* Senate GOP Leader Christine Radogno has some problems with Gov. Pat Quinn’s borrowing plan…
“He’s rolled out a proposal which is $8.7 billion,” Radogno said. “It’s structured in a way that’s pretty significantly back loaded which means the payments will escalate after the first few years. That’s a problem.”
Next fiscal year’s bond payment will be $100 million. By Fiscal Year 15, the payment rises to $450 million. The income tax hike expires during the middle of that fiscal year, but money is allocated to the bond payment. By the next fiscal year, however, annual bond payments rise to $750 million and continue that way through FY 25. The payback schedule is on page 17 of the bill.
However, Leader Radogno doesn’t quite grasp the rest of it…
“Well it is borrowing and the fact of the matter is we will have, by their own estimates, probably about $7 billion in new revenue coming into the state from the tax increase,” Radogno said. “It seems to me that some of that revenue ought to be used to pay existing bills because frankly it would be less expensive to just pay those bills off using our Prompt Payment Act, even if we have penalties, than to borrow the way he’s proposed.”
You could use the new tax money to pay past due bills, but then you’d be creating more past due bills because the state couldn’t pay current vouchers. That’s the whole reason for the borrowing: Pay it off using a portion of the income tax over time. You could pay it down a little bit at a time without bonding, but it would be at least June of 2026 before it was all done with. That’s a heckuva long time to string out vendors and providers.
* Meanwhile, the tax amnesty program was projected to bring in $250 million for the state. The final total was $314 million. From a press release…
More than 78,000 taxpayers sent payments to the Illinois Department of Revenue during the state’s tax amnesty program that concluded last November. The program exceeded its budgetary goal, adding $314 million to the general revenue fund for FY 2011.
“This program’s success is good news as we work to stabilize state finances and to maintain vital public services,” Governor Pat Quinn said. “This much-needed revenue will help our state to meet its obligations and is another important step towards making Illinois fiscally sound.”
The FY 2011 budget estimated that tax amnesty would infuse $250 million into state government coffers during this fiscal year. The state received a total of $717 million in tax payments; $314 million went to the general revenue fund, with the balance going to local governments and the state’s income tax refunds. […]
In addition to the immediate cash infusion, tax amnesty broadened the tax base. Non-filers accounted for $12 million of state receipts, and will be easier for the state to track in future years. Additionally, improved tax tracking software and enhanced audit and collection capabilities will further assist the state in monitoring filers who came forward under amnesty for future compliance.
* Speaker Madigan unexpectedly showed up at the House Rules Committee yesterday. Not many reporters were there…
The powerful Southwest Side Democrat said lawmakers need to address a series of issues, including proposals for “new revenue for the capital program.” […]
Madigan ticked off a series of additional items that need to be addressed, ranging from reining in workers’ compensation costs for businesses to finding ways to cut spending. The speaker also said the state must find ways to finance the state unemployment insurance program, the insurance program for retired Downstate public school teachers and health insurance for community college teachers.
* Related…
* A Seer on Banks Raises a Furor on Bonds: “I’ve seen a copy of the report, and frankly, I’ve seen better papers from graduate students in finance,” said Richard P. Larkin, director of credit analysis at Herbert J. Sims & Company, a municipal bond broker and underwriter. “It’s ludicrous, reckless and irresponsible, and it’s being done without any regard for the consequences.”
* State Borrowing Plan Faces Uncertain Future
* Quinn to feds: No thanks on any bankruptcy bailout: “We believe that the states have an obligation to pay their bills and to meet the demands they have put upon themselves,” [Brie Callahan, spokeswoman for the governor’s office] said. “We don’t want any federal assistance in terms of bankruptcy.”
* Child care advocates fight back against cuts nearing $100 million: “As we look at the budget hole that exists right now, every single dime of the solution is coming out of the Department of Human Services,” Whalen said. “And this means further cuts to developmental disabled, to the poorest of the poor, to basic human service needs, and of course it means drastic cuts to the child care program in our state… “And I think that it’s pretty amazing that when we look to make these terrible choices, we look first at those who have the least.”
