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* From the CTBA…
Today, the Center for Tax and Budget Accountability (CTBA) released a new report, It Is All About the Revenue: Why Both Current FY2016 General Fund Budget Proposals Fall Short, which provides a detailed analysis of both Governor Bruce Rauner’s and the General Assembly’s two very different proposals for the FY2016 General Fund budget. Both budget proposals would cut services and increase the state’s deficit due to the phase down of the temporary tax increases in the state’s personal and corporate income tax rates that became effective on January 1, 2015. Collectively, those income tax rate cuts will cause Illinois’ General Fund to lose $4.6 billion in recurring revenue over the course of the full fiscal year.
While Governor Rauner’s budget proposal would cut spending by $5 billion, CTBA’s analysis found that $3.2 billion of his proposed spending cuts will likely not be realized in FY2016 for legal, constitutional, and related reasons, and therefore, would increase the state’s General Fund deficit to $9.5 billion. Meanwhile, the General Assembly’s proposed FY2016 budget would cut spending by $590 million, but, without the sufficient revenue needed to cover the higher level of spending it authorizes, it would increase the projected accumulated General Fund deficit to nearly $10 billion.
Emphasis added. The full report is here.
posted by Rich Miller
Thursday, Jul 30, 15 @ 1:41 pm
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The newest epic fantasy, the Illinois State Budget.
Comment by Precinct Captain Thursday, Jul 30, 15 @ 1:47 pm
Has the Governor ever acknowledged that his budget comes up short? I can’t recall him ever publicly acknowledging that. When a reporter asked him about that at one of his press conferences a few weeks ago, he acted surprised that anyone would think that.
Comment by Joe M Thursday, Jul 30, 15 @ 1:49 pm
Yep, on the real numbers they are $500M apart. Not trivial, but not the biggest issues of the impasse between the GA and Rauner.
You can disagree with CBTA proposed solutions, and rail about who supports them, but Martire’s numbers always prove to be accurate and added properly.
Comment by walker Thursday, Jul 30, 15 @ 1:50 pm
Governor Rauner is the pot calling Speaker Madigan’s kettle black. Both budget proposals are out of balance.
The solution may be another “temporary” income tax increase.
Comment by Stones Thursday, Jul 30, 15 @ 1:50 pm
===While Governor Rauner’s budget proposal would cut spending by $5 billion, CTBA’s analysis found that $3.2 billion of his proposed spending cuts will likely not be realized in FY2016 for legal, constitutional, and related reasons, and therefore, would increase the state’s General Fund deficit to $9.5 billion===
Is that “Shaking Up” or “Bringing Back”?
My favorite?
===…(Rauner’s) proposed spending cuts will likely not be realized in FY2016 for legal, constitutional, and related reasons, and therefore…===
Gotta real grasp on the governin’ there.
===Meanwhile, the General Assembly’s proposed FY2016 budget would cut spending by $590 million, but, without the sufficient revenue needed to cover the higher level of spending it authorizes, it would increase the projected accumulated General Fund deficit to nearly $10 billion.===
There’s a difference in the report. Did you catch it?
No…
===…proposed spending cuts will likely not be realized in FY2016 for legal, constitutional, and related reasons…===
So, while we’re talking $9.5 Billion or $10 Billion (thus the $500 million), it appears the “Superstars” lack the “fundamental” knowledge… of governing.
BTW, thank goodness when the Governor talks about Democrats just wanting a tax increase, he doesn’t point out his own budget requires revenue too. Requires. Not optional.
I mean, that would blow up Rauner’s narrative, let alone… “my fav”…
===…(Rauner’s) proposed spending cuts will likely not be realized in FY2016 for legal, constitutional, and related reasons….===
That’s just fun.
Comment by Oswego Willy Thursday, Jul 30, 15 @ 1:52 pm
Doggone math!
– MrJM
Comment by @MisterJayEm Thursday, Jul 30, 15 @ 1:56 pm
A very deliberate deficit. If you reduce revenue by reducing taxes, what do you think might happen? Did we need a businessman to tell us this? If you create the crisis you want, you can choose the solutions you want.
