* I expected that yesterday’s Question of the Day would attract far fewer comments than the previous day’s question. Wednesday’s question, which asked you to identify $1 billion in government cuts, attracted 152 answers. Yesterday’s question, which asked you to identify another $3 billion in cuts, prompted just 61 responses.
Slashing that much government just isn’t easy, as you most likely discovered. And regardless of what newspaper editorial writers blather about, it’s even more difficult to do that in a legislative process, where everyone has political ideologies, constituencies, pet programs, etc. to protect.
* The Pantagraph has more on this topic today…
Confronted with the [$9 billion deficit] number, numerous state officials have said this week they want to look at the state’s $61 billion budget and find ways to cut things out before thinking about raising various taxes.
[Anthony Liberatore, a professor of economics at Millikin University] says that might be hard, because some of the state’s biggest expenses, such as paying medical bills for the poor and its employees costly pensions, aren’t optional and can’t be cut.
“I don’t think you can trim your way out of $9 billion,” Liberatore said.
For example, the entirety of the state’s payroll, not including universities, is about $3.5 billion. So layoffs won’t cut into the deficit much, and union officials argue state services are more necessary during an economic downturn.
Pension payments are optional. The payments to the pension systems are required by law, but laws can always be changed. Quite a few commenters, including myself, suggested slashing pension funding. Former George Ryan budget director Steve Schnorf has done yeoman’s work in comments this week and offered up a critique of that viewpoint on Wednesday…
Pushing pension funding off is how we got here. If we hadn’t deferred pension payments in the past, our pension spending next year would be down the better part of $3 billion.
Schnorf offered up some history yesterday…
The battle we are fighting here, one in which we had some chance of victory, was lost when the Blagojevich administration paid its first pension payment out of one-time revenues. There was no way to recover after that. They needed to freeze spending (effectively, cut it) for at least two and probably three years except for pension contributions and Medicaid payment cycle. With 3 years of a billion +/- in revenue growth we would have gone into this current downturn in decent shape.
But that was predictably not possible for a D Gov with 2 D houses in the GA to do. Who was going to be the bad guy who said “no”? No one.
More than five years ago I told a group of eaters,”The good news is we are going to have an income tax increase in the future. The bad news is all the new money will already be spent.” Here we are.
But we can’t go back in time. And we’re in bad shape now with little way out. From a Schnorf comment this week…
Most of our state spending in Illinois is pass-thru; grants to community agencies who provide mental health, DD, adoption services, etc, Medicaid payments to vendors, school aid grants, etc. We have the lowest number of state employees per capita of any state in the Union.
That makes it extremely difficult to cut, because you’re putting business (both not for profit and for profit) and employees out of existence or out of work during a period of extreme employment crisis. Do we really want to toss literally tens of thousands of gainfully employed taxpayers onto the street right now?
* And while this is a nice sentiment…
[Gov. Pat Quinn] opened the door to reforming the state’s tax code.
QUINN: I think what we have to do is have a fair tax system in Illinois. We should look at that, and if we can enact reforms, we will do so, especially now, in hard times, when people are really suffering.
Quinn says he’ll “try hard” to make the tax system more progressive, a change he’s supported in the past. Illinois currently has a so-called flat tax, set at 3-percent of a resident’s income.
He can’t actually make the tax system totally progressive because the Constitution requires a flat tax. Make it too progressive with various income exemptions, and the courts may toss out the law as unconstitutional. Changing the constitution requires a three-fifths vote in both chambers and then a public referendum in 2010. That’s too late.
We really are in a bad place.
* Related…
* Quinn gets extra month to craft budget
* State can run out of money, but can’t file for bankruptcy
* Study: School funding issues persist
* Report: State’s student dynamic changing too fast
* School study cites ‘achievement gap’
* Resources needed for childhood programs
* States contribute to child care decline
* Editorial: Establish rules for leasing closed parks, historic sites
- Steve - Friday, Feb 6, 09 @ 11:09 am:
Can Illinois afford so many pubic universities? Could some be sold to raise cash? I haven’t heard anyone talk about that.Also,does Illinois government have to pay Davis-Bacon wages on all its projects? Being a union state drives up costs.