* Cat stock rises over the $100 mark for first time since 2005: The value of Caterpillar Inc. stock closed Monday at more than $100 a share, the first time that has occurred in more than 5 1/2 years.
* Appeals Court backs state casino tax: Previously, the Illinois Supreme Court had upheld the constitutionality of the tax after the casinos argued that it violated the U.S. Constitution’s “takings” clause. The U.S. Supreme Court declined to hear an appeal of that decision in late 2009.
* Press Release: Governor Quinn Announces Second Round of Top Administration Appointments - Names Two Senior Advisors and Five Agency Heads [Fixed link]
* Illinois fiscal officers look beyond party lines
* Former Ill. comptroller Hynes gets new job with US government as observer to Ireland fund: Former Illinois Comptroller Dan Hynes has a new job with the federal government. Hynes has been appointed as the U.S. government’s observer to the International Fund for Ireland. In his new job, Hynes will serve as the official observer at all meetings of the fund’s board of directors. The International Fund for Ireland is an independent organization with the aim of fostering peace in Northern Ireland and bordering countries. It’s financed, in part, by the U.S. government.
* St. Charles might tighten belt another notch
- Way Way Down Here - Tuesday, Feb 8, 11 @ 7:59 am:
Dan, what can we do for you now that you’ve lost the primnary?
I’d really like to go to Ulster and watch some meetings.
Done, my friend.
- Quinn T. Sential - Tuesday, Feb 8, 11 @ 8:21 am:
The Quinn PR link on Appointments links to a PR on tax reveunes instead.
- Quinn T. Sential - Tuesday, Feb 8, 11 @ 8:32 am:
How much $ is Hynes being paid as the U.S. government’s observer to the International Fund for Ireland? It indicates that in his new job, Hynes will serve as the official observer at all meetings of the fund’s board of directors. The Board of Directors meets only three times per year however, what is he going to do with the rest of his time? How much is that going to cost us?
- Fed up - Tuesday, Feb 8, 11 @ 8:53 am:
Seems like Madigan doesn’t believe the largest tax increase in history was enough. Maybe Madigan wants to prove Christie and Daniels right about Illinois tax situation.
- dave - Tuesday, Feb 8, 11 @ 8:56 am:
Maybe Madigan wants to prove Christie and Daniels right about Illinois tax situation.
Well, Madigan could just say, “Lets be irresponsible and skip the pension payments,” but Christie already has the market on that one.
This debt restructuring is the best and most responsible option, of a bunch of bad options.
- Fed up - Tuesday, Feb 8, 11 @ 8:59 am:
We’ve skipped plenty of pension payments that’s why the system is screwed.
- dave - Tuesday, Feb 8, 11 @ 9:00 am:
(and yes… I know that Madigan and friends HAVE chosen to skip pension payments in the past)
- Fed up - Tuesday, Feb 8, 11 @ 9:11 am:
Dave I was speaking of Madigan stating their is a need for new revenue. I agree the borrowing to payoff the debt is the best option buy I agree with the GOP forcing workers comp reform and other changes to save money instead of just spen d borrow and raise taxes.
- Quinn T. Sential - Tuesday, Feb 8, 11 @ 9:12 am:
At a funded ratio of roughly 26%, how soon is the Judges pension fund predicted to run out of money?
I would not want to be a Plan Fiduciary when the bow of that Titanic slips under the water line and disappears.
- The Truth - Tuesday, Feb 8, 11 @ 9:29 am:
They skipped many many pension payments. Now the part time but full time health insured house/senate members are going to stick it to the evil 50,000 retired state workers with their health insurance premiums.
- CircularFiringSquad - Tuesday, Feb 8, 11 @ 9:36 am:
Anyone else notice the Trib’s “endorsements” of aldermanic candidates has just begun —days after early voting. When they pushed their pet rock, Billboards Cross, in the fall they rushed out their efits before voting began.