Comment by AnonymousOne Thursday, Jul 30, 15 @ 2:03 pm
Illinois government leaves so much revenue on the table. Fourth from the bottom on sales taxes on services / user fee. Hardly any seniors pay any income tax at all, due to deductions and exclusion of pensions and annuities payments. Absurd.
Comment by Capitol View Thursday, Jul 30, 15 @ 2:03 pm
The solution is simple. Increase the State income tax to 15%. That way Madigan’s spending increases can be paid for.
Comment by Hummm..... Thursday, Jul 30, 15 @ 2:04 pm
“legal, constitutional, and related reasons” See? Even the lawyers and the judges are corrupt.
Comment by Skeptic Thursday, Jul 30, 15 @ 2:05 pm
- Hummm….. -,
Your roommate picked up your class schedule for Sophmore year. It’s in your dorm room…
Comment by Oswego Willy Thursday, Jul 30, 15 @ 2:06 pm
I believe simple arithmetic and percentages are covered in elementary school.
Comment by AnonymousOne Thursday, Jul 30, 15 @ 2:12 pm
Fixing to get really interesting in the State of Illinois over the next 24 months. There will not be winners and losers, only losers to varying degrees.
The concept that certain highly-organized, disproportionately-influential special interest groups feel entitled to except themselves from the general suffering will less and less tenable…..even with the substantial constitutional protections.
Comment by salavador dali Thursday, Jul 30, 15 @ 2:23 pm
$500 million is the difference in GF deficit as stated between the two budgets.
But there is another number (that I don’t have time to research!)
Rauner cut $5B with $3.2B being bogus. That means he had another $1.8B in cuts than the GA that cut $.5B. That’s a difference of $1.3B in cuts.
Why does this additional $1.3B in cuts only translate into $.5B less for projected GF deficit? Where did $800m in Rauner cuts go that aren’t reflected in GF deficit?
Does that make sense to anyone? (It could be in report.)
Comment by cdog Thursday, Jul 30, 15 @ 2:25 pm
Raise the income tax rate to 6%, eliminate the retirement income tax subtraction, increase the 65 and older exemption to $10,000.
Use the surplus to pay down state debt, and then revisit the tax rate 5 years later.
From 1993 to 2013, the Retirement income tax subtraction cost the state roughly 21 billion dollars and the elderly who are actually in poverty already have federal AGI of zero.
We pretend like this is a crisis and not a case of where maybe we should have had rates higher than 2% in the 1980s.
Comment by Anon Thursday, Jul 30, 15 @ 2:32 pm
The Rauner fantasy exposed.
Comment by Norseman Thursday, Jul 30, 15 @ 2:37 pm
==eliminate the retirement income tax subtraction==
According to most folks here, that will cause a mass exodus of retirees. Of course, when the talk is of raising the income tax on just working folks, they have no concern of any such exodus.
Comment by nixit71 Thursday, Jul 30, 15 @ 2:38 pm
==All About the Revenue==
As usual with CTBA.
Comment by Formerly Known As... Thursday, Jul 30, 15 @ 2:39 pm
Like it or not revenue must increase and both sides need to won this reality. We wouldn’t be in this mess if previous governors and legislators had done their jobs - but they didn’t. Now no one wants to make the hard choices. Rauner is willing to have increased taxes-good for him, but the Dems don’t want to take their medicine-making changes to improve the business climate and free this state from phony map-making. My take, this is Madigan and Cullertons mess more than Rauners so they are the ones who need to give. And yes, I know that will happen when pigs fly at the state fair!
Comment by NeverPoliticallyCorrect Thursday, Jul 30, 15 @ 2:40 pm
cdog @ 2:25 pm
Most of Rauner’s spending cuts are for Medicaid, which results in a loss of federal revenue. So spending cuts are offset by revenue loss
Comment by Name/Nickname/Anon Thursday, Jul 30, 15 @ 2:40 pm
@Salvador dali: ==There will not be winners and losers, only losers to varying degrees.==
elections are zero-sum games, and that cuts both ways. They have winners. If one group loses, another wins (even if a group is very unpopular, it can still win if all other groups are even more unpopular).
