SUBSCRIBE to Capitol Fax      Advertise Here      Mobile Version     Exclusive Subscriber Content     Updated Posts    Contact
CapitolFax.com
To subscribe to Capitol Fax, click here.
Civic Federation opposes borrowing to fund taxable property tax rebates

Tuesday, May 13, 2014

* A press release from the Civic Federation, which should never be confused with Ty Fahner’s Civic Committee…

In a new report released today, the Civic Federation’s Institute for Illinois’ Fiscal Sustainability opposes Governor Quinn’s recommended budget for FY2015 because it uses revenue from extending the 2011 temporary income tax increase for new spending. The State’s fiscal crisis demands that any increased revenue be used to stabilize State finances by significantly reducing its massive backlog of unpaid bills. The Institute’s full 36-page report is available at www.civicfed.org.

Under existing law, the State would lose $1.8 billion in General Funds revenues in FY2015 when the 2011 income tax rate increases are phased out beginning in January 2015. The Civic Federation is encouraged that the Governor’s plan addresses this fiscal cliff by extending the higher rates. The alternative – recommending budget cuts that are not based on specific public policy proposals – may be expedient but does not solve the State’s fiscal problems.

“The Governor’s plan appropriately recognizes that the State’s finances cannot withstand a dramatic reduction in revenues next year,” said Civic Federation President Laurence Msall. “However, new spending initiatives are just as contradictory to the State’s fiscal reality — especially those financed by borrowing.”

The Civic Federation opposes the Governor’s plan to spend $1.3 billion on a new homeowners’ grant program that would replace the State’s existing property tax credit on individual income taxes. Currently, the State provides an income tax credit for residential homeowners equal to 5.0% of the property taxes paid to local governments on their primary residence. The net cost of replacing this credit with the Governor’s proposed homeowners’ grant program is expected to be $715 million in FY2015.

The additional spending would require the State to borrow money to balance the operating budget, even after extending the higher income tax rates. The Governor proposes closing a $170 million budget gap in FY2015 by borrowing $650 million from funds outside of the State’s General Funds and repaying those funds with interest over the next two fiscal years. Although interfund borrowing is a low cost alternative to accessing transitional capital markets, this option should be reserved for financial emergencies and not to compensate for increased spending.

The Federation commends the Governor’s publication of a five-year budget plan, a first step toward true long-term financial planning. However, the policy choices made in the plan are projected to leave a substantial backlog of bills at the end of the five-year period and no strategy is detailed to establish a meaningful rainy day fund.

In its recent State budget roadmap for FY2015, the Federation recommended that the 2011 tax rate increases be extended for one year and then scaled back by 20% over the following three years. The Federation’s five-year plan also broadens the income tax base to include federally taxable retirement income. In the plan, additional revenues would be used to allow modest growth in agency spending while eliminating the $5.4 billion backlog of unpaid bills, providing relief to local governments and building up reserves to cushion against future economic downturns. The Federation continues to urge State lawmakers to adopt a similarly comprehensive approach to stabilizing Illinois finances.

The full analysis is here. Check out the section on the property tax “rebates”…

The State does not collect property taxes, so these payments cannot be considered property tax rebates or property tax relief. The existing property tax credit is nonrefundable, meaning it can only be used to reduce income taxes owed to the State and cannot be collected for any amount above the total individual tax liability. In contrast, new grants would be made regardless of whether the homeowner owes State income taxes, which adds to the cost of the new program. It is also possible the grant would be taxed by the federal and State governments as part of the calculation of homeowners’ individual income tax liabilities.

That could very well be true. In fact, I think it is true. Here’s your alleged property tax rebate, and, by the way, you owe income taxes on it.

Sheesh.

* I personally think the overall analysis makes some sense. The state shouldn’t be paying for that silly property tax “rebate” plan with borrowed money.

Also, this

In its recent State budget roadmap report for FY2015, the Federation found that the steep rollback in income tax rates would destabilize Illinois’ already weak financial condition. The Federation recommended that the 2011 tax rate increases be extended for one year and then scaled back by 20% over the following three years and that the income tax base should be broadened to include federally taxable retirement income. The Federation urged that the additional revenues be used to allow modest growth in agency spending while eliminating the unpaid bill backlog, providing relief to local governments and building up reserves to cushion against future economic downturns.

That might be doable, except it relies on the retirement income tax. Man, that would be a tough political vote. Impossibly tough, more likely. Suggesting such a thing amounts to a belief in magical budget dust.

