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Fun with numbers

Thursday, Mar 27, 2014

* From Illinois Watchdog

Illinois lawmakers have proposed a budget that tops $34 billion, but doesn’t rely on the 2011 tax money. If Quinn gets his wish and a permanent tax hike, state spending could increase to almost $36 billion for the next year.

That would mean Illinois is spending $12 billion a year more than in 2000.

Using a handy-dandy online inflation calculator from the US Bureau of Labor Statistics, $24 billion in 2000 equals $32.7 billion today. So, using the Watchdog’s budget numbers, the state is spending, in real dollars, just $1.3 billion more than it was back then, without half the tax hike revenue, or $3.3 billion with it. But the state is also making full pension payments these days. It was spending a whole lot less on pensions back in 2000.

- Posted by Rich Miller        


25 Comments
  1. - wordslinger - Thursday, Mar 27, 14 @ 8:58 am:

    Yeah, but the state will be spending $36 billion more than it did in 1818. Thanks, Obama!


  2. - PublicServant - Thursday, Mar 27, 14 @ 9:07 am:

    Illinois Watchdog is a Franklin Center Affiliate. Here’s what MediaMatters has to say about the group and their affiliates:
    ===
    The Franklin Center is a multimillion-dollar organization whose websites and affiliates provide free statehouse reporting to local newspapers and other media across the country. Funded by major conservative donors, staffed by veterans of groups affiliated with the Koch brothers, and maintaining a regular presence hosting right-wing events, the organization boasts of its ability to fill the void created by state newsroom layoffs.

    The group’s editors claim that their “professional journalism” work is walled off from the organization’s more nakedly political operations and say that their “pro-taxpayer, pro-liberty, free market perspective” doesn’t compromise their accuracy or independence. But many journalism professionals - even newspaper editors who reprint the work of Franklin Center affiliates in their own pages - speak warily of the group’s ideological bent.
    ===

    Looks like propoganda as opposed to journalism to me.


  3. - Linus - Thursday, Mar 27, 14 @ 9:07 am:

    Ha! Thanks, wordslinger, for the morning coffee spit-take!


  4. - Lycurgus - Thursday, Mar 27, 14 @ 9:12 am:

    How come the state’s revenue hasn’t been increased by inflation to the same extent as it’s costs since 2000?


  5. - Bill White - Thursday, Mar 27, 14 @ 9:15 am:

    An increase from $24 million in 2000 to $36 million in 2014 is a 150% increase over 14 years

    That is right in line with the increase in the Illinois Gross Domestic Product over that same period.

    http://research.stlouisfed.org/fred2/series/ILNGSP

    ===

    And, the 2000 figures are based on shorting the pension payment.

    In real terms (based on both inflation and state measured GDP) the 2014 budget is MORE frugal than the 2000 budget.


  6. - downstate commissioner - Thursday, Mar 27, 14 @ 9:17 am:

    Lycugus, now you are trying to use logic to explain government, and that never works.

    Doesn’t matter what “real” dollars are to taxpayers…to them real dollars are what comes out of their own pockets at tax time….


  7. - Bill White - Thursday, Mar 27, 14 @ 9:18 am:

    === How come the state’s revenue hasn’t been increased by inflation to the same extent as it’s costs since 2000? ===

    IMHO, because Michael Madigan has pretty much held the line on taxes, especially prior to the income tax increase to 5%.

    Notwithstanding all the shouting, yelling and tearing of hair, total Illinois state and local taxes are relatively low when compared with the rest of the United States.


  8. - Michelle Flaherty - Thursday, Mar 27, 14 @ 9:23 am:

    Take the pension payment out of the budget and rerun the numbers.


  9. - Demoralized - Thursday, Mar 27, 14 @ 9:23 am:

    Comparing to 2000? What genius came up with that comparison.


  10. - Bill White - Thursday, Mar 27, 14 @ 9:27 am:

    === Comparing to 2000? What genius came up with that comparison. ===

    Illinois Watchdog?


  11. - Rich Miller - Thursday, Mar 27, 14 @ 9:28 am:

    ===How come the state’s revenue hasn’t been increased by inflation to the same extent as it’s costs since 2000? ===

    It’s mostly explained above in two words: Pension payments.


  12. - PublicServant - Thursday, Mar 27, 14 @ 9:36 am:

    ===It’s mostly explained above in two words: Pension payments.===

    It’s completely explained, however, as follows:

    Debt Repayments for decades of shorting the State Pensions.

    There. Fixed.


  13. - Chris Wetterich - Thursday, Mar 27, 14 @ 9:51 am:

    Jeez, if you do all that math, it guts the ideological point that drives every story written by the Franklin Center.


  14. - PublicServant - Thursday, Mar 27, 14 @ 9:59 am:

    Hey Chris, got a daughter heading to UC in the fall, and, yes, math trumps spin.


  15. - dupage dan - Thursday, Mar 27, 14 @ 10:08 am:

    === But the state is also making full pension payments these days ===

    For now……


  16. - Nearly Normal - Thursday, Mar 27, 14 @ 10:13 am:

    There is a classic book on statistics called “How to Lie with Statistics” by Darrel Huff and Irving Geis. First published in 1954, this book is still in print and required reading for many secondary and college courses.