- Steve - Friday, Feb 6, 09 @ 11:10 am:
Sorry for leaving out the “l” in public.
- Yellow Dog Democrat - Friday, Feb 6, 09 @ 11:17 am:
Like I said, Schnorf would be my pick for budget director.
Quinn CAN’T make the tax code progressive. But he CAN increase the income tax rate and simultaneously expand the state portion of the earned income tax credit.
And he has other options as well, including decoupling the state income tax from the federal income tax in certain areas.
My bet is that any income tax increase would have to be temporary. Its an old trick, but it works.
It would also have to include property tax/rent relief and an increase in school funding.
As I’ve said before, I think sales tax reform is much more likely. Consumers are spending less now anyway, so taxing consumption is much more palatable politically.
- Scooby - Friday, Feb 6, 09 @ 11:18 am:
The next question is what revenue could/would you raise. Here’s General Funds Revenue from FY08 (in millions):
Individual Income Taxes $10,320
Corporate Income Taxes $1,860
Sales Taxes $7,215
Public Utility Taxes $1,157
Cigarette Taxes $350
Liquor Gallonage Taxes $158
Inheritance Tax $373
Insurance Taxes and Fees $298
Corporate Franchise Taxes and Fees $225
Interest Income $212
Cook County Intergovernmental Transfer $302
Other State Sources $474
Lottery $657
Riverboat Gaming Taxes $564
Other Transfers $679
Federal Sources $4,815
Total General Funds Revenue $29,659
- Vote Quimby! - Friday, Feb 6, 09 @ 11:21 am:
I smell another ‘temporay’ income tax surcharge coming down the pike.
- Scooby - Friday, Feb 6, 09 @ 11:21 am:
Obviously the FY09 revenue numbers will be a little different, and COGFA and OMB have their estimates as to what those will finish at, but just from the chart above even if you doubled the public utility tax, the cigarette tax, the liquor tax, the inheritance tax, the insurance tax, the corporate franchise tax and the riverboat tax, you would still get only about $6.25 billion, leaving you a little less than $3 billion short.
No easy answers.
- Rich Miller - Friday, Feb 6, 09 @ 11:24 am:
===even if you doubled the… riverboat tax===
The boat tax is on gross receipts, and the highest level is around 70-75 percent. You can’t possibly double that.
- Scooby - Friday, Feb 6, 09 @ 11:24 am:
If you want to increase the sales tax, based on a FY08 tax base of 6.25% bringing in $7.215 billion in revenue, then increasing to the following sales tax rates would produce the associated additional revenue:
6.50% - $289 million more
6.75% - $577 million more
7.00% - $866 million more
7.25% - $1.154 billion more
- Cassandra - Friday, Feb 6, 09 @ 11:26 am:
I certainly champion any efforts Quinn makes to
develop a more progressive tax code. I believe he was a tax lawayer at some point in his career so he probably understands the issues better than our
clueless (and twice-elected) Blago. Sometimes brains do make a difference although you wouldn’t know it from Illinois citizens’ voting habits.
- Scooby - Friday, Feb 6, 09 @ 11:27 am:
True. The point being that it’s very hard to close a budget gap this large.
- Secret Square - Friday, Feb 6, 09 @ 11:27 am:
If our state income tax is among the lowest in the nation, and our number of state employees per capita is also the lowest in the nation, then how did Illinois get the reputation of being a high-tax state with bloated government payrolls?
Answer: because of all the OTHER layers of government we pay for. I understand that Illinois has more units of local government than ANY other state (6000 + last time I checked). Counties, townships, municipalities, school districts, park districts, water districts, etc. etc. etc. — almost all of them with taxing powers. Each individual entity may not charge that much in property and/or sales or use taxes, but when you add them all together, the burden becomes intolerable to many. Having so many entities spending your tax dollars also makes it harder to see where you tax dollars are being spent.
