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Report: “Staggering” decline in state revenues

Wednesday, May 5, 2010

* The Illinois Commission on Government Forecasting and Accountability has an answer for those who say that Illinois has a spending problem and not a revenue problem. We do, indeed, have a revenue problem

For [the month of April], gross corporate income taxes fell $247 million, or $203 million net of refunds… Gross personal income tax receipts dropped $103 million, or $93 million net of refunds. Public utility taxes declined $37 million, corporate franchise taxes were off $7 million, interest income fell $4 million, and both vehicle use tax and other sources dipped $1 million each.

The state also saw a $345 million drop in federal sources for just this month. There were a few highlights mixed in with the lowlights…

Relatively few sources experienced gains in April. Sales tax receipts did manage to grow a decent $45 million, while insurance taxes were up $15 million. Liquor taxes as well as inheritance taxes managed to eke out $1 million in monthly gains.

And the fiscal year to date numbers are enough to make you choke…

Through April, gross personal income tax has fallen $697 million, or $629 million net of refunds. Sales tax receipts are off a disastrous $461 million, while gross corporate income tax is down $382 million, or $315 million net of refunds. Inheritance tax has declined by $51 million and public utility taxes by $84 million. All of the other revenue sources net an additional decline of $47 million.

All non-federal state revenue sources are down “a staggering $1.213 billion,” according to CoGFA. Take out the one-time transfers, and that decline grows by more than $100 million.

Also in the report, there were just 853 new single family housing permits issued in March, but that’s up almost 50 percent over a year ago. Man, talk about a crash.

- Posted by Rich Miller        

62 Comments
  1. - John Bambenek - Wednesday, May 5, 10 @ 1:07 pm:

    Bull.

    The “revenue” problem exacerbates the spending problem, I’ll grant you. When you deficit spend for years, max your credit cards, get more cards and max those, when your income drops, sure, it’ll be rough. The real problem was maxing out to begin with.

    They can’t even take away the much ridiculed free rides for seniors from Blago and they want to say “there’s no where to cut”…

    Cut first, then we’ll talk about revenue. Until then, they’ll just spend 110% of whatever projected revenue they get and then realize the projections were 20% too high…

    By the way, if you follow the assumptions that there is no where to cut and its only a revenue problem, we should be talking about raising the income tax to AT LEAST 6%, not 4 (with cooresponding corporate tax increases).


  2. - Rich Miller - Wednesday, May 5, 10 @ 1:09 pm:

    ===follow the assumptions that there is no where to cut and its only a revenue problem===

    Nobody, but NOBODY, says that. It’s a silly strawman.


  3. - Small Town Liberal - Wednesday, May 5, 10 @ 1:13 pm:

    - By the way, if you follow the assumptions that there is no where to cut and its only a revenue problem -

    Just another one of your straw men John, every reasonable person does indeed realize that there are cuts that need to be made.


  4. - John Bambenek - Wednesday, May 5, 10 @ 1:13 pm:

    Yeah, every one says “oh we’ll cut”… then they cut the meat and leave the fat. You’ve said yourself that the cuts are BS that have been proposed.

    Last year the target was social service providers. Now we’ll target education.

    How many people in upper management of state government are getting 10% raises again?

    Or we can talk about the middle management bloat at McPier.

    Or any number of things, really.

    No one is taking seriously the need for real cuts.


  5. - Small Town Liberal - Wednesday, May 5, 10 @ 1:13 pm:

    You beat me to it Rich.


  6. - 47th Ward - Wednesday, May 5, 10 @ 1:18 pm:

    ===No one is taking seriously the need for real cuts.===

    OK John, let’s talk real cuts. You first: where would you cut to find $1 billion in real savings. Please be specific. After you’ve found the first billion, please repeat until you’ve specified enough cuts to be made to solve the deficit.

    I’ll wait while you get your calculator.


  7. - Small Town Liberal - Wednesday, May 5, 10 @ 1:24 pm:

    - where would you cut to find $1 billion in real savings. -

    Oooooh, let me answer for John, because this was a very specific item in he and Adam A’s hilarious budget proposal:

    Eliminate DCEO = $1 Billion instant savings

    Great plan…


  8. - John Bambenek - Wednesday, May 5, 10 @ 1:28 pm:

    Ok, step one. Zero out DCEO.

