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Make it temporary again?

Thursday, May 8, 2014

* Rep. Jerry Costello is against making the tax hike permanent, or even extending it a few years, but suggests another temporary extension might be an alternate way forward

There might not be enough votes in the House to make Illinois’ temporary tax hike permanent, so a one-year extension of the increase might be sought instead, according to a local lawmaker.

“They’re having problems — leadership in the Democratic Party — coming up with enough votes to pass a permanent extension of the tax,” said Rep. Jerry Costello II, D-Smithton. […]

“I think for some of the people on the fence, if they could say it was a finite situation, it would be easier for them. For me, it doesn’t change my position — I’m a ‘no,’” Costello said.

Steve Brown, a spokesman for Madigan, said he’s not aware of any plan to back away from the permanent increase, in favor of another temporary one.

“That’s news to me,” Brown said. “I know the speaker is supporting what the governor has proposed. The speaker has told the press in recent days that he’s continuing to work on that roll call.”

As subscribers know, the House Speaker is, indeed, having some problems with that permanent tax hike. But another temporary tax hike would mean yet another politically contentious tax vote in a few years, and the Speaker isn’t loving that idea.

Your thoughts?

- Posted by Rich Miller        


48 Comments
  1. - Temperauner - Thursday, May 8, 14 @ 9:06 am:

    I’m guessing Rauner doesn’t want a temporary hike either. That’s why this idea might fly. Some cover for some Dems and setting Rauner up for a huge battle in two years and putting him on the spot for the general.

    My guess is that Rauner has been anticipating a permanent hike and would with a wink say he’d sign a bill to repeal that will never happen. With a temporary hike, he’ll have to take a stand this fall on what he’ll do in two years.

    Politically, I think this is a big winner for Dems.


  2. - Steve - Thursday, May 8, 14 @ 9:07 am:

    Nothing is so permanent as a temporary tax hike.


  3. - x ace - Thursday, May 8, 14 @ 9:08 am:

    Duct Tape the Muffler


  4. - PublicServant - Thursday, May 8, 14 @ 9:10 am:

    I say make it permanent. The ratings agencies hate temporary solutions, and the uncertainty associated with them. It’s hurting our bond ratings. Surrounding states have much higher rates than the proposed permanent hike to 5%. Oh and before you go ranting about Indiana don’t forget to add on the county income tax rates to the state rate.


  5. - Name Withheld - Thursday, May 8, 14 @ 9:12 am:

    I have to admit that I prefer this idea. Make the lawmakers have to reaffirm the tax hike every few years to ensure that it’s still needed. if alternate sources of revenue are developed, or revenue picks up, maybe it can be allowed to expire.

    Then again, I believe in unicorns too.


  6. - AFSCME Steward - Thursday, May 8, 14 @ 9:16 am:

    Temperauner

    “With a temporary hike, he’ll have to take a stand this fall on what he’ll do in two years.”

    Rauner hasn’t taken a stand on anything. Why would the tax issue be any different?


  7. - Demoralized - Thursday, May 8, 14 @ 9:17 am:

    I think it would be a good compromise. I don’t think I’m in favor of a 1 year extension. Maybe That just creates an ongoing “fiscal cliff” scenario like we have had with the feds for so long. Maybe make it 3 or 5 years.

    I understand that an election year is the worst possible time to be dealing with this but legislators need to be responsible and recognize that allowing the current tax rates to expire would be one of the most irresponsible things they could do.


  8. - Capo - Thursday, May 8, 14 @ 9:18 am:

    Of course the speaker doesn’t like this idea. In a few years he may actually decide to retire and this would not help Lisa’s chances of assuming the governorship. Nothing the speaker does is without deep thought of long term repercussions - except maybe the whole pension underfunding all these years….