So, in addition to transparency, ethics reform and serious tax reform (meaning, rethinking not only the income tax but the sales/service tax structure) some of these obsolete local government entities ought to be consolidated or abolished in the long term, if we are ever to avoid finding ourselves in this kind of hole again in future generations.
I know that’s not going to help us get out of the hole we are in now, but I believe this is a point that isn’t emphasized enough, and goes a long way toward explaining why so many people think we can just cut our way out of this hole.
- John Bambenek - Friday, Feb 6, 09 @ 11:27 am:
Sure, when you bracket out the waste, fraud and abuse, it sure is hard to cut. Here are some ideas of where to look:
Cut the 700 some odd mil from the piglet book of wasteful projects
Cut not only Illinois aircraft fleet, but the routine flights that ferry high-level bureaucrats back and forth from chicago to springfield.
Most state government relocated to Chicago with Blago where there is a higher cost of living and higher operational costs. Most, if not all, state government agencies should have their base of operations in the state capitol… And that’s not Chicago.
Salary caps of government officials, let’s say at the level of pay for the governor. If we can mandate pay caps for CEOs, let’s cap pay for upper management in the state.
Gut the DCEO, there’s a billion right there.
Gut any program or agency that failed to respond to the auditor general or programs no one seems to know anything about.
Consolidate shared services where possible.
Institute a true competitive RFP bidding process to minimize costs.
I can go on and on… There are cuts to be had if only you look for them.
- Prairie Sage - Friday, Feb 6, 09 @ 11:28 am:
Let me add to the fire — this is exactly the WRONG time to skip a pension payment, when equity markets are terribly depressed. If the state could borrow enough (which it probably can’t) this would actually be an ideal time for another pension bond.
- Been There - Friday, Feb 6, 09 @ 11:33 am:
===The boat tax is on gross receipts, and the highest level is around 70-75 percent.===
The top rate is only at 50% now. But you are right doubling it can’t work. Also, if you raise the rate in Illinos, Harrah’s in Hammond just advertises more and the Joliet Harrah’s steers their customers over there. I’m not an apologist for the boats but I think they are probably as high as they can go.
- Rich Miller - Friday, Feb 6, 09 @ 11:36 am:
===Cut the 700 some odd mil from the piglet book of wasteful projects===
Yeah, which included the MAP and MAP Plus programs, child care grants, mental health facilities, teen pregnancy prevention, homelessness prevention, capital improvements to state parks, rural health care, etc., etc., etc.
It’ll never fly.
- Been There - Friday, Feb 6, 09 @ 11:37 am:
Prarie Sage is right about not skipping a pension payment. As a matter of fact we are probably lucky the pensions were underfunded. If the pension money was paid up its value would have crashed with the market. Now they still owe the full amount. But now is the time to fund while the market is low.
- Scooby - Friday, Feb 6, 09 @ 11:40 am:
On income tax, the individual rate and the corporate rate are generally coupled at a ratio of 8 to 5 based on this language from the state constitution:
So any increase in one is usually tied to an increase in another.
The individual income tax rate is 3.00% and the corporate income tax rate is 4.80% producing in FY08 $10.320/$1.860 billion respectively. Here’s what an income tax increase could net you based on a FY08 tax base:
Rate 3.25%/5.20% - Increase $860/$155 or $1.015 billion
Rate 3.50%/5.60% - Increase $1,720/$310 or $2.030 billion
Rate 3.75%/6.00% - Increase $2,580/$465 or $3.045 billion
Rate 4.00%/6.40% - Increase $3,440/$620 or $4.060 billion
It’s really hard to close a $9 billion budget hole.
- Moderate Repub - Friday, Feb 6, 09 @ 11:42 am:
Sorry missed the questions last two days. Obviously my suggestions could not be implemented because of the political implications but this is what I would do if I was king:
Sorry folks but we are broke; we will be cutting all of Blagos expansions for health care.
