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* This is all I got and all I could get from the governor’s office today. Sorry…
FY22 BUDGET PROPOSAL TOPLINES
With the Covid-19 pandemic creating massive new hardship for families, small businesses and the most vulnerable, the Governor will be proposing a budget that protects hardworking families from additional hardship – with no tax increase. Vital services such as IDPH, DCFS, IDES and others will be strengthened.
Broadly speaking, his plan can accomplish this because:
• following the Governor’s $700 million in spending reductions in FY21, the FY22 budget proposal maintains that fiscal discipline by holding state spending flat vs FY21;
• the FY22 budget proposal will close corporate tax loopholes of $900 million and redirect revenue such as the cigarette tax into the General Fund;
• significant federal funding for education will provide additional support for schools while the state maintains its existing investment, and the governor is committed to ensuring that education is fully funded in future years;
• the FY22 budget deficit is projected to be $3 billion, rather than $5.5 billion, after the Governor called for the state to pay off $700 million in MLF borrowing early and the economy performed more strongly than expected.There is no question that this budget will include painful choices, but as the effect of the pandemic diminishes over the coming months, the Governor will continue to focus on economic recovery for the hardest hit. The Governor will also continue to advance long-term structural budget improvements that continue the stronger fiscal trajectory Illinois was on before the pandemic. The Governor looks forward to collaborating with the General Assembly to finalize a responsible state budget.
The governor’s office claims the $3 billion budget deficit will be closed by his proposal. They didn’t say how. If I had to guess, it would be federal money.
…Adding… I was just told by the governor’s office that they won’t rely on new federal money to close the deficit.
So, flat state spending, including education spending (but heavy federal money for schools on top of state money), corporate loophole closures (tried many times by other governors and usually failed). And one can only wonder what other state money will be redirected into the General Fund (LGDF?).
posted by Rich Miller
Tuesday, Feb 9, 21 @ 1:06 pm
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Closing corporate loopholes should be one of the first places to look for revenue. We had years of social services and higher ed taking cuts, such as under the former governor. Corporations got a 40% federal income tax cut. The markets did well as our economy tanked last year, and corporate profits hit an all time high.
Comment by Grandson of Man Tuesday, Feb 9, 21 @ 1:24 pm
=== the Governor called for the state to pay off $700 million in MLF borrowing early ===
What are they talking about? Below is the payment schedule as described by GOMB in its December monthly report. So, the governor’s office is saying they made the December payment of $360M, and the January payment of $190M, plus have already made the March payment of $150M, to get to $700M?
Or are they saying they made the December and January payments, plus paid *another* $700M? That’s very significant, if true, and appears to be how one would most logically interpret that above statement.
“The first borrowing was executed in June of 2020, totaling $1.2 billion. Repayment of this borrowing must be completed within fiscal year 2021. As of December 31, 2020, $360 million of the $1,264 million repayment had been set aside by the Comptroller. The remainder of the set-asides are planned for January ($190M), March ($150 million), April ($550 million), and May (approximately $155 million). The second borrowing was executed in December 2020, totaling $2.0 billion. Repayment of this borrowing is scheduled over the next three fiscal years, with $690 million due on or before 12/15/21, $713 million due on or before 12/15/2022, and $736 million due on or before 12/15/23.”
Comment by Bud's Bar Stool Tuesday, Feb 9, 21 @ 1:25 pm
Hopefully decoupling is not what’s being lumped into the category of “corporate loophole.” Corporations have already been decoupled. The decoupling proposal only affects pass-through businesses.
Comment by Tawk Tuesday, Feb 9, 21 @ 1:34 pm
And now, the Governor disappears until July.
Comment by Ok Tuesday, Feb 9, 21 @ 1:35 pm
“Closing corporate loopholes”… means what, exactly?
Comment by Anon y mouse Tuesday, Feb 9, 21 @ 1:36 pm
“with no tax increase”. Did he run this by the Lt. Governor and Treasurer?
Comment by Not the Dude Tuesday, Feb 9, 21 @ 1:41 pm
How much will they sell the Thompson Center for in this budget?
Comment by Franklin Tuesday, Feb 9, 21 @ 1:47 pm
I love how “no tax increase” somehow equals $900 million. Businesses don’t pay the taxes if those so-called corporate loopholes are closed. Consumers do.
Comment by Downstate Illinois Tuesday, Feb 9, 21 @ 2:47 pm
=== I love how “no tax increase” somehow equals $900 million. Businesses don’t pay the taxes if those so-called corporate loopholes are closed. Consumers do.===
Loopholes circumvent
It’s not an increase if you remove the circumventing.