  9. - AFSCME Steward - Thursday, May 8, 14 @ 9:20 am:

    Right now their stretching, looking for a revenue solution that can gather enough votes to pass. The 5% permanent tax is meeting resistance. It would not surprise me if a compromise is reached either extending the temporary tax for one or two more years, or a permanent increase less than 5%, or even a combination of the two. It’s only May 8. Nothing of any significance ever gets resolved in Illinois until the last few days.


  10. - OVERSIGHT - Thursday, May 8, 14 @ 9:21 am:

    Yep…gotta get it pushed off past the the next round of elections or faces will change and heads will roll.


  11. - Walker - Thursday, May 8, 14 @ 9:21 am:

    Let’s not call it “temporary” unless we can agree on a firm multi-year plan that would likely lead us to the point where we can lower it. If that’s impossible, face the facts.

    I have not seen such a plan that could pass.


  12. - AFSCME Steward - Thursday, May 8, 14 @ 9:23 am:

    “I understand that an election year is the worst possible time to be dealing with this but legislators need to be responsible and recognize that allowing the current tax rates to expire would be one of the most irresponsible things they could do.”

    The legislators were also the ones who created a plan set to expire during an election cycle.


  13. - Oswego Willy - Thursday, May 8, 14 @ 9:30 am:

    Thought a “sun setting” of the Tax, to begin with keeping it the next fiscal, cutting it in half the following fiscal, and finally eliminating the second half the 3rd fiscal.

    The most prudent, proportional response, and to be fiscally intelligent about this, and being responsible to the State, you keep it this year. Let this election pass, then in time for the next time they face the voters, the temporary increase will have expired.

    They have 2 full years to move on revenue streams.

    The increase needs to be temporary. That’s it. Temporary, but temporary in a “responsible” way.

    Always felt the gradual reduction to the past rate made the most sense, governmentally and politically.


  14. - BIG R. Ph. - Thursday, May 8, 14 @ 9:38 am:

    They said it was temporary. They have used the extra money to fund the pensions and to not pay down the outstanding debts. They now have an extra $1.2 billion in revenue.

    They have overtaxed us. It is time for a roll-back!

    Additionally, they will find that by reducing the income tax that they will actually take in more $. It works every time it is tried.


  15. - Grandson of Man - Thursday, May 8, 14 @ 9:39 am:

    I would prefer that we keep the income tax increase permanent, because fiscal stability is good for our financial ratings and for business.

    If I did business with the state, I would want to know that it had an improved revenue stream so I wouldn’t have to wait as long for payment. We are doing a better job with our overdue bills with the increase than without it.

    I also don’t like the constant political battles over this issue. Our 5% income tax rate is not radically different than other tax states, and in many cases it’s less than the top rates of other states. Since we talk about the tax rate and business, isn’t it better to have fiscal and political stability? That’s something I’d consider if I was running a business in Illinois.

    On the other hand, if we have to do another temporary extension due to the political environment, oh well, what can we do? I would go for it. The worst outcome to me is to lose the revenue that is helping our state recover, and this is confirmed by the ratings agencies.

    We do want to recover financially, yes?


  16. - Walker - Thursday, May 8, 14 @ 9:39 am:

    Deja vu all over again.

    If you support calling it “temporary” without a realistic plan to lower it, because that’s the only way it can pass — and we know it has to pass — don’t complain in five years that you were “lied to” by politicians.


  17. - AFSCME Steward - Thursday, May 8, 14 @ 9:41 am:

    Big R

    “They have overtaxed us. It is time for a roll-back!”

    Maybe you should move to Wisconsin to escape the excessive Illinois taxes.


  18. - AFSCME Steward - Thursday, May 8, 14 @ 9:47 am:

    Walker

    “Deja vu all over again.

    “If you support calling it “temporary” without a realistic plan to lower it, because that’s the only way it can pass — and we know it has to pass — don’t complain in five years that you were “lied to” by politicians.”

