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* My Crain’s Chicago Business column…
The latest state budgetary meltdown got me wondering: Why did the Democrats decide four years ago to allow the income tax hike to expire in the middle of a fiscal year?
The trouble caused by the Jan. 1, 2015, tax hike expiration has been tremendous.
By putting in that particular “sunset date,” state revenues are scheduled to drop almost $2 billion in the second half of the new fiscal year, which starts July 1 and ends June 30, 2015.
To prevent that dramatic loss of revenue, Gov. Pat Quinn proposed in March that the Illinois General Assembly permanently extend the income tax hike. Fellow Democrats House Speaker Michael Madigan and Senate President John Cullerton both publicly agreed.
Trouble is, statehouse tax hikes almost never get passed before an election. Former Republican Gov. Jim Thompson twice pushed for post-election tax hikes, claiming he’d badly misread the fiscal tea leaves while he was campaigning on a solemn pledge to never raise taxes.
And, sure enough, the combination of an off-year election that’s already going to be bad for Democrats and Republican gubernatorial candidate Bruce Rauner’s endless supply of campaign cash has scared the living daylights out of House Democrats. The tax extension idea was dropped.
Instead, the Democrats passed an alternative budget that kicks a very expensive can down the road, blowing a gigantic, multibillion-dollar hole in next year’s budget.
So why did the Democrats lock themselves into such a mess?
Mr. Cullerton told me a few weeks ago that he’d been asking himself that same question.
Go read the whole thing to find out what Cullerton said.
* Meanwhile, Doug Finke…
[Gov. Pat Quinn] didn’t get the tax extension, he didn’t get the $500 pre-election checks for property taxpayers (another of his proposals), he didn’t get an increase in the minimum wage (although he’ll get an advisory referendum), there’s no increase in the earned income tax credit, and most of his budgetary priorities went down the drain. He did get a new capital program of sorts, all of $1 billion for roads and bridges.
But like the Chicago Cubs, there’s always next year and the hope it will prove more successful. Except, depending on the November election, this could have been Quinn’s last spring hurrah.
* Umm…
“This was a successful session,” the speaker continued. “The governor didn’t get everything he wanted, but that’s the nature of the Legislature. That’s the nature of American government. But going forward, the Democrats will be together because they’ll be brought together by Republicans.”
posted by Rich Miller
Monday, Jun 2, 14 @ 12:00 pm
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Comment by A guy... Monday, Jun 2, 14 @ 12:10 pm
I think it’s going to be kind of fun watching Governor Rauner beg the General Assembly to raise taxes next year. Even more fun when Durkin and Radogno put 0 votes on it.
Be careful what you wish for because you just might get it, good and hard.
Comment by 47th Ward Monday, Jun 2, 14 @ 12:33 pm
I don’t buy Cullerton’s explanation at all. The idea that these guys didn’t consider the sunset date is silly.
Who’s going to take the heat when services get cut? It won’t be individual legislators. It will be whoever is governor.
Whoever is governor in January will want the money from the current tax rates. They’ll have to make it happen. That’s why they got the Big Chair. Book it.
Comment by wordslinger Monday, Jun 2, 14 @ 12:38 pm
Excellent column as usual. I’m with you all the way until the last sentence.
Any gains made by anyone this session were offset by the negatives. That stretches from the newest and most idle members of both parties who are tarnished by simply being a part of this session, to the Speaker and Party Chairman who could not cobble together an effective budget despite enjoying a supermajority and single-party control of the Senate, House and mansion. Every politician within a 10-mile radius of Springfield was damaged by this weak and ineffective session.
Comment by Formerly Known As... Monday, Jun 2, 14 @ 12:46 pm
Rich,
Elections should be about a choice of direction. I think it is good that the legislature did not pass legislation making the temporary income tax permanent before we have heard from the voters on Election Day. One gubernatorial candidate has indicated he is in favor of making it permanent/extended and has from now until the election to tell voters what would be cut if it is not extended or made permanent.
The other gubernatorial candidate has indicated that he is opposed to making the temporary income tax legislation permanent or extended. For several months, if not more, that candidate has also committed to providing the public with the list of draconian cuts to the state budget that would be necessary and that he would recommend and represent as his position going into the election. While that same candidate has not yet fulfilled that commitment, he has from now until the election to stake out his position.
While I am not in favor of government by referendum California style, the voters win because they get to choose the vision/direction of the state prior to such an important decision being made.
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Comment by Mayor Barrett Monday, Jun 2, 14 @ 1:01 pm
Like Word, I don’t buy the Cullerton explanation. They knew when they wanted to do. Staff would have asked them about the effective date. I’m sure they regret the decision now after seeing the bad results.
Also, like Word expressed in a different post. I’m not sure that we’ll see a lame duck tax increase if Rauner gets elected. Madigan and Cullerton will let Rauner stew in his own rhetoric. If tax increases are suggested, they’ll expect the Republicans to do some heavy lifting.
Comment by Norseman Monday, Jun 2, 14 @ 1:06 pm
===Why did the Democrats decide four years ago to allow the income tax hike to expire in the middle of a fiscal year?===
Why indeed? A good question, what’s the answer? I don’t think that was the outcome that Gov. Quinn preferred at the time. I think it was the General Assembly that imposed that course of action. Why?
Comment by Mighty M. Mouse Monday, Jun 2, 14 @ 1:40 pm
It was successful if you define successful as disastrous, and Mike Madigan can define success however he chooses.
Comment by lovecraft Monday, Jun 2, 14 @ 5:56 pm
As a media member recently said so perfectly to Eddie Arruzza on Chicago Tonight
“And who is the genius in the Democratic Party who decided this should expire on January 1 2015, while you are budgeting right in the middle of campaign season?”
Comment by Formerly Known As... Monday, Jun 2, 14 @ 6:37 pm