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.


TrackBack URI

Sorry, comments for this post are now closed.


* Reader comments closed for the weekend
* Question of the day
* *** UPDATED x1 - Rauner response *** This just in... Illinois Supreme Court denies Rauner appeal
* They need a rich "white knight"
* Johnson finally backs Davis... So does Joan
* Schneider throws Quinn under the bus
* Wincing before the hit
* Inspector general's IDOT probe places no direct blame on Quinn
* Today's number: 57 percent
* *** UPDATED x2 - Not totally clean - Some questions answered *** Stories raise unanswered questions about IDOC policy
* *** UPDATED x1 - Schneider campaign responds *** US, Illinois Chambers launch TV hit on Schneider
* Reaching into the past for today's gotcha moment
* New DGA YouTube video ties Rauner to Romney via outsourcing
* SUBSCRIBERS ONLY - Supplement to today’s edition
* SUBSCRIBERS ONLY - Today's edition of Capitol Fax (use all CAPS in password)
* This just in... Unions file motion to "gut" the state's pension case
* 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

          
        * HTC Nexus Tablet date, Windows 9 date, Gear 3 leaks & more – Pocketnow Daily
        * Guess which smartphone took these photos (Vol. 6) (Update: answer within!)
        * Three fun things to do with the Xiaomi Mi4 (Video)
        * For The First Time, The Majority Of Opera Software’s Revenue Came From Mobile Ads
        * Mobile Verification Service Zumigo Closes $6 Million Series B Round Led By Intel Capital
        * HTC One M8 for Windows, edge-free AQUOS Crystal, Moto “Quark” & more | Pocketnow Weekly 110
        * Samsung reminds us why we love handwriting in Note 4 teaser

        * Oppo Find 5 Will Not Get The Android 4.4 KitKat Update
        * Samsung Gear 3 To Feature a Curved Design (Rumor)
        * Samsung Galaxy S5 Takes The Ice Bucket Challenge (Video)
        * Samsung Galaxy Alpha Up For Pre-orders In The UK From August 28th
        * Samsung Teases the Galaxy Note 4 In A Video
        * SpaceX rocket explodes during failed test
        * Cricket Offers $100 To T-Mobile & MetroPCS Customers To Switch Carriers

        * White Sox recall infield prospect Sanchez
        * Abreu's 33rd homer not enough for White Sox
        * Shortstop Anderson debuts at Double-A
        * Carroll, White Sox look to end Yankee Stadium hex
        * Abreu's 33rd homer not enough for White Sox
        * Replay confirms play at plate; Yanks nail runner
        * Abreu happy to see fellow Cuban Castillo in bigs


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

        Archives
        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


        * Libertarians survive petition challenge in Illi.....
        * IDOT hiring abuses report critical of Gov. Quin.....


        * Rauner dealt double blows over Illinois ballot
        * 8 gang members indicted on racketeering charges
        * Church cautions schools on ice bucket challenge
        * Rauner says Board of Election action a Quinn win
        * 2 parolees charged in suburban Chicago standoff
        * Supreme Court won't take up term limits appeal
        * Cardinal George to get experimental cancer drug
        * Report: State agency broke hiring rules for years
        * Sen. Warren disavows PAC urging run for president
        * United flight to Chicago makes emergency landing

        * State employee unions want expedited ruling in pensions suit
        * November ballot certified without term limits question
        * Supreme Court won't take up term limits appeal
        * Rauner dealt double blows over Illinois ballot
        * IDOT broke hiring rules for years, report finds
        * State Rep. Poe faces 3-week stem cell procedure in Texas
        * IDOT cuts positions following questions on hiring
        * Authorities investigating powdery substance at Illinois State Library
        * Powdery substance mailed to Illinois State Library deemed non-hazardous
        * Term-limit backers seek Supreme Court intervention

        * Chicago execs join in ice bucket challenge
        * McDonald's testing mozzarella sticks with marinara sauce
        * Watch where Michael Madigan tries to boost turnout
        * Supreme Court spikes term limits appeal
        * IDOT broke hiring rules for years, state report says


        * Karen Lewis credits dad with influencing her populist platform
        * Eight accused of racketeering, drug-running in Indiana
        * Cardinal George to participate in research trial of new cancer drug
        * Prosecutor: Harvey hostages threatened, one woman sexually assaulted
        * Boy, 3, shot in head on  W. Side
        * A new heart, a deeper love
        * Emanuel alters eligibility rules for firefighters entrance exam
        * IDOT political hiring is setback for Quinn
        * Kids pay the price for weak oversight of charter schools
        * Attorney indicted on charges of soliciting perjury in drug case