    The problem is fiscal discipline. It is an issue on both sides of the aisle. The Dems just want to create new programs. The GOP’s answer to every issue is a tax cut. There are few adults in either chamber that actually care about longterm solutions. Everyone is more concerned with winning the next election than fixing anything. And the voters, let’s talk about the voters. They keep electing these guys, but constantly complain about the choices they make. It’s simple. Until the voters start voting out the legislators that don’t act like adults, the problems will continue. Until the attitude cut his stuff but don’t touch mine goes away, the status quo will remain.


  19. - RNUG - Thursday, May 8, 14 @ 9:48 am:

    The one thing the bond rating agencies keep pointing to is the “temporary tax”. The one thing other state like California did differently than Illinois on “pension reform” was make their revenue increase permanent.

    If you want improved ratings, it’s going to have to be permanent.


  20. - Pius - Thursday, May 8, 14 @ 9:50 am:

    ==Always felt the gradual reduction to the past rate made the most sense, governmentally and politically==

    OW: Sadly, the most sensible way to do something seems not to be the norm in our state government.


  21. - Befuddled - Thursday, May 8, 14 @ 9:55 am:

    Terrible idea. Call it temporary again? Who is going to believe that? Just solidifies the belief that legislature is lying to us.


  22. - Give Me A Break - Thursday, May 8, 14 @ 9:57 am:

    Big R, please share with us where you believe to be overtaxed and then please share with us your list of programs/services that need to be cut. Make sure to call your local non-profit Human Service Provider and explain your cut list.


  23. - Langhorne - Thursday, May 8, 14 @ 10:00 am:

    make it permanent, but maybe trim it by a quarter percent once or twice a couple three years out. permanent helps stability, bond rating, etc. slight break gives them something to take home–see, not as bad as it coulda been. then actually use some of the money to pay back bills. when revenue comes in a bit higher than expected, pay the damn bills.


  24. - Arizona Bob - Thursday, May 8, 14 @ 10:02 am:

    @OW
    =They have 2 full years to move on revenue streams.=

    Giving them more breathing room won’t do any good, OW, and you know it. This tax increase just gives them an excuse for shirking their responsiblity to solve the “structural deficit” problem by seriously modifying the “structure” so that it’s sustainable.

    Outside of the likely unconstitutional pension “reform” which really doesn’t solve the problem, the GA has done little to correct the structural defects in spending policy that need to be corrected to get out of the crisis mode.

    The extensions, or making the temporary tax increase permanent, only delays judgement day a bit. Time to end it and force the GA and Gov to get the problem solved now. Permanent increases to 5% just aren’t going to cut it from what I’ve seen on the projections.

    Back when George Allen was coaching the Washington Redskins,the team’s owner once said, “I gave George an unlimited budget…and he EXCEEDED IT!”

    There’s no doubt in my mind that the same could be said about the Illinois GA if they were given the chance. No amount of revenue would ever be enough. We found that out in the 1990s when we had a great job picture, the economy was booming, and we could have caught up with our pension andd school funding problems. Never happened.

    It’ll always be “brinkmanship” in Springfield.


  25. - Demoralized - Thursday, May 8, 14 @ 10:04 am:

    ==Additionally, they will find that by reducing the income tax that they will actually take in more $==

    That must be the new math.


  26. - archimedes - Thursday, May 8, 14 @ 10:04 am:

    While it has to be permanent to the process of a structural budget balance - especially going forward - does it have to be 5 cents? For example, $700 million alone is just for the property tax credit. Maybe it could be 4 1/2 cents, or something less than the full 5 cents.

    Does the full 5 cents give too much discretion? It may make it tempting to spend or cut taxes to favor political power.


  27. - Demoralized - Thursday, May 8, 14 @ 10:06 am:

    “Republican Senator Dale Righter says Democrats aren’t being honest when they say the state must extend income tax rate or make cuts.”

    The only one being dishonest here is Sen. Righter.