We will implement managed care to Public Aide recipients’ to reduce escalating costs.
We will role back the poverty levels for qualifications to enter our Public Aide programs to George Ryan levels (still higher than most states now)
We will administer asset tests to applicants to again control costs, we are not trying to force socialized health care by slowly adding everyone and their mom to the rolls without real proof that they need it. These programs were designed to help those in most need not to socialize medicine. If the Feds can do it, go for it, Illinois will NOT take on this endeavor itself to say it is the first state to do it; it’s not what these programs were designed for.
To raise money for the state we will sell the universities their property and charters for a dollar, I guarantee you will not get any objections for them eliminating over a billion in state aid that directly goes to universities. Other states have done this with success so we will follow.
I will cut $500 million from education reducing per pupil support form the state. Tough times, has to be done.
We will short Chicago public teacher’s pensions this year by $800 million.
Capital Bill will be done on the back of a gas tax, and increased fees for drivers, 30 billion for the program.
I was going to assign numbers of savings to each issue, but every party, interest group, caucus, and chamber has different numbers for them all so its pointless. But with Fed aid this will get us very close, and loose a lot of seats in the General Assembly.
- Been There - Friday, Feb 6, 09 @ 11:43 am:
I can’t see how we do anything except raise the income tax. Each 1% looks like it would raise 3.5 billion. Maybe a little less with exemptions for lower incomes. Politically painfull? Yes but their bigger problem would be to not get greedy and raise it more than is needed and then add on a bunch of goodies for each legislator.
- well then - Friday, Feb 6, 09 @ 11:44 am:
so if scooby is correct and a 1% increase in the sales tax would bring in just over $1.1 billion. Can anyone tell us what a 1% increase in the income tax would bring in? Just so we can see.
- Rich Miller - Friday, Feb 6, 09 @ 11:44 am:
Moderate Repub, that doesn’t even get us close to a balanced budget.
Try again.
- Greg - Friday, Feb 6, 09 @ 11:51 am:
I think Secret Square raises a good point. Sure, it wouldn’t save 3B, but it would be nice to cut the redundant levels of local govt. Couple dozen county board members? That’s not much smaller than some state senates. Then there are the aldermen…
As for the state budget, the A#1 first step should be hiking the gas tax. If you want, have a provision for automatic suspension when avg price exceeds $4 or whatever.
The gas tax actually creates beneficial distortions, unlike income taxes which come with plenty of deadweight loss. For a tax, it’s as good as they get.
- cermak_rd - Friday, Feb 6, 09 @ 11:54 am:
Why can’t they cut the budget by having non-political well respected folks come up with an austerity program? Then the leg members would have some cover for voting for things that will hurt their districts. Seems like that’s the only way forward as raising taxes during a downturn is a recipe for a worse downturn. Simply cut everything and anything ruthlessly. Put offices and staff that aren’t required to be there 24/7 (like state troopers and prison guards) on a 4 day schedule and shut down offices on the 5th day. Make the cuts as broad and deep as you can so everyone feels the pain. After all if everyone is suffering no one can play the martyr.
- Yellow Dog Democrat - Friday, Feb 6, 09 @ 11:58 am:
Been There et al:
There are a number of options. These numbers come primarily from the Center on Tax & Budget Accountability:
Raise Personal Income Tax to 4% and Corp IC to 6.4%- $2.9B
Expand Sales Tax to include Services:
$1.7B or $822M [if you lower the rate across-the-board to 4.5%]
Ending Corporate Tax Giveaways - up to $1.7B
Means Testing the Tuition Tax Credit - $40-$45M
Taxing Pensions above $75K a year - $200M
Means Testing Property Tax Credit - up to $240M
Decoupling From Federal Corp Tax Exemptions: $130M
Issuing Pension Obligation Bonds ($16B at 6% over 40 years) - $320M
- Mr. Wizard - Friday, Feb 6, 09 @ 12:00 pm:
The discussion SHOULD be on “What is the role of Gov? What MUST we fund and what can we cut out?” e.g. Should we cut capital improvements or teen pregnancy initiatives? We should be removing programs the Government has no business paying for.
