A look at the budget
Thursday, Mar 7, 2013 - Posted by Rich Miller
* Tribune…
Quinn also wants to reduce the amount of money cities and transit agencies receive from the state. Under current law, that money increases each year without review. He wants to stop that and roll back spending to 2012 levels, which would amount to a $241.2 million cut.
That’ll be tough…
East Moline Mayor John Thodos was among municipal leaders who said a proposal that could funnel money away from local governments was a bad idea. “I’m tired of hearing how we have to give more,” Thodos said.
“It’s going to be a very tough sell,” said state Rep. Dan Brady, R-Bloomington, of the cuts in municipal funding. “It’s going to be a very painful process and I think the municipalities are trying to prepare themselves for it.”
It’s very difficult politically to go up against the mayors, and part of that money also goes to mass transit, which ain’t easy to cut. But while revenue sharing is important, it shouldn’t be sacred. Everybody has had to take cuts, and municipalities should be no different.
* Press release…
While Gov. Pat Quinn’s rhetoric may suggest he is taking the state’s fiscal challenges more seriously, State Sen. Christine Radogno (R-Lemont) pointed out the budget plan Quinn outlined before a joint session of Illinois lawmakers on March 6 would increase state spending, even as he advocates for significant cuts to funding for suburban and downstate school districts.
“I think it is clear that the Governor’s strategy with this budget plan is to maximize the pain in some very sensitive areas in order to increase pressure on lawmakers to pass comprehensive public employee pension reform,” said Radogno.
By far, most of the spending increase is due to the increased pension payment, which is about a billion dollars.
There is more money for public assistance offices, many of which are in Downstate communities. Most of the money is being spent to deal with the national healthcare law. Rep. Bill Mitchell (R-Forsyth)…
“Governor Quinn wants to cut education by $300 million, slashing transportation reimbursement to our geographically large Downstate schools,” Mitchell said. “At the same time, he wants to spend more on welfare and Obamacare. The Governor hasn’t implemented welfare reform and his party refuses to consider even the most basic spending reforms, such as selling the $22 million fleet of state aircraft. Governor Quinn should work with us to eliminate the waste, fraud and abuse in the system before cutting funding for our schools.”
* But those education cuts are problematic…
Cullerton said he doesn’t intend to go along with Quinn’s threatened cuts to education in next year’s budget, saying, “We should all consider this an unacceptable option and work to fully restore education funding.”
State Sen. Heather Steans, who chairs an approp committee, had this to say via press release…
(B)y concentrating the cuts on education, the governor presented us with a false trade-off. There are other ways the budget can absorb the necessary reductions
Steans also called the AFSCME contract agreement a “political deal”…
“We can take a hard look at spending that isn’t absolutely necessary and whose presence in the budget may reflect a political deal”
* Without more revenues, Quinn’s budget will probably have to be cut further. I was asked yesterday on “Illinois Lawmakers” before the speech if I thought the governor’s proposal was dead on arrival. “Yes,” was my response.
Here’s why…
Quinn’s proposed budget for operations comes in at $35.6 billion. The House has adopted a resolution vowing not to spend more than $35.1 billion, the amount House analysts believe the state will collect in taxes next year.
“In terms of specifics about how we are going to put this together, I didn’t hear it,” said Rep. John Bradley, D-Marion, one of the House financial experts. “I wanted to hear specifics about where he would spend money. I didn’t hear a lot of specifics today.”
Keep in mind that’s just the revenue target. The House usually sets the spending target well below revenues in order to help pay down overdue bills. So that $500 million difference could wind up being much greater.
* Speaking of revenues…
Quinn also suggested suspending what he called business tax loopholes that would have generated $445 million this budget year. One would result in taxing foreign dividends earned by some corporations. Another would end a tax break for products made out of state.
The new money would help pay down the state’s near $10 billion backlog of overdue bills to providers of state services, but the approach has failed to gain traction in the past.
“Why should we give costly, ineffective loopholes to some of the biggest and most profitable corporations on Earth when we have bills to pay?” Quinn asked.