Cold it be they now know what we realized a while back ????? No one reads that slop
- cassandra - Tuesday, Feb 8, 11 @ 9:56 am:
Looks to me as though the borrowing plan is structured in such way as to make a Governor Pat’s temporary income tax increase on the middle class a permanent income tax increase on the middle class. As we knew all along, really. Little reminders will surface periodically. The new AFSCME contract will almost certainly entail big budget increases.
I too wonder why DHS would take the brunt of any cuts Governor Pat actually makes. Given his penchant for disaster politics-everybody’s gonna starve–what’s he after this time. Even higher taxes? Higher borrowing based on additional revenues from a permanent tax increase, or what.
If DHS really is going to cut (their budget(s) are confusing as somebody pointed out yesterday), how, exactly will these cuts be made. After all the bills were finally paid, what cuts did the nonprofits take last fisc year? Were the agencies told to expect certain cuts this year, and how much. How well are these services means-tested. Paying for day care is fine, but has anybody audited the program lately. What kind of income proof is required once enrolled. Is it free day care forever once you get in the door? What does the Department of Aging do exactly? This is the 21st century. Being over 65 doesn’t mean Need Government Service. In fact, aging baby boomers are the opposite of dependent. How are the relevant agencies coming with moving the disabled into (cheaper) community settings. And so forth.
Unpleasant questions, and we wouldn’t have to ask them if either party was willing to do so. They aren’t. And we’ll pay.
- Ahoy - Tuesday, Feb 8, 11 @ 10:04 am:
Quinn is proposing to fund most of the bond payments after the majority of the income tax has expired. This is either Blago style budgeting or there is a plan to either cut future spending or raise the income tax permanently. Is there a plan on how the state is going to afford the $765 million bond payment in years 2016 through 2025 or are we just going to deal with it when we get there?
- Anonymous - Tuesday, Feb 8, 11 @ 10:18 am:
Wrong press release listed for new appointments to agencies by the Governor
- Louis G. Atsaves - Tuesday, Feb 8, 11 @ 10:24 am:
Unclear on the concept?
Let’s see if I’ve got it figured out a bit.
(1) A midnight lame duck passage of the state income tax from 3% to 5%, effective immediately.
(2) A passed bill mandating municipal and county property tax increases in two years for police, fireman and municipal worker pension contributions.
(3) Steadily escalating gasoline prices at the pump. Don’t remember if a proposed tax increase per gallon passed or not.
(4) Increases in heating and electrical bills.
(5) Notices sent by K-Mart and other major employers of layoffs over the next few months of nearly 1,000 employees.
(6) A “borrow to pay our accumulated unpaid bills” plan of $8.7 billion, which has sharply increasing premium payments at a time when the “temporary” lame duck midnight income tax increase roughly expires.
(7) Alternative revenue sources from gambling are either being declared unconstitutional (video poker bill) or bottled up (casino expansion bills).
The average guy is taking a beating. The small businessman who doesn’t qualify for all those “loopholes” is taking a beating.
That much is clear.
- Louis G. Atsaves - Tuesday, Feb 8, 11 @ 10:26 am:
Let me add the 1,000 employees Abbott Labs is laying off in Lake County as part of a nationwide or worldwide layoff plan. Previous reports stated that Illinois wouldn’t be hit so hard.
- central illinois - Tuesday, Feb 8, 11 @ 11:01 am:
the link to the press release for agency director appointments goes to the tax amnesty press release
- (618) Democrat - Tuesday, Feb 8, 11 @ 11:14 am:
@ fed up =Seems like Madigan doesn’t believe the largest tax increase in history was enough.=
The recent temporary tax increase wasn’t even close to the largest tax increase in Illinois history.
The largest tax increase in history was pushed through and signed by Republican Governor Richard Ogilvie.