    Next?

    Zero out municipal revensue sharing.

    Next?

    Find everyone on a clout list who paid for their job our board appointment from Blago. Fire them.

    Next?

    Roll back eligibility on Medicaid and other welfare programs to pre-Blago levels. (I believe KidCare is something like 400% of federal poverty level).

    Next?

    Open up the state Qui Tam law so anyone can pursue fraud without permission from IL AG’s office, similar to how the federal Qui Tam law works.

    Next?

    Go through every program, identify duplicative, overlapping programs. Identify programs that aren’t high priority. End them.

    The Medicaid forensic audit is already being worked on.

    Open union contracts and extract a wage freeze. If they don’t cooperate, find every single position that can be privatized and do it. Roll the unions.

    Next?

    Take that $31B capital bill that really only needed to be like 4-5B for real improvements… reallocate the money or end those programs.

    You also could probably redo the pension payments to accomodate the pension reform just passed.

    I’d also modify pension benefits *not already earned*. Charge retirees some modest amount for their health care.

    Should I keep going?


  9. - John Bambenek - Wednesday, May 5, 10 @ 1:29 pm:

    And what’s wrong with zeroing out DCEO again?

    While we’re at it, zero out HFPB too.


  10. - Greg B. - Wednesday, May 5, 10 @ 1:31 pm:

    These numbers show that the problems we face exist far beyond the walls of the statehouse. If the economy is generating these kinds of poor results what makes us believe we can tax our way out of it?

    What we need is a v shaped recovery.


  11. - Louis G. Atsaves - Wednesday, May 5, 10 @ 1:39 pm:

    Enough already!

    Hey guys, MY business revenues are ALSO down! I’ve cut back to try to make ends meet. I’ve thrown personal money into my business to keep it going. If things keep up the way they have been, I may be using “former business” when I post here.

    Isn’t ANYONE paying attention?

    The State of Illinois by comparison has cut little or nothing back and has continued to merrily spend and/or borrow to keep running. Now some want to tax me more at a time I’m making less money to keep the ship of State afloat?

    Now everyone is shocked that State revenues (and Federal) revenues have sharply declined. Are they living in a vacuum in Springfield? Washington? Did they expect their revenues to remain the same while everyone else is experiencing declines?

    We should be demanding that THOSE WE ELECTED prepare budgets find where to cut and to make the difficult decisions if they want to raise taxes. This argument of “so YOU tell us where to cut” one, two, three, ten billion is classic disinformation/distraction behavior used by those who are supposed to make such decisions.

    If the elected leadership in Springfield refuses to make the tough decisions, then they should do right by the people of Illinois who they have failed to properly represent and resign and step aside for the next group to give it a try.

    I understand government acts as a safety net for social services, but when government cannot even provide THAT function, then its time for some serious changes in who we send to Springfield.


  12. - dupage dan - Wednesday, May 5, 10 @ 1:40 pm:

    I give this stream a few more minutes before someone says it’s the fault of the GOP.


  13. - Bill - Wednesday, May 5, 10 @ 1:42 pm:

    This is all the fault of the GOP!


  14. - Rich Miller - Wednesday, May 5, 10 @ 1:44 pm:

    ===Now everyone is shocked that State revenues (and Federal) revenues have sharply declined===

    The only people who are probably shocked are those (Tribune) who have been claiming that the state doesn’t have a revenue problem.


  15. - MOON - Wednesday, May 5, 10 @ 1:47 pm:

    Rich

    I read with great interest the cuts proposed by John Bambenek that are posted above. Unfortunately, I do not have the information or knowledge needed to even begin to analyze his proposals.

    Having said that, I hope with your vast knowledge of State government and its finances you could provide us with your opinion regarding these proposals by Mr. Bambenek. Give us the benefit of your insight. Thanks


  16. - dupage dan - Wednesday, May 5, 10 @ 1:49 pm:

    I knew I could count on you, Bill. Thanks.