Removing the circumventing goes to the original premise, less the exceptions.
Comment by Oswego Willy Tuesday, Feb 9, 21 @ 2:49 pm
Almost all the business tax incentives have one thing in common - they’re offered in virtually all 50 states which makes them very challenging to repeal. The other vexing problem is the Dept. of Revenue’s lack of manpower to audit the sheer number of businesses shifting to buying products (ie.. farm chemicals) out-of-state.
Comment by Rutger Hauer Tuesday, Feb 9, 21 @ 3:04 pm
Furlough Days Coming
Comment by Jason Tuesday, Feb 9, 21 @ 3:13 pm
RNUG do you see furlough days coming?
Comment by RNUG Tuesday, Feb 9, 21 @ 3:14 pm
“Almost all the business tax incentives have one thing in common - they’re offered in virtually all 50 states which makes them very challenging to repeal.”
Yep. And those state-level economic development incentives we do have in Illinois are incredibly weak compared to other states (looking at you, EDGE). The only incentive at the state level that is worth a darn is the Enterprise Zone, but even that program’s effectiveness comes more from the local incentives and not the state portion.
Comment by sulla Tuesday, Feb 9, 21 @ 3:17 pm
==Furlough Days Coming==
You can’t force the union to take furlough days and they’ve already indictaed they have no intention of doing them. So I would say, no, furlough days are not coming. I suppose they could do a “voluntary” furlough program like they did last time. Not very many union members took furloughs under that program, though.
Comment by Demoralized Tuesday, Feb 9, 21 @ 3:31 pm
– You can’t force the union to take furlough days and they’ve already indictaed they have no intention of doing them –
We’re all in this together, amirite?
Comment by JB13 Tuesday, Feb 9, 21 @ 3:39 pm
=== We’re all in this together, amirite?===
That’s how a union works, collective bargaining too.
:)
Comment by Oswego Willy Tuesday, Feb 9, 21 @ 3:40 pm
3:14 was me asking RNUG, sorry
Comment by Jason Tuesday, Feb 9, 21 @ 4:13 pm
Geez, wake up. Businesses will pay for this through the elimination of tax incentives (loopholes, for those who don’t know any better).
Comment by Old Lobster Tuesday, Feb 9, 21 @ 4:13 pm
-Jason- If I were to guess, I would say they will do an “all of the above” plan.
I could see the State asking for voluntary furlough days, but I don’t see the unions agreeing unless JB publically shames them into it, which would not be a good long term move. If you’re a politician in Illinois, you don’t want to tick off the unions.
Along with what has been mentioned, some of that will be to delay filling positions and, maybe, whip up an early retirement program that shifts costs from GRF to the retirement funds. Long term those are bad for State spending, but it can help the budget short term if they don’t hire replacements, or hire cheaper entry level people. Not sure how much of that they could get away with, given how hollowed out State government already is.
Maybe they will really sell the Thompson Center this year. Or maybe other vacant State property; there is a fair amount of closed facilities around the state.
And of course there is always the last resort of shorting payments to the pension funds.
Comment by RNUG Tuesday, Feb 9, 21 @ 5:13 pm
Thanks RNUG, The early retirement sounds interesting depending on what is offered
Comment by Jason Tuesday, Feb 9, 21 @ 5:55 pm
Thanks RNUG, it would be interesting to see what they would offer for early retirement
Comment by Jason Tuesday, Feb 9, 21 @ 5:56 pm
“Businesses don’t pay the taxes if those so-called corporate loopholes are closed. Consumers do.”
Uh, not so much. Economic theory says if consumer demand is elastic, the cost increase doesn’t get passed along; instead, the business becomes more efficient. However, if consumer demand is inelastic, the cost increase gets passed along. Now, if you want to say the economy is dominated by monopolies and oligopolies, that’s another discussion.
Comment by Anyone Remember Tuesday, Feb 9, 21 @ 6:23 pm
If this statement from the governor’s office is true (“governor’s office says that they won’t rely on new federal money to close the deficit.”), it means that all the federal money will be used to increase unsustainable spending since the finds are non recurring.
Comment by Say it another way Tuesday, Feb 9, 21 @ 7:54 pm
They will project to sell the Thompson Center for $10 billion. Problem solved.
Comment by Advocate Tuesday, Feb 9, 21 @ 9:12 pm