Other than that, it’s not far out of line. Although I agree with the governor’s budget office that the entire bill backlog doesn’t have to be eliminated. People and big corporations don’t pay bills the day they arrive in the mail.

- Posted by Rich Miller        


14 Comments
  1. - DuPage - Tuesday, May 13, 14 @ 10:57 am:

    The rebate is mostly just election year political theatrics.


  2. - Ahoy! - Tuesday, May 13, 14 @ 10:57 am:

    While the entire backlog doesn’t need to be eliminated, it does need to be brought into a manageable and predictable payment cycle. The State should be able to take an invoice and provide payment within 45 days, 60 at the longest.


  3. - Mason born - Tuesday, May 13, 14 @ 11:02 am:

    –“The Governor’s plan appropriately recognizes that the State’s finances cannot withstand a dramatic reduction in revenues next year,” said Civic Federation President Laurence Msall. “However, new spending initiatives are just as contradictory to the State’s fiscal reality — especially those financed by borrowing.”–

    What is sad is that someone had to say that. You would think by know that would simply be common sense.


  4. - Wensicia - Tuesday, May 13, 14 @ 11:06 am:

    Since the state doesn’t collect property taxes, what’s the basis for providing relief exclusively for homeowners at every income level? This isn’t much different than providing free rides for seniors.


  5. - Norseman - Tuesday, May 13, 14 @ 11:17 am:

    === A press release from the Civic Federation, which should never be confused with Ty Fahner’s Civic Committee ===

    But it is so hard for us older folks.


  6. - Walker - Tuesday, May 13, 14 @ 11:18 am:

    It looks like the Civic Federation is very close to supporting the Governor’s “recommended” budget, and acknowledges that we cannot sunset the current rates.

    Calling inter-fund cash movements “borrowing” is stretching the term beyond what the public would assume they’re talking about. And if this weren’t an “emergency” then half of what has been done in the past two years wouldn’t have been required. To claim a fiscal emergency environment for some choices, but denying it for others, is foolish.

    The Federation doesn’t like the property tax ideas at all — those were offered as a political sop to get votes for the required rate extension in any case. No one loves them.

    All in all, good input.


  7. - fed up - Tuesday, May 13, 14 @ 11:22 am:

    The so called rebate has nothing to do with good or even Avg. govt it only is proposed as a feel good political moment before the election by Pinocchio Pat Quinn


  8. - CircularFiringSquad - Tuesday, May 13, 14 @ 11:24 am:

    why can’t confuse Laurence and Tyrone…neither have much background in state finance and both rake up big time cash from corporate honchos.


  9. - Federalist - Tuesday, May 13, 14 @ 11:38 am:

    Oh no, for once I agree with the Civic Federation!


  10. - Anon - Tuesday, May 13, 14 @ 11:43 am:

    The Civic Fed opposes new spending on Quinn’s program, but proposes new spending of its own for municipalities. I guess new spending is bad only when the CF says it is.


  11. - wordslinger - Tuesday, May 13, 14 @ 12:23 pm:

    The property tax rebate is an election-year gimmick. Not as irresponsible as the Bush tax rebate checks of 2008, but just as transparent.


  12. - downstate hack - Tuesday, May 13, 14 @ 12:34 pm:

    All new spending should be eliminated until the bills are cleared. This is a no-brainer as a start to fiscal integrity for Illinois.


  13. - Chicago Cynic - Tuesday, May 13, 14 @ 4:24 pm:

    The Civic Federation is often a voice of reason, and generally speaking they are here too. Not on the senior tax - not gonna happen - but on the need to extend the tax increase while limiting additional spending increases.

    The “property tax rebate” plan is such a ridiculously transparent political stunt. Hint, you’ll get a check but your property tax bill will be the same. Ridiculously bad idea. Like the Bush tax refund check, it will neither help the economy in a sustained way nor even help most homeowners pay their property tax bills (much or most of which are paid through their mortgages anyway).


  14. - Yellow Dog Democrat - Tuesday, May 13, 14 @ 10:45 pm:

    Yesterday I argued that the most vulnerable point of Quinn’s whole budget was the call for new spending.

    Nothing but chirping crickets from Team Quinn in response to the report. But the Civvies carry some sway on both sides of the aisle in Springfield.


Sorry, comments for this post are now closed.