    This continuing saga only gets more painful to watch. Makes that Amerens offer look pretty good, eh PQ?


  17. - Western Illinois - Wednesday, May 5, 10 @ 1:51 pm:

    It makes me wonder about those glowing federal recovery reports-sales tax should track GDP -it sure doesnt look like a robust recovery to me


  18. - Ghost - Wednesday, May 5, 10 @ 1:53 pm:

    === Ok, step one. Zero out DCEO. ===

    There goes our business and development growth since we will lose the fed money overssen by DCEO, that aside, this is what, 50-60 million, were not to a billion yet….

    === Zero out municipal revensue sharing. ===
    so the locals increase taxes…. this is just passing the tax buck and bill downhill, ao Ill call this zero in savings.

    === Find everyone on a clout list who paid for their job our board appointment from Blago. Fire them. ====

    Since those positions need staffed this would just replace them with new people, so zero savingshere.

    === Roll back eligibility on Medicaid and other welfare programs to pre-Blago levels. (I believe KidCare is something like 400% of federal poverty level).===

    Ok, we lose federal matching money by doing this; and by removing general care spending we end up paying for the medical costs when medical problems escalate to emergency care. We have long been aware that it is cheaper to pay for well exams then waiting and paying for critical care to fix medical problems after the patient deteriorates. So this causes the State to lose money and increase expense, wiping out any beenfit from removing DCEO, putting us at no money saved.

    ===Open up the state Qui Tam law so anyone can pursue fraud without permission from IL AG’s office, similar to how the federal Qui Tam law works.====

    Moat of this litigation is frivilous driven by a class action hungry lawyers seeking to cash in. This will increase litigation against most business in Il by removing the screening mechanism designed to ensure only meritourous claism advance. Tis will drive out and away more business, costing us revenue and jobs. So this increase our revenue loss and uneployment.

    ===Go through every program, identify duplicative, overlapping programs. Identify programs that aren’t high priority. End them.===

    Name these or this is just magic bean make the money appear.
    === Open union contracts and extract a wage freeze. If they don’t cooperate, find every single position that can be privatized and do it. Roll the unions. ===

    Wy not just Rob banks and sell drugs if we are going to enegage in illegal conduct? Since that would not be legal we can toss tat one as well.

    === Take that $31B capital bill that really only needed to be like 4-5B for real improvements… reallocate the money or end those programs. ===

    Ok so half of that is federal match, an the majority of that is for repairs or infrastructure needed to sustain business. so we lose 16 billion in federal spending out of our economy, fail to work on infrastructure which we need to support businss etc. That aside this is a net loss since we lose more in fed dollars then we save wth the cut.

    So far, your plan puts us in worse financial shape then we are now.


  19. - Small Town Liberal - Wednesday, May 5, 10 @ 1:53 pm:

    - And what’s wrong with zeroing out DCEO again? -

    Oh, nothing, if you can prove that actually saves $1 Billion. Or even that it saves anything. Maybe it actually would cause an eventual loss of revenue. I’m sure there could be cuts to DCEO, but just zeroing it out is an example of your general do away with government mindset.


  20. Pingback Goin’ Down, Goin’ Down, Down « QC Examiner - Wednesday, May 5, 10 @ 1:58 pm:

    […] Goin’ Down, Goin’ Down, Down The Illinois Commission on Government Forecasting and Accountability reports that there has been a “staggering” decline in Illinois revenues. […]


  21. - Secret Square - Wednesday, May 5, 10 @ 1:58 pm:

    “Roll back eligibility on Medicaid and other welfare programs to pre-Blago levels. (I believe KidCare is something like 400% of federal poverty level).”

    I hate to burst your bubble, but that’s already been done. As part of the settlement of the lawsuit filed to stop Blago’s unauthorized healthcare expansion, HFS agreed to allow those who had already signed up in good faith for expanded FamilyCare — there were less than 5,000 people in all who had — to stay on it, but NOT to allow any more people to sign up. HFS has reverted to the old eligibility threshhold of 185 percent of FPL for FamilyCare (which covers parents/adult caretakers of kids who qualify for KidCare).