None of that will happen. The Gov. and legislators will use the “low tax state” mantra to increase taxes in a big way. Why? Because we have created a monster. The Amer. Cancer Society is now as well-funded a lobby group as the highway contractors. And elected officials need an enormous amount of dough just to get re-elected. So…. currently funded programs will stay and the state will continue to borrow and tax its way out of this “crisis”.
- Cynic - Friday, Feb 6, 09 @ 12:01 pm:
John Bambeck — What does Chicago’s cost of living have to do with anything? Transferring jobs to Springfield (or other cities for that matter) won’t save any money because the state can’t just break its leases without incurring penalties.
Secret Square is onto something. We need to reform all government, not just state government.
I will say that going forward, the state should try to pay market rates for its leases. There are countless instances where the state has leased property at above-market rates and simultaneously ill-suited for its intended purpose.
- Just a guy - Friday, Feb 6, 09 @ 12:02 pm:
Question to cermak/others - if Illinois, like California, were to do a 1 day shut down of “non-essential” employees/offices how does that affect benefits based on a “Full time employment” (37.5 or 40 or however many hours it is).
- Yellow Dog Democrat - Friday, Feb 6, 09 @ 12:02 pm:
Oh, I should have added applying the sales tax to internet purchases, which adds $800M to $1.0B
That’s about $7B worth of options. But given the interest rates now, we might be able to do much, much better on Pension Obligation Bonds than 6.0%. Perhaps as low as 3.5%, which would save taxpayers nearly $800M a year in interest payments.
- Yellow Dog Democrat - Friday, Feb 6, 09 @ 12:05 pm:
Mr. Wizard -
I agree with you there ~ given that very few if any businesses are expanding right now, we should be taking a HARD look at DCEO’s budget and moving that money into programs that help us stop the bleeding and keep the jobs we have.
- Cassandra - Friday, Feb 6, 09 @ 12:08 pm:
I haven’t heard anything about property tax reform this year as part of a budget plan. Is it on the back burner.
Will suburban votes sit quietly while their income taxes go up and their education allotments from the state go down (as some have proposed). At least in past years, it has seemed that something had to be offered to voters living in high property tax districts (not all of whom are wealthy by any means) in exchange for
an income tax increase. Hence all those swap
proposals.
- Rich Miller - Friday, Feb 6, 09 @ 12:10 pm:
People, your small-bore ideas will do little to nothing to get us out of this budget hole. I thought the past couple of days would clearly demonstrate that to you. Enough. Final warning.
- The Doc - Friday, Feb 6, 09 @ 12:10 pm:
===If you want to increase the sales tax, based on a FY08 tax base of 6.25% bringing in $7.215 billion in revenue, then increasing to the following sales tax rates would produce the associated additional revenue:
6.50% - $289 million more
6.75% - $577 million more
7.00% - $866 million more
7.25% - $1.154 billion more
=================================================
Scooby, are you working for the Daley or Stroger administrations? The law of diminishing returns, coupled with what will be a harsher economic climate in FY10, means raising the sales tax rate is a tremendously poor idea.
Extending the sales tax to cover services is a much better idea. It’s more user-based and progressive. And considering most of the other options are actual rate hikes or ideas that aren’t available right now, this might be the best way to put a big dent in the deficit.
- Secret Square - Friday, Feb 6, 09 @ 12:14 pm:
Not sure where I read this, but I believe the plethora of local government bodies is a legacy of the 1870 Constitution, which severely limited the amount of debt a single public body could take on, so when communities wanted to build things like libraries, water/sewer systems, parks, etc. they had to create new public bodies to oversee them. Even though that constitution went into the historical wastebasket 40 years ago we still are saddled with a lot of these entities.