* *** UPDATED x2 - Cullerton responds *** Rauner won't schedule leaders meeting until Dems "are ready"
* Mendoza bumps manager bonuses to back of the line
* Caption contest!
* CPS prospectus includes mention of "hypothetical bankruptcy"
* Fun with numbers
* Question of the day: Golden Horseshoe Awards
* CMS blames AFSCME for halt to bonuses
* Good news and not so great news in Site Selection report
* Chris Kennedy added to "Boss Madigan" list
* *** UPDATED x1 *** Are we really going to have to wait until 2018?
* Rauner's dark money prince could wind up running the RNC
* Madigan on the attack, offers to discuss modified version of "Turnaround Agenda"
* IMA says Rauner signature on Exelon bill weakens manufacturing
* It's more than just a website and e-mails
* Kennedy may file candidate papers "in short order," while Bustos moves up DC ladder
* Del Mar gets his plum
* Emanuel meeting with Trump this morning
* So now they tell us
* *** UPDATED x1 - Cullerton optimistic but firm *** Rauner slams Madigan for refusing to put forward a budget, wanting a tax hike, stalling to force a crisis
* Yesterday's blog posts

Support CapitolFax.com
Visit our advertisers...

...............

...............

...............

...............

...............
<


Search This Blog...

Search the 98th General Assembly By Bill Number
(example: HB0001)

Search the 98th General Assembly By Keyword

  
* ‘Super Mario Run’ and the shape of Nintendo to come — an interview with Reggie Fils-Aimé
* Galaxy Beta Program shows off TouchWiz’s new name: Samsung Experience
* Android app updates are getting 65 percent smaller
* Snapdragon 835 benchmark affirms octa-core design
* Sprint and Niantic partner to bolster Pokemon GO stops count
* Canadian Note 7 service stoppages take effect December 15
* Release date for Honor Magic concept phone is December 16

* Moncada welcomes expectations awaiting White Sox
* In span of day, White Sox system skyrockets
* Kopech next in long line of Texas fireballers
* White Sox land Giolito, 2 more prospects for Eaton
* In rebuild mode, Hahn has 5 assets to deal
* White Sox GM Rick Hahn is the prospect collector
* Best prospects traded in past 25 years

...............


Main Menu
Home
Illinois
YouTube
Pundit rankings
Obama
Subscriber Content
Durbin
Burris
Blagojevich Trial
Advertising
Updated Posts
Polls

Archives
December 2016
November 2016
October 2016
September 2016
August 2016
July 2016
June 2016
May 2016
April 2016
March 2016
February 2016
January 2016
December 2015
November 2015
October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
April 2014
March 2014
February 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007
May 2007
April 2007
March 2007
February 2007
January 2007
December 2006
November 2006
October 2006
September 2006
August 2006
July 2006
June 2006
May 2006
April 2006
March 2006
February 2006
January 2006
December 2005
April 2005
March 2005
February 2005
January 2005
December 2004
November 2004
October 2004

Blog*Spot Archives
November 2005
October 2005
September 2005
August 2005
July 2005
June 2005
May 2005

Syndication

RSS Feed 2.0
Comments RSS 2.0
WordPress

Loading


* Rauner Asks Democrats for Budget Proposal, Dela.....
* Illinois Gov. Rauner signs bill sparing 2 nucle.....
* Sneed: Trump’s tip of the hat to Emanuel..
* Rauner signs energy bill as ComEd announces del.....


* Energy Department grants to fund Illinois CO2 projects
* Suburban tobacco store manager sentenced in tax case
* Group offers reward to fight dog fighting in DuPage County
* Illinois firearm deer harvest down 8.5 percent this year
* Chicago officer convicted of perjury, 2 officers acquitted
* Doctor: candy that sickened students contained marijuana
* Purported Chicago gang leader to jurors: Gang never existed
* Illinois Gov. Rauner signs bill sparing 2 nuclear plants
* Rauner asks Democrats for budget proposal, delays meeting
* Comptroller: State employee bonuses on hold during impasse

* Springfield-area veterans join pipeline protest
* Rauner asks Democrats for budget proposal, cancels meeting
* Comptroller: State employee bonuses on hold during impasse
* Rauner signs Exelon subsidy to spare 2 nuclear plants
* Rauner to sign Exelon subsidy to spare 2 nuclear plants
* Judge blocks administration from imposing contract on AFSCME
* State budget still elusive as leaders lash out
* Illinois budget still elusive as leaders lash out
* Killer of former central Illinois man sentenced to probation
* Prosecutors: Don't move Aaron Schock trial out of Springfield

* Lothian hands CEO title to newsletter editor
* Chicago is getting another newsroom
* Another newsroom is coming to town
* Boeing sweats under Trump spotlight as SoftBank feels warmth
* What's pushing the markets to new highs today?