    Also, I believe Congress has since authorized federal match for State Children’s Health Insurance Programs covering kids up to 400 percent of FPL, so cutting back eligibility for KidCare would not save the state as much as it would have a few years ago (due to the loss of the matching funds).

    I’m not saying that there aren’t potential cost savings that could be realized with regard to Medicaid — but please, everyone, stop pinning your hopes on “cutting back the vast Blago healthcare expansion” — because to the extent that the “vast expansion” even existed, it’s already been cut back.


  22. - John Bambenek - Wednesday, May 5, 10 @ 2:03 pm:

    A federal match still means the expenditure of state money. It isn’t free money. By cutting eligibility, sure, federal money is left on the table but that doesn’t mean we have to pick up the slack either. That’s nondiscretionary expenditures now off the table.

    As far as DCEO, there is SOME federal matching but by and large that organization has utterly failed it’s mission. We don’t get a federal match to run trade offices in, for instance, Poland. Odd story about that trade office, no one in the Polish government or Polish-American Chamber has ever had contact with that individual. You’d think if they were there to promote business, they’d, you know, actually talk to someone.

    And if I recall, wasn’t a controversial Blagojevich appointee exiled to the trade office in Johannesburg? What business are we going to import from S. Africe? Carjackers?

    Sure, I can’t give you a complete list of duplicated programs… mostly because even when the Auditor General tried to enumerate all those programs, HE COULDN’T. He’s got subpoena power… I have jack crap. And you’re going to bust my chops because I don’t have a list of phantom programs? Please.

    And of course, we wouldn’t want to ask those public sector unions to forego their 4%+ annual pay raises… that’s just the same as robbing a bank… Yeah.

    The problem is no political courage, which means we won’t see real cuts, we won’t see a tax increase and the whole thing comes crashing down.

    Your solution? Bag on the guy who says something other than “let’s take other people’s money and throw it at the problem and hope it goes away”.

    Genius.


  23. - John Bambenek - Wednesday, May 5, 10 @ 2:07 pm:

    And for the record, cutting the municipal revenue sharing doesn’t push the problem down hill… it’s a subsidy that never should have existed in the first place. If they want to raise taxes, they can go convince their voters. Good luck with that.


  24. - Louis G. Atsaves - Wednesday, May 5, 10 @ 2:07 pm:

    ===The only people who are probably shocked are those (Tribune) who have been claiming that the state doesn’t have a revenue problem.====

    Just the Tribune? Nope. It’s deeper than that. After the delusional media, then look at the elected classes, those close to the elected classes, the state and other governmental employees, because they too are all suffering from the same delusions. Even with 12 furlough days, state employees remain delusional. I know. I’m married to one of them.

    Can’t wait for the next set of property tax bills to come out, outside of Cook County and within Cook County. The elected class may need to find a few secure holes to crawl into just before they are put into the mail.


  25. - George - Wednesday, May 5, 10 @ 2:09 pm:

    John Bambenek, you are just embarrassing yourself.

    As far as DCEO, there is SOME federal matching but by and large that organization has utterly failed it’s mission

    Dude… The state spends $50 million GRF on DCEO. Not $1 billion.

    That $50 million in State money gets us $2.3 billion in federal money.

    Seriously, you need to at least do a tiny bit of research.


  26. - wordslinger - Wednesday, May 5, 10 @ 2:10 pm:

    Let’s hope April is the bottom. GDP was up 3% last quarter. That’s a spark, at least. The economy is still not good anywhere outside of the Great Plains.


  27. - How Ironic - Wednesday, May 5, 10 @ 2:10 pm:

    @John:

    “Ok, step one. Zero out DCEO.”

    Please. DCEO has $44Million in GRF funding. That’s where the shortfall is. GRF. The ‘Billions’ in DCEO’s budget is comprised mainly of OSF (300M) and Fed $$ (1.9Billion). So eliminating DCEO will net the State $44Million on a $13BILLION shortfall.
    Next? (As in try again…your example falls flat)

    Zero out municipal revenue sharing.
    Yeah…that’s a great idea. We’ll just cut all the little towns out of their portion of tax revenues. Can you say ‘Monster Property and Sales Tax Hikes’? Next?

