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* Meanwhile, in the real world…
Illinois tax receipts plunged late last year as the economy soured, putting the state’s already swollen budget deficit on track to hit a record $4 billion and increasing the odds of a tax increase.
Total tax collections dropped 6.6% to $6.2 billion for the three months ended Dec. 31, according to Illinois Comptroller Daniel Hynes. Key funding sources including sales taxes, corporate income taxes and investment income shriveled as financial markets collapsed, consumers stopped spending and businesses retrenched.
State revenues projected to rise nearly $800 million during the fiscal year ending in June now are forecast by the General Assembly’s Commission on Government Forecasting and Accountability to fall $1.3 billion — the first downturn in six years.
Combined with rising Medicaid and other state payments, the shortfall will force Illinois legislators to confront painful decisions on spending reductions and tax increases. Frozen credit markets have choked off opportunities for deficit financing used to close budget gaps in the past.
“Without any changes, the hole is going to be $4 billion to $5 billion,” says state Sen. David Syverson, R-Rockford, a member of the forecasting commission. “Illinois was in extreme financial straits before the downturn even started; this just puts us in an even worse scenario.”
* And Sen. Koehler attempts to walk back his comments from last week…
Hold your horses, says state Sen. Dave Koehler. There’s actually no specific proposal for a tax hike to cover the state’s backlog in bills.
Yet.
At a town hall meeting at the Peoria Public Library’s Lakeview branch last week (more on that later), Koehler told the audience the state will pay its bills - even if it requires a one-time tax increase. The headline to the story read, “Koehler: Bills backlog may require tax hike.”
And they’re off and running.
“Nothing has been proposed. It’s kind of an idea in progress,” Koehler said Friday. […]
“The key is, we can’t continue to operate as a state and have people waiting six, seven, eight, nine months for the payment. That really puts pressure on the communities and small business and it’s just not an acceptable way of doing business,” Koehler said.
If something is proposed down the road, Koehler said it would be more of a user tax. “Really, a one-time catch up,” he said.
* Progress Illinois has a summary of what the state can expect to receive from the non-transportation portion of the federal bailout. Keep in mind, however, that this is still a work in progress and not all of the money will arrive at once, nor will all of it directly benefit the state budget.
* There’s more grumbling about the transportation plan…
Though President Obama is begging Congress to pass a jobs-stimulus bill, U.S. Rep. Dan Lipinski, his fellow Chicago Democrat, says he’s “leaning against” voting for the bill in its current form — because it contains too little for transportation.
“Clearly, the state of Illinois has greater needs than the state could receive under the current bill,” said Lipinski, who’s on the U.S. House Transportation and Infrastructure Committee. Downstate Transportation Committee members Aaron Shock, a Republican, and Phil Hare, a Democrat, agree with Lipinski that the transportation portion is too small.
“There’s very little for mass transit and rail,” said Hare, who wants an Amtrak line from Chicago to Des Moines, Iowa.
The stimulus bill aims to create jobs in the sputtering economy. It allocates less than 8 percent of the $825 billion for transportation projects, which, for Illinois, would mean about $1 billion for roads and $545 million for mass transit.
CTA Chairwoman Carole Brown told the Transportation Committee last week that the CTA could spend $500 million within 90 days just fixing slow zones and buying new trains and buses.
posted by Rich Miller
Monday, Jan 26, 09 @ 10:20 am
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Absolutely the worst time for tax increases. But, since gov. goofy hasn’t reigned in spending of any sort over his years there & no tax increase for years during his years there and IL deficits keep getting larger, where’s the choice? Can’t keep living on fumes forever. Cuts to fix this will need to be humongous.
Comment by sal-says Monday, Jan 26, 09 @ 10:25 am
Where have you been? IL has been trailing almost all other midwest states in economic inidcators for several years. Even before the “recession” became a national issue, we were behind in unemployment, job creation, ect mostly because of the anti-business environment promoted by the Democrats.