        * Boy shot inside residence on West Side
        * Jackson Jr.'s political fund fined nearly $18,000 for missing reports
        * Cops: Tracking device leads officers to phone store robbery suspects
        * Libertarian Party remains on Illinois ballot this fall
        * Rauner term limits question won't appear on November ballot
        * Ex-cop could face prison for violating probation
        * Cardinal George testing new cancer drug
        * 2nd charge in Antioch inappropriate touching case
        * Heavy rain shuts down Eisenhower for third time this summer
        * U. of I. defends pulling job offer over tweets critical of Israel


        * IL Supreme Court Won't Hear Term Limit Question Before Ballot Deadline
        * Gone Fishing: Harsh winter brings lake temps down, but not for long
        * Race, Cops & Traffic Stops
        * Listen to State Week - August 22, 2014
        * In Wake Of Ferguson, Rally Planned In Springfield
        * WUIS Education Desk: Springfield Mayoral Candidates Talk District 186
        * Unions Ask For Quick Ruling On Pensions
        * Report Says IDOT Broke Hiring Rules For Years
        * CPS students scramble for new school after Concept charter opening delayed
        * Illinois Takes First Step Toward Drafting Greenhouse Gas Plan


        * State employee unions want expedited ruling in pensions suit
        * Rodney Davis: Congress trying to aid college debt battle
        * Charles Krauthammer: Stopping the worst people on earth
        * November ballot certified without term limits question
        * IDOT broke hiring rules for years, report finds
        * Our Opinion: Another life saved by CPR
        * Esther Cepeda: Misreading our demographics
        * E.J. Dionne: Ferguson divides us less than we imagine
        * Richard Kaplan: Additional Rauner tax-return disclosures probably won’t reveal much
        * State Rep. Poe faces 3-week stem cell procedure in Texas


        * Gang member Rice guilty of murder try
        * Suspicious object turns out to be Star Wars toy
        * Colorful visitor
        * County forgives $2.4M in bad speed-camera tickets
        * Un-bee-lievable: 50,000 bees living in NYC ceiling
        * City says no profiling on noise law
        * Open Line
        * Mayor working to bring crime stoppers to town
        * Ex-Y on block
        * Phillip Van


        * Jackie Robinson West playing in U.S. final today
        * Seahawks embarrass the Bears
        * White Sox waste Abreu's homer, lose to Yankees
        * Palatine Street Fest continues through Sunday
        * Trestman wants to see Jeffery ‘stack years together'

        * Statement by Representative Jan Schakowsky...
        * Legislation proposes mandating 24/7 nursin...
        * Statement by Representative Jan Schakowsky...
        * Farm Antibiotic Restrictions Proposed - Al...
        * Jan Schakowsky: Tom Marino's Response to '...
        * Telling Nancy Pelosi to do research is sex...
        * Schakowsky blasts Marino for 'sexist' atta...
        * Schakowsky: Marino's attack on Pelosi was ...
        * Dem: Attack on Pelosi was 'sexist' - The H...
        * How I failed to live on the minimum wage -...

        * Homeless veterans project hits snag...
        * Homeless veterans project hits snag...
        * Homeless veterans project hits snag...
        * Lawmakers React to Iraq Journalist Death...
        * Lawmakers React to Iraq Journalist Death...

        * Senator Kirk Applauds New Life-Saving Stro......

        * Alleged Red Light Camera Bagman Cooperating With Feds
        * Whatever Floats Your Boat
        * Unrest in the Midwest
        * Possible Karen Lewis Super PAC Being Discussed
        * Report: State Agency Broke Hiring Rules For Years
        * We Are One Coalition Urges Circuit Court To Expedite Pension Suit
        * Supreme Court Won't Take Up Term Limits Appeal
        * CTU boss Karen Lewis officially files to run for Chicago mayor
        * Study: TSA Full-Body Scanners Photograph Genitals, But Miss Guns, Explosives, Knives
        * Appellate Court rules against term limits, effort heads for IL Supreme Court


        * Quinn Said He Was Stopping Patronage Hiring In 2010; He Was Actually Expanding It
        * Rauner: Quinn patronage scandal reminds us why we need term limits
        * Governor Quinn Announces New Class of Illinois State Police Cadets - More Cadets to Protect and Serve Communities Across Illinois
        * ICYMI: Term limits amendment — and citizens — lose
        * IDOT Teams Up with “Walking Dead” Star to Drive Down Fatalities in Illinois - Innovative New Labor Day Ad Campaign to Target Young Males; Law Enforcement to Crack Down on Drunk, Unbelted Drivers




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