    Find everyone on a clout list who paid for their job our board appointment from Blago. Fire them.
    That’s not a bad idea. But it’s not going to save $13 BILLION Next?

    I stopped after that. These aren’t suggetions…they are platitudes thrown out by armchair budgeteers and Brady Budget wannabes.

    Next?


  28. - Nikoli - Wednesday, May 5, 10 @ 2:14 pm:

    Not to start an online flame war, but this statement was always one of the things that bugged me about Adam A’s budget plan…

    “Open union contracts and extract a wage freeze.”

    If it was so incredibly easy to either a.) open the contract or b.) get the unions to go along with opening the contract, don’t you think Quinn would have done so back in 2009 when he was trying to get AFSCME to open the contracts? The Governor needs the union to agree to open the contract and they never will because its not in their best interests to do so.

    Sorry, but this is a flawed argument and Adam A and John know it.


  29. - 47th Ward - Wednesday, May 5, 10 @ 2:14 pm:

    ===What business are we going to import from S. Africe? Carjackers?===

    Stay classy John.


  30. - Brennan - Wednesday, May 5, 10 @ 2:15 pm:

    Reduce every public relations/communications state, county, city employee by 30%.

    I can’t get the bad news from the elected official or the person they appointed to head a department.

    Paul Krugman says borrow and borrow some more. Rates are low. It’s like free money.


  31. - Ahoy - Wednesday, May 5, 10 @ 2:16 pm:

    Our revenues are down $1.2 billion and we have a $13 billion budget hole. Our spending problem is much worse than our revenue problem.


  32. - Moving to Oklahoma - Wednesday, May 5, 10 @ 2:19 pm:

    LOL! we have a revenue problem.


  33. - Lefty Lefty - Wednesday, May 5, 10 @ 2:21 pm:

    Mr. Bambenek’s right. Maybe not all of his suggestions are doable, but he is making suggestions and some of them are reasonable and necessary (foregoing union pay raises, for example).

    Fixing this mess is going to hurt, and our “leaders” are pretending it can be done painlessly. I’ve said here before that the income tax increase is reasonable and necessary, but giving more money to this group could be a big mistake.


  34. - Small Town Liberal - Wednesday, May 5, 10 @ 2:21 pm:

    - And of course, we wouldn’t want to ask those public sector unions to forego their 4%+ annual pay raises… that’s just the same as robbing a bank… Yeah -

    No, but forcing open a negotiated and agreed to contract is against the law, and you didn’t mention asking in your proposal.

    And as for the liason to Johannesburg, the coverage area includes 55 countries, we probably trade something with one of them, just guessing. Similar situation with Poland, although I would love to see proof that no government or industry officials have ever spoken to this person.


  35. - Pat Robertson - Wednesday, May 5, 10 @ 2:34 pm:

    ==LOL! we have a revenue problem. ==

    What we have here is a failure to communicate!


  36. - AllIsWell - Wednesday, May 5, 10 @ 2:38 pm:

    It’s obvious that for every cut that is suggested it’s a) not enough, b) penny-wise and pound foolish c) politically motivated d) plain stupid e) will cost us money f) won’t save money h) isn’t doable i) list your reason here.

    So, essentially, nothing is going to happen until after November when everyone seems to believe: taxes can be raised right away; some additional, albeit, less painful cuts can be made; the economy will have improved moderately; and 4) and most importantly, the voters won’t remember by the time 2012 rolls around.

    It may play out just like that.


  37. - VanillaMan - Wednesday, May 5, 10 @ 2:45 pm:

    We have a revenue problem and a credit problem. This is due to spending more than we had coming in for many, many years. We all saw this happening before Blagojevich in 2002. What has happened over the past eight years to address this situation folks?

    Nothing! For eight years!

    The people in charge have demonstrated a refusal to lead on this, repeatedly. We need as many new legislators and statewide elected official as possible to get a fresh start. Our current leaders have zero credibility with voters so anything they do will be suspect to the point where nothing will be allowed to proceed under their rule.