Which brings me to suggest a future QOTD (don’t clog up this thread, however, with your answers; think about them and save them for later): in light of all that has happened in the past 3 months, would you change your vote on the con-con referendum if you could?
- Greg B. - Friday, Feb 6, 09 @ 12:15 pm:
The argument made in the Piglet Book is that these programs may or may not have merit. It’s the fact that these are dropped in the manner that they are. It’s the same with earmarks in DC. No one is saying that all are unworthy. But the process allows for all kinds of crap (Rich can I say crap?) to be thrown in that is wasteful. So, cutting the $689 M in the Piglet really isn’t going to happen.
That pass through function of state government that Steve points to should be examined. Lot’s of cronies on those non-profit boards and who does the oversight on those? Is there good oversight?
Other states with low per-capita state employees include New York, California, Texas and Florida. Two states with high per capita state employees are Dick Cheney’s Wyoming and Hawaii. That statistic used to argue that Illinois is somehow efficient doesn’t really tell us very much at all. It is just a function of math.
Hawaii and Wyoming have to very different governments. And no one is going to confuse New York and California’s big govt. states with small govt state Texas.
It’s like saying Illinois is 49th in state funding for education. 10 other states make the claim they are 49th in funding, too.
Steps that might help.
1. Per Bill Holland we have thousands of state programs but no catalogue of them and no idea of what could be eliminated or consolidated.
2. Accept that lay offs in the private and public sectors are a reality. It won’t make matters worse from an unemployment perspective of whether they are state or private sector workers. Right now there is only x to pay for y amount of jobs. Right?
3. How much did Daley get for the skyway? How much for Midway? How much could we get for the tollway system? Yeah, I know it’s drastic? That lottery sales looks a lot better looking up from a $9B hole too.
We have a short term problem. The economy will eventually grow again, we need to look at solutions that bring in $$$ now without wrecking our future competitiveness as Quinn seems to lean toward doing.
- Nonpartisan - Friday, Feb 6, 09 @ 12:19 pm:
A complete pension overhaul needs to be done as the required pension payment continues to increase each year. They need to discontinue the free health coverage for retirees which is a terrible burden. In a few years, the required pension obligation will grow toward $6 billion (I believe it’s in the $3 billion range now). Unless this, along with other cuts, is addressed and probably can’t be due to the unions, unpopularity, etc) there is no answer.
- wordslinger - Friday, Feb 6, 09 @ 12:19 pm:
I some form of gross receipts tax off the table because of who last proposed it and how he dropped it on the GA after the election?
I suspect a further bump in a sales tax could hit the point of diminishing returns. That 10% in the city is a psychological barrier to buy there.
- Cassandra - Friday, Feb 6, 09 @ 12:24 pm:
I’m not suggesting property tax reform as part of
the cuts. But when the horse trading starts in earnest I’m thinking it’s going to come up, especially if education cuts are significant.
- Gene Parmesan - Friday, Feb 6, 09 @ 12:27 pm:
Thank you Secret Square and Greg B. My head wants to explode every time I hear someone use the per-capita argument and the 49th in education funding figure.
- Steve - Friday, Feb 6, 09 @ 12:32 pm:
Maybe someone can answer how it is that Texas(which is a much bigger state than Illinois) can operate without an income tax? Texas has roads,bridges,and parks.Any takers out there?
- Johnny USA - Friday, Feb 6, 09 @ 12:32 pm:
Geez, Rich…take a breath…
It is not up to us to solve this problem.
I’m not even sure there is a problem, other than everyone else says there is one.
- Pot calling kettle - Friday, Feb 6, 09 @ 12:33 pm:
Some of these ideas, like one-day shut downs and four day weeks just put off work for another day when people will need to work overtime. If we can get by with a four day week, then we can cut 20% of the employees (which is not the case). In fact, Rod neglected things which will require a lot of catching up (and therefore $$$) now. For example, we have too few corrections officers and parts of the DNR are in shambles.