The fact that we trail other states is because of the Democrats running our state…all of them, not Bush, not just Blago.
Comment by the Patriot Monday, Jan 26, 09 @ 10:27 am
How’s the inside of the gift horse’s mouth, boys?
Comment by Leroy Monday, Jan 26, 09 @ 10:32 am
Maybe some of this could of been avoided if the Gov. would of watched his spending. It certainly hasn’t helped matters any. Think about all the Special Sessions and the private plane he uses. Jet fule is outragouse. It only takes three hours to drive to Springfield. Oh yeah, you might have to stay the night. Wouldn’t want that.
Comment by jjandbaby Monday, Jan 26, 09 @ 10:45 am
No matter how we got here, the point is that we’re here. If there isn’t a tax increase what other means does the state have to take care of our current financial doom? We can’t keep on sweeping accounts or robbing Peter to pay Paul.
Comment by sneaker Monday, Jan 26, 09 @ 10:49 am
Blago united the Dems and GOP for impeachment. Perhaps that bipartisan experience can help them make the very tough cuts and tax increases that are inevitable.
Comment by wordslinger Monday, Jan 26, 09 @ 10:56 am
I just saw the Center on Budget and Policy Priorities’ anlaysis of Medicaid assistance for state in the House version of the economic recovery package. It estimates Illinois could potentially receive $2.879 billion in additional assistance over the nine calendar quartes from October 1, 2008 throuhg December 31, 2010.
Comment by GA Watcher Monday, Jan 26, 09 @ 11:04 am
I’m not convinced that financial doom is here. Look at the feds’ history with the bank bailout. Banks which received a hefty bailout are are back asking for more…and it looks like they’ll get it, or some of them will.
So not only is Illinois looking at a close to $50 billion dollar bailout from the feds, we likely could get more than that if we need it in future years if the economy,as predicted, oontinues to slump. Don’t believe it? Would you have believed a trillion dollar bailout of financial institutions a year ago?
So, as I’ve been saying, let’s not give our legislators and Pat Quinn the idea that state tax increases are the solution. If they want to raise taxes on the wealthy, that’s fine, athough I would note that Obama has nixed that approach, at least temporarily, at the federal level.
And it would be truly unfair for middle and lower income taxpayers to get a federal tax rebate this year only to see the money disappear into higher state taxes. That hardly means increased purchasing power and more jobs.
Comment by Cassandra Monday, Jan 26, 09 @ 11:07 am
===So not only is Illinois looking at a close to $50 billion dollar bailout from the feds===
Excuse me? Where did you get that number?
Comment by Rich Miller Monday, Jan 26, 09 @ 11:09 am
I think I saw it on this blog last week, among other places. The projection was that Illinois’ share would be $50 bil.
Comment by Cassandra Monday, Jan 26, 09 @ 11:14 am
IL’s transportation stimulus share currently stands at a little more than $1 billion, and that will be further subdivided by a state/local split. Not sure of the other areas of the economic recovery plan. As noted elsewhere, many of IL’s US Reps think the amount is too low and should be raised.
And everyone should keep in mind this is a bill that is still to be horse-traded, written, and signed by the POTUS.
Comment by Six Degrees of Separation Monday, Jan 26, 09 @ 11:25 am
Just the RAMP payment to state pension systems increases by $1.2 Billion this next fiscal year. There is no way to balance the budget without drastic spending cuts AND very significant increases in revenue. The federal money, most of which is earmarked, will make a dent but will come nowhere near to solving our fiscal problems. Just Medicaid debt alone is approaching $3 billion. Who else is not going to get their state checks in April?
Comment by Bill Monday, Jan 26, 09 @ 11:38 am
Once again –
Pass the Meeks bill for increasing the income tax and broadening the sales tax onto more services, with a two year sunset. Move a State Constitutional Amendment this spring changing the flat rate income tax to a graduated one.