    Other states have tough economic situations too, but name another state that still has the same people in charge before, during, and after a gubernatorial impeachment meltdown, five years of broken budgets, and an electoral curse from 2006 still sitting on it’s shoulders like Illinois does.

    Time to clean house people!


  38. - Responsa - Wednesday, May 5, 10 @ 2:49 pm:

    –Can’t wait for the next set of property tax bills to come out, outside of Cook County and within–

    Funny you should mention that, Louis. My property tax bill just came in today’s mail. It is substantially up from last year’s. My income and the value of my house? Not so much.


  39. - 47th Ward - Wednesday, May 5, 10 @ 2:50 pm:

    ===but name another state that still has the same people in charge before, during, and after a gubernatorial impeachment meltdown, five years of broken budgets, and an electoral curse from 2006 still sitting on it’s shoulders like Illinois does.===

    California.


  40. - OneMan - Wednesday, May 5, 10 @ 2:53 pm:

    From the Trib

    Gov. Pat Quinn today pushed the idea of a state sales tax holiday before school starts in the fall. Taxpayers would get a break on paying the state’s share of the sales tax — which is 5 percent — from Aug. 6 through Aug. 15 under legislation that advanced in the House.

    That will solve the revenue problems.


  41. - Responsa - Wednesday, May 5, 10 @ 2:56 pm:

    –That will solve the revenue problems.–

    LOL Somehow I don’t think that’s the problem PQ’s trying to solve, here.


  42. - Six Degrees of Separation - Wednesday, May 5, 10 @ 3:01 pm:

    853 building permits in March for the WHOLE STATE? Time was when Will County alone would process that many in a month, let alone the other 101 counties. I guess it’s a (temporary) victory for the anti-sprawl advocates if nothing else.


  43. - Name Withheld - Wednesday, May 5, 10 @ 3:12 pm:

    I can’t even begin to come up with savings on the order of billions of dollars. But there surely has to be some ways we can both cut spending and increase revenue.

    Here are some suggestions. I don’t know how viable they are, but maybe they could be turned into something.

    1) Have Illinois become a one-license plate state (instead of two), but leave the fee the same. I don’t know how much it costs to make plates, but if we reduce the cost for making plates but leave fees the same, doesn’t that net us more money?

    2) Resell computing power/bandwidth/processing. Back in the ’80s, some guy at H&R Block noticed that they had all of these computers that were doing nothing in the evenings. He got the idea to do something with this, and thus Compuserve was born - one of the first ‘pre-internet’ networks. With the sheer amount of power CMS has, what are the options for making use of this in some revenue -generating manner?

    3) Put wind-turbines on every highway sign/overpass/underpass/etc and use them to generate electricity that we can resell. Some kid in Arizona did a graduate research project on generating wind power from highways (http://blog.makezine.com/archive/2007/05/wind_power_from_highways.html). With the amount of traffic going across Illinois roads, this could generate a crapload of money.

    I can’t see where there’s a magic bullet. We have to nickel-and-dime ourselves down because the truly important things (education, medicare, etc) are pretty expensive, and any threat of changing them only results in a war of rhetoric. That leaves the more numerous, and less expensive, other things. We have to get creative in both the elimination of unnecessary things, and the creation of new methods of revenue generation. My meager suggestions probably won’t result in a lot of savings, but then again - I don’t pretend to have all of the answers. But combine what I’ve suggested with others that I know all of us have, and maybe something can happen.


  44. - colt 45 - Wednesday, May 5, 10 @ 3:20 pm:

    a spending problem, it is. money is coming in to the state and those monies should be appropriated. oh for some amount of courage amongst the appropriators. people seem to forget the part after the comma in the old addage “the government giveth, the government can taketh away”. don’t take one more dime from me or from my business until you prove to me that you’re competant and trustworthy. knowing the likelihood of that, stripping the state budgets down to even more of a bare bones minimum is fine with me and the people who howl about the decline in state revenue are free to pony up more.