We could save money by cutting back on the shadow government in the Thompson Building, but many of those workers would still need to be employed and officed somewhere.
The bottom line is that the citizens of the state have come to expect a certain level of government services and for many years they have been given those services without being presented with a complete bill. IF we want our schools, roads, parks, and other services we need to get used to paying for them. All the complaining won’t fix that.
The other thing that needs to be rejected is the idea the the budget problems can be fixed by cutting other peoples services or taxing other peoples revenue. Non-government employees complain about the costs of the pensions. Folks who don’t use parks think DNR should be cut. People in the city complain about the cost of township government. Non-gamblers say raise the gambling taxes. The list goes on and on and on.
For once, I would like to hear someone say, “I use this service and I am willing to pay for it.” So hear goes:
==My kids go to school and get a pretty darned good education; I drive on township, county, and state highways every day; I think the teachers deserve a decent pension for their willingness to teach the huge variety of children that walk into their classrooms; I’m glad the police keep me safe and the Dept. of Corrections keeps the bad guys locked up; I love hiking in the parks. None of this is perfect, but it’s a damn good deal considering the taxes I currently pay. Because I value these services, I want Gov. Quinn and the State Legislature to raise my income tax to pay for them and they should probably start taxing my haircut and auto repair as well.==
Anyone else willing to fess up? If not, which government services that you receive are you willing to do without? No fair cutting someone else’s if you expect to keep all of your own.
- Secret Square - Friday, Feb 6, 09 @ 12:40 pm:
Steve, I suspect it has something to do with oil. I believe Florida also operates with no income tax or a very small one, but that’s because they have millions of tourists they can soak. Residents of places like the Cayman Islands and Monaco pay no taxes, again, because they get so many rich visitors they don’t need to.
Without vast supplies of a hugely in-demand commodity to sell (maybe in the distant future, water will become such a commodity) or climate or scenery that millions of people from around the world will pay big bux to visit, it seems to me it would be pretty hard for any state or country to go without some kind of income tax.
- Bill - Friday, Feb 6, 09 @ 12:43 pm:
Sales taxes need to be extended to all services and internet sales. I realize that lawyers and doctors have very good lobbyists and lots of money but they should be included.
Add to this an 10 cent/gal gas tax and a 2% temporary income tax surcharge earmarked exclusively for debt repayment for pensions and medicaid. When the debt is repaid the surcharge could sunset.
There should also be enough to rebate some $ to low income families and provide some minimal property tax relief.
- Greg - Friday, Feb 6, 09 @ 12:50 pm:
We can raise the gas tax much more than 10 cents. It could fill a meaningful component of the hole, especially if other states followed suit.
- Scooby - Friday, Feb 6, 09 @ 12:53 pm:
=== Scooby, are you working for the Daley or Stroger administrations? ===
What the?
- Cheswick - Friday, Feb 6, 09 @ 12:59 pm:
Bill is right that sales tax should be applied to purchases made on the internet. As it is, we as consumers are supposed to fill out our own tax forms and send them in with a check. But who does that?
I heard one estimate a few years ago that Illinois’ share would be about a billion dollars. Not sure how that was arrived at, or if it’s still the same. Anyway, as yet, they haven’t figured out how to tax out of state purchases at the point of sale. This should be a major priority in these times.
- jake - Friday, Feb 6, 09 @ 1:11 pm:
We need an amendment to the state constitution to permit a graduated income tax. It would have been best to do it earlier, but launching a drive to do that now is better than later. This can be put on the ballot either by citizen petition or by the General Assembly.
- Rich Miller - Friday, Feb 6, 09 @ 1:16 pm:
===This can be put on the ballot either by citizen petition or by the General Assembly.===
You’re half right. Only the GA can put that on the ballot for real.