Over the next two years, study what state services and programs need to be continued, and at what cost. Use the Meeks tax revenue to pay back old bills and backfill the pension funds, so that the federal stimulus dollars as they come can be used for that purpose over the next 18 months or so.
In two years, set the graduated tax rate based on needed dollars for necessary state programs and services, including higher ed, human services, and all the rest.
The major flaw to this approach is that it asked the General Assembly to vote twice on taxes, not just once. But if we do nothing now because the federal one time only dollars are coming, we’ll just face the “cliff affect” shortly thereafter and closer to the next elections.
Comment by Capitol View Monday, Jan 26, 09 @ 12:35 pm
Actually we havent been as bad off as other states Minnesota a “oog government” state is FIVE Billion in the hole Considering we have created a 2 billion structural deficit because we wont do the Income Tax/Propety tax swapBecause Blago didnt live in reality. The big problem is this decline is just heating up Look at CATs layoffs today
As to Trans I would love more for rail Speed up the quincy zepher and the Chicago -DM
I read on capitolfax blog last week we are set for a Billion What I would like to know is cant gov or legis grab the Billion tha is allreadi in IDOTs budget?
Comment by western illinois Monday, Jan 26, 09 @ 12:39 pm
$175,000,000.00 The amount that will be saved by IDOC if they would implement THE LAW.
(730 ILCS 5/) Unified Code of Corrections.
(730 ILCS 5/Ch. V Art. 8A heading)
ARTICLE 8A. ELECTRONIC HOME DETENTION
Is the law, yet IDOC refuses to put procedures in place to allow those qualified to be on Electronic Home Detention.
This is wrong. How can our legislators allow IDOC to continue to ignore the law and spend money needlessly?
Comment by maddyoday Monday, Jan 26, 09 @ 3:51 pm
It’s also possible that the federal government will permanently pick up a higher percentage of what states and localities currently pay for. To those who say unlikely I point out that according to some pretty mainstream economic observers federal subsidies to the financial industry are likely to approach not one but two trillion. Letting state”fail” financially (while the feds continue to subsidize multimillion dollar financial executive salaries, say)is simply not politically viable.
There is likely a lot more money coming to the states after this initial bailout. Raising our state taxes based on predictions of future financial problems post-initial bailout is not rational without more information.
Comment by Cassandra Monday, Jan 26, 09 @ 4:26 pm
Cassandra, you’re just flat wrong about the $50 bil. That’s imaginary. The budget itself is about $60 bil. So, if we were getting 50, legislators would be dancing in the streets right now.
Comment by Rich Miller Monday, Jan 26, 09 @ 4:31 pm
Rich, I agree with you that it ain’t gonna happen, but I have to agree (painfully) with Cassandra that there was at least one published report last week with that number cited.
Comment by Arthur Andersen Monday, Jan 26, 09 @ 6:12 pm
Blago was caught on tape saying he didn’t want to be governor anymore. While his financial situation was probably the biggest reason for that, I imagine the state’s financial situation was another. He knew or at least suspected that his own Ponzi schemes for state budgeting without a tax increase were finally about to collapse, and he wanted to get the heck outta Dodge and let MJM and Pat Quinn clean up the mess.
When Fitz dropped the hammer on him, he switched tactics and started playing the victim, culminating in his claim last Friday that the whole impeachment thing is just a plot to raise taxes. He KNOWS taxes are going to have to be raised, but he’s found a way to shift the blame for it. Or he thinks he has… I was kind of surprised at the number of commenters I read on various blogs over the weekend who said they’d take the tax increase if that was the price of getting rid of Blago!
Comment by Bookworm Monday, Jan 26, 09 @ 6:28 pm
Illinois’ budget problems are due to a history of neglect by Republicans & Democrats in both the legislature and the governor’s office. They’ve taken the easy path and pushed the problems off into the future. Will they now show leadership and deal with the problems, or will they again pass the buck? I don’t have much faith in either party.
Comment by Pelon Monday, Jan 26, 09 @ 7:07 pm