  45. - dupage dan - Wednesday, May 5, 10 @ 3:31 pm:

    All I see here is alot of effort to show that JB doesn’t have all his facts exactly right so he can be dismissed. At the top of the stream several folk insisted that there is, indeed, room for cuts in expenditures. Nowhere in the following comments is there a single mention of any of those cuts by those folk. None. Perhaps there isn’t any room for cuts. Or, more likely, no one wants to mention any specific cuts for fear of being lambasted for suggesting any reduction in somebody’s sacred cow. Anybody out there……..?


  46. - Peggy SO-IL - Wednesday, May 5, 10 @ 3:38 pm:

    The revenue problem is a direct consequence of the poor economy. Housing starts down–also directly related to Brady’s business losses, as that’s his (primary) industry. This means that many businesses and business owners like Brady did not pay taxes, or paid very little in taxes. Poor economy=low tax revenue. Not that much of a mystery…Now the spending has been bad, even in good times.


  47. - Small Town Liberal - Wednesday, May 5, 10 @ 3:41 pm:

    dupage dan - Nice attempt at redirection. The post was about a revenue problem which JB said was bull and that the only real problem was spending. He proposed cuts which he said could fix the deficit without revenue enhancement, and commenters began offering reasons why his proposals were invalid. You want Rich to start a thread for suggesting cuts, go ahead, but stick to the point on all others.


  48. - Retired Non-Union Guy - Wednesday, May 5, 10 @ 3:43 pm:

    The State’s revenue income stream isn’t going to recover any time soon. I say that based on the analysis I used to do on the impact of the federal economy versus the State’s unemployment and welfare caseloads to try to predict recovery times. Back in December, I wanted an idea of what was happening and pulled the federal numbers I used to use and did an analysis. Going into this recession, we lagged by about the same amount of time I expected. And it looks like we’re going follow the same trend coming out or we, based on the shift from manufacturing to more of a service economy in the state, it may be even slower than I expect. I predict Illinois’ economic recovery will be 12 to 18 months behind the federal recovery … so don’t count on a rising economy to save things. Even if the national economy is starting to recover, you won’t see those revenues until FY2012 at the earliest.

    As far as cuts go, it won’t solve the problem, but highly publicized cuts of the fat that is there would go a long way to solving the public’s perception of nothing being cut. A good part of that fat is middle and upper middle management (yes, I was part of it). I watched it grow from a fairly lean structure under Ogilvie, and almost every Governor since added another layer. It’s probably only a few million but some strategic cuts would start a public perception that something is being done.


  49. - Elliott Ness - Wednesday, May 5, 10 @ 3:44 pm:

    The only reasonable plan proposed here concerned the bonding of capital projects. If we cut out the member projects that will require less revenue from the video poker gaming. Use whatever comes in above the bond payments toward the bidget.
    It is odd that no one mentioned cutting the tax breaks for big business, like the newspaper ink exemption and the list of tax breaks that has been proposed every budget for the last 8 years!


  50. - John Bambenek - Wednesday, May 5, 10 @ 3:59 pm:

    You can always ask someone to renegotiate a contract. You can always tell that person that you’ll cancel that contract or not renew it if they don’t. That’s how you deal with the unions. Tell them you’ll privatize jobs that can go out the door if the don’t come to the table. Nothing illegal there. All union contracts are for a defined period for a reason.

    I do agree on cutting targetted tax breaks that don’t make sense anymore. In fact, I’d cut all the corporate welfare. If there are going to be tax breaks, they should be across the board ones.

    For that matter, I’d also throw on the table getting rid of TIFs. It doesn’t help the state, per se, but it does put pressure on local governments who don’t get that revenue that goes into a secret stash used for developers. How many developers need to be arrested by the FBI until we release that’s a scam?

    No single cut will get us there… alot of them together will.

    And it’s absurd to expect me to be able to comb through all the programs while I have a full-time job and a family and have no staff, when the state has hundreds of people and THEY can’t list the programs in their entirety.

    BTW, the State of Illinois has over 100 spokespersons. 95 of them need to go. Another cut.

    If we can hatch plots to hire a canoe czar, there’s money to be cut people.