* Attempted bank robbery reported in Chicago Heights
* Georgia Nicols horoscopes for Dec. 8, 2016
* Dear Abby: ‘Orphan’ at 55 feels like he’s hit bottom
* 7 people shot Wednesday on South, West sides
* 13-year-old girl disappears from Uptown
* Trump chooses hardliners but talks softer on immigration
* Aroldis Chapman signs five-year deal to return to Yankees
* MGM National Harbor ready for its Maryland debut
* 17-year-old boy shot in Chicago Lawn
* Snapchat photo leads to man’s arrest in beating of 3-year-old


* Report: Aroldis Chapman, Yankees reach deal for $86M, 5 years
* Hoax beliefs fueled death threats to Sandy Hook parent, Florida woman charged: Feds
* Campus officer shot teen armed with knife at Nevada high school
* New York restaurant threatened by Pizzagate hoax callers
* Don't dismiss Vic Fangio leaving Bears just yet
* Trump retaliated against Carrier's union leader on Twitter. Then his phone started to ring.
* Ohio legislators approve what would be the country's toughest restriction on abortion
* Crowd braves cold to remember slain Dolton rapper
* Theo Epstein: Position players outside Cubs core fair game in trades
* First look: White Sox prospects acquired from Nationals


The widget AQL4JYGHIY powered by Feed Informer does not exist.


* Bernard Schoenburg: Bustos gets leadership post, criticizes Rauner
* Our View: Lawmakers should withdraw their lawsuit over paychecks
* George Will: The sensitivity police strike again
* Eugene Robinson: The proliferation of fake news presents real perils
* Guest Column: The Trump Administration faces extremism/terrorism
* Springfield-area veterans join pipeline protest
* Rauner asks Democrats for budget proposal, cancels meeting
* Comptroller: State employee bonuses on hold during impasse
* Rauner signs Exelon subsidy to spare 2 nuclear plants
* Rauner to sign Exelon subsidy to spare 2 nuclear plants


* Ronald Taskoski
* Wendell Davis
* Mary Foehner
* Paul Youngblood
* Margaret Osman
* Maryann Mercer
* Steven Kelley
* Shirley Jones
* Howard 'Cotton' Heumann
* Jimmie Cooksey


* Capitals lose 3-goal lead, recover to beat Bruins in OT
* Review: 'Hairspray Live!' pushes the boundaries and wins big
* Plum's 30 leads No. 11 Washington women to 101-44 win
* Extra effort in Wauconda's win
* Elgin crash backs up traffic on Randall Road

* House lawmakers overcome hurdle on key tra...
* Rodney Davis talks funding with Bloomingto...
* The agency that fought Illiana gets a new ...
* Rep. Dold takes educational cruise down Ch...
* Lawmakers decry high turnover rate of VA h...
* CBD Oil, and politics
* Simon considering state Senate bid
* Killer Congressman Tom MacArthur trying to...
* Shutdown? State may not notice
* Rep. Bob Dold

* Durbin's debit debacle - Washington Examin......
* House Democrats Press Obama To Do More To ......

* Sen. Mark Kirk Praised During Senate Floor......

* Girl, 13, Missing From Uptown Hospital
* How times change; Rahm now our ally in upcoming political fight w/ Trump
* Santa Sleighed
* Roller Skate With Santa At Margate Park
* Illinois Bible Colleges Head to Court of Appeals
* Thorner: Grassroots pushback essential for Trump to appoint pro-life nominee
* IL GOP jabs possible Dem gubernatorial nominee, three more lawmakers
* Trump taps Iowa Governor Branstad for Ambassador to China
* Chicago YPN raises more than $400 for Salvation Army
* Governor Announces Appointments to Illinois Bicentennial Commission


* Governor’s Export Awards Recipients Announced
* Governor Signs Legislation to Protect Jobs, Ratepayers and Taxpayers
* Give The Gift Of A Lifetime With A College Illinois!® 529 Prepaid Tuition Plan - College Illinois! can help limit or even eliminate future student loan debt
* Illinois Department of Veterans’ Affairs Hosts 75th Pearl Harbor Remembrance Day Ceremony
* IDHR Issues Reminder of Fair Housing Rights During Holiday Season - State law prohibits targeted, discriminatory restrictions on decorations and celebrations




      Hosted by MCS SUBSCRIBE to Capitol Fax Advertise Here Mobile Version Contact Rich Miller