  17. - VanillaMan - Thursday, Mar 27, 14 @ 10:50 am:

    Here’s what MediaMatters has to say…

    Stop right there.


  18. - Yellow Dog Democrat - Thursday, Mar 27, 14 @ 10:50 am:

    Are they only looking at GRF spending? Because the FY 2003 budget - the last budget enacted by a Republican governor, was more than $52 billion.

    So, my question is, how does this budget compare to FY 2003 in total spending as a percent of GDP?


  19. - Steve Williams - Thursday, Mar 27, 14 @ 12:10 pm:

    I get you are trying to keep it simple by using the calculator but those are big numbers and small differences gets into serious money. BLS says that CPI cannot be used across different geographic areas. If you use the Midwest CPI instead of the national CPI, which is what the calculator appears to use, you will get a number that is significantly lower than the $32.7B, in the $800M-$1.7B range lower.

    Also, I don’t find any references to CPI including productivity increases in the calculation. This could lower the amount of money necessary to perform the same functions by as much as 30% over those 13 years. Clearly, all $32.7B would not be impacted by productivity increases but a significant portion should be if we have effective management in place. If even a third can be impacted, that another $1B.

    These additions don’t get us close to the $12B but it puts us closer to the middle of the two ranges.

    As you said, fun with numbers.


  20. - Bill White - Thursday, Mar 27, 14 @ 12:17 pm:

    What Michelle Flaherty said

    === Take the pension payment out of the budget and rerun the numbers. ===

    That makes it an apples to apples comparison.

    Then use the more precise inflation numbers.

    As a second frame of reference, also use the GDP figures to calculate aggregate S&L taxation as a percent of overall percent of GDP.


  21. - Anon - Thursday, Mar 27, 14 @ 12:22 pm:

    == How come the state’s revenue hasn’t been increased by inflation to the same extent as it’s costs since 2000? ==

    The outdated IL tax system does not capture the growth in the economy. We don’t tax services — though we have a service economy — and we don’t have gradutated tax rates — though the lion’s share of income growth has gone to the top 5%. If we adopted, say, the Wisconsin tax system — with scores of service taxes and a graduated income tax — the IL treasury would pull in several $billion more a year.


  22. - wordslinger - Thursday, Mar 27, 14 @ 1:04 pm:

    – If we adopted, say, the Wisconsin tax system — with scores of service taxes and a graduated income tax — the IL treasury would pull in several $billion more a year.–

    I find it fascinating that those who most loudly praise the alleged fiscal acumen of Gov. Walker are the most opposed to anything resembling the Wisconsin tax model.


  23. - Formerly Known As... - Thursday, Mar 27, 14 @ 3:33 pm:

    == How come the state’s revenue hasn’t been increased by inflation to the same extent as it’s costs since 2000? ==

    If Illinois’ spending has grown roughly 150% (@Bill White), Illinois’ economy has grown roughly 150% (@Bill White), and Illinois’ state revenue collections have grown roughly 171% (IDoR annual reports http://tax.illinois.gov/aboutidor/taxstats/), it is not the state’s revenue we should be focusing on, but rather why Illinois’ budget surplus has not stayed in line since 2000.

    A more accurate question might be “What has structurally changed in our 2014 budget model compared to the year 2000?”

    Illinois ran a surplus of +$777 million in 2000 (http://illinoisissues-archive.uis.edu/papers/budget.pdf). We also finished improving our pension system funding ratio from 52.4% in 1995 to a high of 74.7% in 2000.

    Even if tax rates today were identical to the lower tax rates in 2000, we should be running an inflation-adjusted surplus of $1,059,377,683 in 2014.

    So, if spending, the economy, and revenue collections all grew in similar fashion since 2000 then what caused our budget surplus to “disappear”?

    At least 2 possibilities seem plausible, though others here can probably think of many more.

    - The big change would appear to be the fact we are now making a full pension payment. I am not, however, certain by exactly how much we may have shorted the pension payment in 2000 or how much the payment was supposed to be that year.

    - A decrease in federal revenue to Illinois could also explain the change, though that seems counterintuitive with an Illinoisan in the White House.


  24. - Just The Way It Is One - Thursday, Mar 27, 14 @ 10:31 pm:

    Wow–that’s aMAzingly CLOSE in spending comparisons from 2000 up ’till now–AND one amazing little online CALculator to boot! Maybe 14 years later, our Beloved Illinois isn’t so way off track after ALL (as SOME might try to “hammer” INto or “shake up” into our Heads, as if we’ll just take his WORD for it(!), with their Nightly TV Ads)…!


  25. - Yellow Dog Democrat - Friday, Mar 28, 14 @ 7:48 am:

    Don’t be too hard on Illinois Watchdog.

    The Tribune’s reporting of the numbers is nearly as contrived.

    Can we get one more story on unemployment that ignores that reductions in government employees is the driving force?


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