Comment by UIC Guy Thursday, Jul 30, 15 @ 2:45 pm
===According to most folks here, that will cause a mass exodus of retirees. Of course, when the talk is of raising the income tax on just working folks, they have no concern of any such exodus.===
According to academic research from the University of Wisconsin and the Wisconsin Department of Revenue, that isn’t the case. Other economic research has also demonstrated that retirement income sources is one of the most inelastic income sources to taxation.
Simply put, lower and middle class retirees don’t move out of the state for favorable tax treatments. The effective income tax paid is usually lower than the actual tax rate, so think of it this way: would you go through the trouble of selling your home, moving to a new place, leaving your friends, neighborhood, and potentially family for a 5% raise?
If you’re making the needs based argument, economically, individuals over the age of 65 in the State of Illinois have the lowest poverty rates.
One might lose some jobs to states with more favorable tax treatments, but that simply isn’t the case. Heck, any research from the first couple of years of the 5% tax rate on the State of Illinois fails to take into account that the temporary tax increase was offset by the payroll tax holiday for social security. So, initially people who receive wages as a majority of their income didn’t even notice the tax’s impact on their checks.
But, you know, this is all data and the data and facts are only helpful if one has a body politic that wants to pay for the services it’s receiving and make investments in the future.
How about some generational equity?
Comment by Anon Thursday, Jul 30, 15 @ 2:58 pm
====All About the Revenue. As usual with CTBA.==
I’m as big a critic as any of the CTBA and their never-ending struggle to raise taxes as decreed by their public sector benefactors, but this report does a solid job of pointing out the realistic gaps in the proposed budgets.
Comment by nixit71 Thursday, Jul 30, 15 @ 2:58 pm
“I was told there would be no math.”
Comment by Bigtwich Thursday, Jul 30, 15 @ 3:03 pm
Why not tax retirement income at a lower rate? Half an apple is better than none.
Comment by The Unknown Poster Thursday, Jul 30, 15 @ 3:13 pm
@Anon - Excellent points! I’ve been stressing “generational equity” for awhile here, but it’s usually met with rancor.
I forgot Quinn and Co had a 2 year reprieve from the private sector on the state income tax hike due to the temporary 2 percentage point decrease in OASDI.
Comment by nixit71 Thursday, Jul 30, 15 @ 3:13 pm
No, it won’t cause a mass exodus of retirees. Some will factor it into retirement planning, which is already complex for many, but if family and social ties are in Illinois, there is a strong incentive to stay, or at least make Illinois the principal residence. It’s not that easy to pretend you live in Fla. And if you try to, and you get caught, well, could be messy.
But it doesn’t matter, because our highly risk-averse GA and governor are very unlikely
to take on such a political risk. Very unlikely. These folks can’t even reinstate a modest income tax increase, or most of it. They are terrified every time somebody suggests a tax on services. Indeed, they really can’t do anything. And we’re stuck with them.
Comment by Cassandra Thursday, Jul 30, 15 @ 3:14 pm
The folk complaining about the CTBA always wanting to raise taxes either can’t handle the truth about our regressive tax system or they only want free stuff.
Comment by Triple fat Thursday, Jul 30, 15 @ 4:36 pm
– Why not tax retirement income at a lower rate? Half an apple is better than none. –
Because the Illinois constitution requires that income be taxed at one rate. You either exclude the retirement income completely, or you tax it at the same rate as regular income. There are ways around this (exclude the first $50,000, e.g.), but basically the issue is that the constitution requires a single (flat) rate.
Comment by the Other Anonymous Thursday, Jul 30, 15 @ 5:01 pm
What’s sad is that Rauner says he won’t agree to a tax increase until his turnaround agenda is passed. But I don’t see how his agenda will generate higher tax revenues. Maybe some but not enough to justify this battle.