  51. - John Bambenek - Wednesday, May 5, 10 @ 4:00 pm:

    And Elliott hit a nail… the revenue shortfall from video poker et al will put another drag on the budget because we have to come up with that bond repayment money from somewhere… cut the fat on the capital bill before we blow another hole in the budget.


  52. - Yellow Dog Democrat - Wednesday, May 5, 10 @ 4:29 pm:

    === Take that $31B capital bill that really only needed to be like 4-5B for real improvements… reallocate the money or end those programs. ===

    I heard Tom Cross speaking at a GOP event and say that the state probably has $50 to $60 BILLION in capital needs, but $30 Billion was all they could afford.

    Also, its pretty clear that the revenue stream of video poker isn’t going to provide the revenue we thought we needed for even $31B, so where you think this extra money is coming from, I’m not sure.


  53. - Pelon - Wednesday, May 5, 10 @ 4:32 pm:

    “We have to nickel-and-dime ourselves down because the truly important things (education, medicare, etc) are pretty expensive, and any threat of changing them only results in a war of rhetoric.”

    There is no real hope of balancing the budget without significant cuts to education, medicaid, and social services AND an increase in taxes. As you point out changing these things will only result in a war of words.

    There is no real hope for a solution. Voters in areas such as California and Greece have clearly demonstrated that they will let the state fail rather than accept the alternative of taxes and service cuts. To me, the only questions are how long will it take, and what will the state be like after the collapse?


  54. Pingback Latest State Revenue Proposal: Less Revenue | chicago.rssible.com - Wednesday, May 5, 10 @ 5:33 pm:

    […] Item: Report: “Staggering” decline in state revenues […]


  55. - Anonymous - Wednesday, May 5, 10 @ 5:52 pm:

    Add slots to the race tracks
    get video pokers rule out NOW
    Two new casinos one in Chicago to attract tourists and conventions
    Income tax up 1%
    Sales tax up.5%
    Cut 1 billion

    It’s a start but this idiot group will ge home and do nothing


  56. - Budget Watcher - Wednesday, May 5, 10 @ 5:53 pm:

    Medicaid cuts are essentially undoable. The new federal healthcare bill effectively locks states into per march 23, 2010 levels as part of the maintenance of effort provisions. Plus, it takes $2 in Medicaid cuts to save $1 in state costs. Medicaid cuts have always had to be doubly severe in order to garner any real savings.


  57. - Budget Watcher - Wednesday, May 5, 10 @ 5:54 pm:

    Sorry…should read pre-March 23, 2010


  58. - (Formerly) Angry Republican - Wednesday, May 5, 10 @ 6:06 pm:

    When will the financial analysts start talking about IL defaulting on it’s debt as a possible solution? The gross state product of CA is about 3X the size of IL’s, which is why our budget problems are way worse than CA. Sure the state would have trouble borrowing after a default, but the state won’t rein in spending any other way.

    On a side note, some of the big banks are selling credit default swaps on municipal debt (including IL). At the moment, these are completely unregulated, and investors win big if there is a default.


  59. - DuPage Dave - Wednesday, May 5, 10 @ 6:29 pm:

    This blog didn’t used to have some of these extreme characters in the comments. Too bad.


  60. - Doug - Wednesday, May 5, 10 @ 8:06 pm:

    It’s funny watching the state of my birth crying they have a revenue problem at the same time they tax their citizens at some of the highest rates in the country.

    It’s the unions and their contracts that are killing Illinois (and California, NJ, Michigan and others)

    there is a race to figure out which state will either default on their loans or file bankruptcy.


  61. - RJW - Wednesday, May 5, 10 @ 9:12 pm:

    Hey Doug:

    According to the Tax Foundation, Illinois ranks 30th in state/local tax burden compared to the national average. I would hardly say that Illinois taxes its citizens at “some of the highest rates in the country.” I’m not suggesting we go to the top 10 but there is room for movement in there while still being fair to the citizens.


  62. - SFK - Thursday, May 6, 10 @ 4:28 pm:

    why would anyone want give the boneheads in Springfield, cook county, chicago, etc one more dollar of your hard earned money?


Sorry, comments for this post are now closed.


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