- jake - Friday, Feb 6, 09 @ 1:19 pm:
It would be technically easy to assess a state sales tax on internet sales. The seller has access to the mailing address of the consumer’s credit card bill. The zip code of that address gives the state that the purchaser is from. The seller can automatically assess the state sales tax appropriate to the zip code and pass that on to the state, all done electronically and automatically. The obstacle is political. There needs to be a Federal law requiring implementation of that system for Internet sales.
- Pot calling kettle - Friday, Feb 6, 09 @ 1:22 pm:
A graduated tax should have been put on the ballot years ago. I cannot imagine that the opposition has a large constituency; although they would certainly have a lot of money. It should be passed this spring and we should have a special election this summer to vote on it. (Not possible of course, since it has to be on the ballot in a General Election.)
- Levois - Friday, Feb 6, 09 @ 3:17 pm:
What makes a system too progressive? No matter how you can make the system someone’s going to whine about how one group still haven’t paid their fair share, however that’s determined. It’s pretty easy to say progressive income taxation will cure all the financial ills of the state.
- Moderate Repub - Friday, Feb 6, 09 @ 4:18 pm:
- Rich Miller - Friday, Feb 6, 09 @ 11:44 am:
Moderate Repub, that doesn’t even get us close to a balanced budget.
Try again.
Been busy, yes you are right, and it’s my fault. No it won’t balance it that lsit was for the $3 billion question, not including the Fed bailout money.
As to that, it’s more than $3 billion in cuts, but not the $6 billion everyone is using, but I don’t believe its near that much, I think Danny is at least a billion over. Regardless, its a lot and there is not a politically viable way to cut even $2.5 billion of whatever the real number is in my opinion.
- steve schnorf - Friday, Feb 6, 09 @ 5:16 pm:
I believe we should move to a graduated income tax. However, that’s not going to help in the next 10 months: its a longer tern solution.
I also believe we should tax pensions, at the very least over some level. But, I don’t think it will happen.
- Marianne North - Friday, Feb 6, 09 @ 10:04 pm:
I think you’re going to drive people out of Illinois with all of these sales taxes. It’s already started in Cook County. A graduated income tax is fair. I guess going without a raise for 4 years under Blagojevich didn’t do much for balancing the budget, did it?
- jake - Saturday, Feb 7, 09 @ 10:03 am:
It may be a good time to issue pension bonds again. Best conditions for that are a combination of low interest rates and low stock market, which conditions are unusual but happen to pertain right now. You issue the bonds and put the proceeds in the pension investment fund, with a very reasonable expectation that your return from investment will outweigh your obligation to the bondholders. This would be made even more attractive if the Feds would make bondholder dividends on public pension bonds tax-free, which they currently are not. Tax exemption for dividends on public pension bonds would be a good thing to lobby the Federal government for–it would help states enormously and would be in the spirit that public bonds should be tax free in general.
- jake - Saturday, Feb 7, 09 @ 10:17 am:
=It’s pretty easy to say progressive income taxation will cure all the financial ills of the state.=
A progressive income tax would not cure ALL of the financial ills of the state, but it would cure one BIG ill, which is that any way of raising revenue in the present tax structure will be regressive.
- Bruno Behrend - Sunday, Feb 8, 09 @ 2:28 pm:
Rich asked: “Do we really want to toss literally tens of thousands of gainfully employed taxpayers onto the street right now?”
Raising $3, 6, or 9 billion in taxes would lose just as many, if not more jobs as cutting spending.
Every dime of taxation takes money out of the economy, so while some taxes are worse than others (I think most economists agree that sales & consumption taxes are the least damaging), as each person, household, and small or large business has less money to spend on investment in equipment or hiring employees.
A 67% hike in the income tax translates to $1000 less in money for a family with $50,000 of income. Even if we ameliorate some of that with expanded credits, a big tax increase will hurt Illinois’ relative to other states.
If IL can’t cut much from payroll, then we need to look at every “grant” and every “capital” project. Open up every book for every “grant” and decide which to cut back, and which to zero out.
As for tax increases, expanding the sales tax to services might be the best of all the bad solutions.