- comment - Tuesday, Feb 8, 11 @ 11:19 am:
Ok… the second largest tax increase in the histoty…
- Loop Lady - Tuesday, Feb 8, 11 @ 11:32 am:
Could someone please tell me how Radogno became such an “expert” on budgetary matters? Is she a CPA? Finance major? Isn’t she a former member of a muni library/school board? BFD!!
She is always trashing Quinn’s proposals but never offers up an alternative…lead, follow, or get out if the way sister…
- (618) Democrat - Tuesday, Feb 8, 11 @ 11:46 am:
@ fed up = I agree with the GOP forcing workers comp reform=
From the above Capital Fax post; Madigan ticked off a series of additional items that need to be addressed, ranging from reining in workers’ compensation costs for businesses to finding ways to cut spending.
Democrats in both the Illinois house and Senate are dealing with workers comp reform.
Judging the balance of power in Illinois the Republicans aren’t in the position to force anything.
- mokenavince - Tuesday, Feb 8, 11 @ 1:28 pm:
Looks like MJM wants to say yes to more taxes.See ya next session on workers comp.And instead of no to unions lets make it maybe.Because our trio just can’t say no. We are bankrupt for leadership!
- fed up - Tuesday, Feb 8, 11 @ 2:34 pm:
(618) your ignorance is astounding if the Dems want to borrow money they need 2/3rds vote which guess what means the GOP does get to force reforms.
- fed up - Tuesday, Feb 8, 11 @ 3:42 pm:
( By Fiscal Year 15, the payment rises to $450 million. The income tax hike expires during the middle of that fiscal year, but money is allocated to the bond payment. By the next fiscal year, however, annual bond payments rise to $750 million and continue that way through FY 25. )
So Quinn’s plan is to have most of the Bond Payment’s come after his supposedly temporary tax increase expires. Yeah good chance of this being a temporary tax increase. This “temporary” looks like another in the long list of Quinn lies.
- late to the party - Tuesday, Feb 8, 11 @ 4:32 pm:
In FY15, 1.25% of the 2% income tax increase goes away, reducing the income tax to 3.75% until FY25, when it reduces again to 3.25% and the debt obligation expires. .5% of the income tax will be used (at least in part) to pay the remaining debt obligation. If we are to believe that a 2% tax increase creates about $6B in income, the .5% should be more than enough to cover the debt service without making the whole temporary tax permanent.
- Ahoy - Tuesday, Feb 8, 11 @ 4:37 pm:
Late to the party,
You’re assuming Illinois start’s balancing their year to year budget. The state is not making the necessary cuts to do this. In theory you are right, but the state is not taking appropriate measures to cut year to year spending enough for our new revenue to pay off all of our old bills and balance the budget.
- Larry downstate - Tuesday, Feb 8, 11 @ 5:33 pm:
Would some reporter please find out how many state jobs have been added since Quinn has come into office.?
- steve schnorf - Tuesday, Feb 8, 11 @ 5:52 pm:
Leader Radogno is asking the questions the debate should be about; how much do we need to borrow (to pay off old bills to a reasonable level), how long of a payback period should there be, and should the payback be back-loaded.
On the other side of the coin, it is important to understand that we will not be bringing in $7B in new revenue between now and the end of the fiscal year, probably more like $2.9B, so another legitimate question is how quickly do we want to start paying those old bills.
- Ain't No Justice - Tuesday, Feb 8, 11 @ 5:53 pm:
Larry, we have about 15-25 new jobs in our department alone. Especially right before the new retirement for state employees came into play. You can FOIA the info but it will take a very long time.
- Anonymous - Tuesday, Feb 8, 11 @ 9:01 pm:
Thanks for pointing out the discrepencies in Sen. Radogno’s comments. Once again, its clear that the problem in this state are solely due to the (powerless) Republicans.
By the way….saw Lisa Madigan’s important announcement on pulling one corrupt cop’s pension. Does she have time now to investigate the pervasive state employees workers comp. fraud? her silence on this so far has been, well, deafening. Or is this not her job either?