  28. - South of I-80 - Thursday, May 8, 14 @ 10:09 am:

    Kicking the preverbal can down the road, again! Just like “pension holidays”, we’ll pay it back next year!


  29. - Robo - Thursday, May 8, 14 @ 10:13 am:

    From a campaign PoV voting to extensd is just as costly as making it permanent. If you’re going to whip votes you want to make it one and done.


  30. - Oswego Willy - Thursday, May 8, 14 @ 10:18 am:

    - Arizona Bob -,

    So, you want the tax to expire? What are you suggesting?

    - Pius -, this pause in what can/will happen gives me hope that a solution might be reached to appease those rating bonds, and lead to a passable reduction back before the increase was instituted. I want it rolled back, but rolled back responsibly, and I want it done with a plan, not a knee jerk response by those not wanting any rollback, and those requiring an immediate rollback.

    Heck, all I hear is this Rauner fiscal ideal. If “We” wins, in his 3rd budget, the increase will be gone, so now get to it.


  31. - Secret Square - Thursday, May 8, 14 @ 10:18 am:

    “Surrounding states have much higher rates than the proposed permanent hike to 5%.”

    Note that MO just approved a rollback of its top income tax rate from 6% to 5.5% — which is STILL higher than ours.


  32. - Formerpol - Thursday, May 8, 14 @ 10:20 am:

    Temporary means temporary. keep you word! Liberals like to spend other people’s money; and just can’t seem to understand that lowering tax rates can actually result in increased revenues.
    People get to keep and spend more of their own money - it lifts all boats and creates jobs. There is $1.2 billion more revenue already, and if they just stop all new spending the State would survive well. Many organizations need to be weaned from state subsidies and forced to become more self-reliant. Illinois government does not spend our tax dollars wisely!


  33. - Demoralized - Thursday, May 8, 14 @ 10:32 am:

    ==Liberals like to spend other people’s money==

    I think “Conservatives” do pretty well also.

    ==can’t seem to understand that lowering tax rates can actually result in increased revenues==

    Another new math proponent heard from.


  34. - Mighty M. Mouse - Thursday, May 8, 14 @ 10:40 am:

    Make the increase temporary? Make the same mistake again? Been there, done that.


  35. - Skeptic - Thursday, May 8, 14 @ 10:47 am:

    “They keep electing these guys, but constantly complain about the choices they make.” The voters can only elect people who are on the ballots.


  36. - Anon - Thursday, May 8, 14 @ 11:09 am:

    It was stupid the first time.
    As far as the concern of the bond houses, that no longet matters now that they’re talking about revenues instead of pensions.


  37. - PublicServant - Thursday, May 8, 14 @ 11:48 am:

    ===Temporary means temporary. keep you word!===

    OK. Keep it temporary, for the next 20 years. There. Fixed.


  38. - VanillaMan - Thursday, May 8, 14 @ 12:09 pm:

    Our national and state economies were supposed to grow enough to support the tax hikes.

    But they haven’t. We are in a low to zero growth economy. This has been the worse recovery - ever.

    This being the case, this just can’t continue. Eventually our national and state economies will recover.

    Just not now.

    Kill it with fire. We need to see some honest government that deals with us honestly.

    Not this.


  39. - A guy... - Thursday, May 8, 14 @ 12:31 pm:

    It’s spectator sport now to watch this roll call and what it will take to get to 50% + 1. If they really believe in this, they can’t make the temporary tax more temporary, can they? We’ll see.


  40. - Earnest - Thursday, May 8, 14 @ 3:50 pm:

    I dislike the temporary idea. Whatever they do, it’s got to point towards stability for state finances. Regardless of the particulars of complaints, I think the thing that makes it all worse is the uncertainty, the sense that another shoe is going to drop (whether that’s increased taxes, reduced services ,etc.).


  41. - wordslinger - Thursday, May 8, 14 @ 4:36 pm:

    Everything is temporary. You can pass a law one day and revoke it the next.

