and the state has to own up to how much retiree health care is costing and will cost the taxpayer we will see a change of viewpoint amoung the younger members of our society who don’t get these plush salaries and benefits but will have to pay for the state employees’.


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