And the Democrats don’t have much to contribute to improving the state’s economy. They seem fixated on things like increasing the minimum wage which would help individuals but the economy?
All this and little lasting impact on the economy.
Comment by Sir Reel Thursday, Jul 30, 15 @ 5:07 pm
==The folk complaining about the CTBA always wanting to raise taxes either can’t handle the truth about our regressive tax system or they only want free stuff.==
Or are aware of the glaring conflict of interest with an entity that calls for higher taxes and consistently receives large payments from entities that are 100% dependent on tax revenue.
Or don’t like being labeled as “wanting free stuff” when they have no choice on what the stuff costs or whether or not they want to consume it or if it should be consumed at all.
Comment by nixit71 Thursday, Jul 30, 15 @ 5:18 pm
nixitt71
But you have no problem with a one percenter reducing his tax obligation, right? I mean the leader of the monied class doesn’t have a dog in this fight, does he? No sir, no conflict of interest there. Pray tell did you even read the report? It’s an easy read. Rather than unfairly attacking the characteri of the CTBA why don’t you explain to us where their report is wrong. Oh by the way you are aware of how taxation and representation works don’t you? I said you are one thing or the other. Let me be even more clear to you; you are either ignorant or want free stuff. I’m perfectly fine with you being ignorant. Sheesh!
Comment by Triple fat Thursday, Jul 30, 15 @ 6:07 pm
==individuals over the age of 65 have the lowest poverty rates==
Must laugh. We sure do need to fix all that saving they did for their medical bills and nursing home expenses. Apparently, in some minds, seniors should live in poverty after dedicating their lives to raising…..you….and contributing to the economy for decades. But, if fixed, and they have less that’ll be good news for your inheritance. There won’t be any for you.
Comment by AnonymousOne Thursday, Jul 30, 15 @ 6:25 pm
Ugh.
Comment by Liandro Thursday, Jul 30, 15 @ 7:48 pm
=== we wouldn’t be in this mess if previous governors had done their jobs…making the hard choices ===
Quinn ran on a tax hike in both of his elections. He made the hard choices, and paid the price for so doing. Please don’t include him among those who ignored the chronic revenue shortfall.
Comment by nona Thursday, Jul 30, 15 @ 8:29 pm
What will those critics of CTBA for pointing out the state needs more revenue say when Rauner supports revenue enhancements? Will he be just as off-base as the critics suggest about Martire?
Comment by nona Thursday, Jul 30, 15 @ 8:36 pm
Both Rauner’s and Madigan’s plans need revenue, lots of revenue.
I think I understand MJM’s goal, to deliver the level of services he thinks the taxpayers want … but don’t really want to pay for and it will force a tax hike.
I’m not sure what Rauner’s goal really is, but it appears he wants to create a major crisis. He’s acting like the State is a business he can do a “bust out” on, then run through bankruptcy to shed the debt. That action would be logical if states were allowed to take bankruptcy, which they are not.
The other logical speculation would be that this “bust out” is the setup to not reducing, but completely skipping, the pension fund payments in FY16 and FY17 … which would set up a crisis in the pension funds in an attempt to force the courts to accept a “police powers” argument. I don’t see the courts buying it, especially given some of their language in the SB-1 ruling, but I truly believe that kind of thought process is how Rauner sees it.
Comment by RNUG Thursday, Jul 30, 15 @ 8:59 pm
This study fails to calculate the unrealized gains of less property tax income, lower wages, and less corporat taxes. This study is a SHAM.
Comment by PENSIONS ARE OFF LIMITS Thursday, Jul 30, 15 @ 11:23 pm
==individuals over the age of 65 in the State of Illinois have the lowest poverty rates. ==
Can we see that broken down by age brackets? 65-70, 70-75, 75-80, and so on? Remember, that wealth at 65 has to last until you die - which could be 30 years with inflation. So, yes, those at 65 probably do have lower poverty rates - but what about 80 year olds?
Having said that, I don’t have a problem taxing retirement income over a certain threshold per year.
Comment by thoughts matter Friday, Jul 31, 15 @ 6:59 am