    ==can’t seem to understand that lowering tax rates can actually result in increased revenues=

    Show me. Are you going to trot out the JFK capital gains tax cut? Comic book economics.

    That’s the fantasy. Yet Reagan and HW increased taxes once their borrowing got to the crazy stage. W just cut taxes and let the borrowing get crazier.

    Tell me, how much more revenue will the Illinois treasury collect at lower rates? You’re on to something here, show us.


  42. - Yellow Dog Democrat - Thursday, May 8, 14 @ 4:38 pm:

    Pass the doomsday budget then, Jerry.

    Let those ten Democratic naysayers join with Repuvlicans to pass a doomsday budget, then.


  43. - Yellow Dog Democrat - Thursday, May 8, 14 @ 4:49 pm:

    wordslinger:

    Try YDD corollary on them.

    Republicans argue that we can grow tax revenue by reducing tax rates.

    So I logically argue that the key to shrinking
    government spending is to raise taxes.

    ;)


  44. - wordslinger - Thursday, May 8, 14 @ 6:01 pm:

    –So I logically argue that the key to shrinking
    government spending is to raise taxes.–

    Obviously. Higher taxes means less revenue. Makes perfect sense, in some minds.


  45. - AFSCME Steward - Friday, May 9, 14 @ 7:37 am:

    “–So I logically argue that the key to shrinking
    government spending is to raise taxes.–

    Obviously. Higher taxes means less revenue. Makes perfect sense, in some minds.

    Or conversely, if we completely eliminate taxes the government should have more money than it knows what to do with.


  46. - Bart - Friday, May 9, 14 @ 10:10 am:

    AFSCME Stewerd:

    ““They have overtaxed us. It is time for a roll-back!”

    “Maybe you should move to Wisconsin to escape the excessive Illinois taxes.”

    You sure wouldn’t move, would you Mr. AFSCME? Be pretty tough to find a new vein to tap where the democrats aren’t as plentiful or as easily bought as in Illinois, huh?

    Instead of “Big R” moving to WI, maybe Illinois should completely eliminate collective bargaining for public employees, then cut the AFSCME contingent of public workers by 50% and replace them with “contract workers”

    Your special interest group is pretty expensive, and Illinois ought to move to neuter you and your fellow travelers.

    After all, the tasks that are being performed by AFSCME members could be performed by just about anyone, and I am sure there are plenty of people in Illinois that would be eager to take your jobs with just an average 401k plan no pension benefits.

    A large reason Illinois finds itself in its current low estate is the public unions’ ownership of the democrat legislators.


  47. - wordslinger - Friday, May 9, 14 @ 10:18 am:

    –A large reason Illinois finds itself in its current low estate is the public unions’ ownership of the democrat legislators.–

    Yeah, they just love that pension bill.

    What’s the point of repeating national talking points, over and over?


  48. - Bart - Friday, May 9, 14 @ 11:51 am:

    The truth needs repeating, especially in Illinois.

    AFSCME-guy is suggesting that someone should move if they don’t like watching their tax money go to waste paying for the stupidly expensive arrangement that the public employee unions have purchased by their campaign contributions and who knows what other graft.

    Of course, the proper thing to do for “Big R” and others is to first stop the bleeding - the annoyance of the union tax-suckers is almost completely alleviated when you are no longer paying for them.

    I say “almost” because even though a person is no longer wasting money on $100,000 “English as a second language” teachers and the like, you know they still exist and that guys/gals like AFSCME Steward think it is their due to milk the taxpayer 30 years in retirement, because, after all, they gave some democrat a couple grand. Pretty sweet investment.


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* Illinois Department of Labor Director Hugo Chaviano Awards Governor’s Award for Contributions in Health and Safety to the Illinois Refining Division of Marathon Petroleum Company LP
* State Regulator Elected Treasurer of Interstate Medical Licensure Compact




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