The Illinois Chamber was not amused. From a press release…
It is astounding that Governor Quinn speaks of improving Illinois’ business climate and growing jobs while once again seeking to raise corporate taxes by nearly half a billion dollars. I find the governor’s willingness to seek tax increases from businesses while chanting about tax loopholes both uninformed and offensive.
Governor Quinn offers proposals that are contrary to federal tax policy, bring greater confusion to tax compliance and have already been determined to be unconstitutional by the United States Supreme Court. Eliminating the foreign dividend deduction flies in the face of the U.S. Supreme Court decision (Kraft Gen. Foods v. Iowa Dep’t of Revenue & Finance (90-1918), 505 U.S. 71 (1992)) which held states can not treat domestic dividends more favorably than foreign dividends for income tax purposes.
- wordslinger - Thursday, Mar 7, 13 @ 10:55 am:
Putting together a budget is a lot easier when you short or completely blow off pension contributions.
- cassandra - Thursday, Mar 7, 13 @ 11:05 am:
Loopholes. Spring must be right around the corner.
- Shemp - Thursday, Mar 7, 13 @ 11:07 am:
“But while revenue sharing is important, it shouldn’t be sacred. Everybody has had to take cuts, and municipalities should be no different.” -Rich Miller
Since the municipal sharing is percentage based, when state revenues go down, municipal revenues go down, so how have municipalities not taken the same cuts? When the income tax went up 2 percentage points, the state cut the percentage sent back to cities so that they wouldn’t get any of the increase the State received. And to boot, the State still sets police/fire pension benefits and leaves cities to fund them, and at last check, the State isn’t looking at police/fire pension reform to help cities combat rocketing pension costs. Not to mention the state already took from the replacement tax last year for ROE’s.
- Huh? - Thursday, Mar 7, 13 @ 11:10 am:
Don’t the transit funds come out of the MFT we pay at the pump?
- dave - Thursday, Mar 7, 13 @ 11:13 am:
Really, Rep. Bradley?
Come on — the budget speech is not where he should be giving specifics. The specifics are laid out very clearly in the budget book and more details were discussed in the many, may budget briefings.
Did Rep. Bradley want Quinn to read every budget line?
- Bluefish - Thursday, Mar 7, 13 @ 11:15 am:
“Everybody has had to take cuts, and municipalities should be no different.”
The share of the income tax that municipalities get is in exchange for them not being able to levy their own income tax. Since the money is distributed on a per capita basis a town like Dolton actually gets more than a town like Deerfield despite the difference in income taxes generated between the two. Cutting, or even capping, the distributive fund will have the most severe impact on those municipalities with the least ability to make up the difference through property and other taxes.
- Arthur Andersen - Thursday, Mar 7, 13 @ 11:22 am:
To add to word’s list, it’s also easy to balance a budget by borrowing money to pay the bills when you have no cash. Too bad we all can’t do that.
Quinn budget logic is not much more advanced from that of Princess AA I at about age 15 when she said, “Dad, I might have a babysitting job a week from next Tuesday, so can I borrow 20 bucks now?”
- Skeeter - Thursday, Mar 7, 13 @ 11:23 am:
The GOP response can be summarized as “What? We didn’t mean to cut stuff that impacts OUR districts.”
Yet another reason the GOP has no credibility.
- Small Town Liberal - Thursday, Mar 7, 13 @ 11:23 am:
The whining of the GA is pathetic. A lot of these folks have been part of the game for a long time, and sat on their hands while pensions were being shorted and budgets weren’t balanced.
Now they’re lecturing Pat Quinn over revenue projections and wanting him to go over individual line items in his speech? What a crock.
- Kasich Walker, Jr. - Thursday, Mar 7, 13 @ 11:27 am:
Joining Colorado & Washington states, the Oregon House introduced a bill to treat cannabis like alcohol.
Even if under the most unlikely of circumstances Oregon couldn’t collect fees on producer, wholesaler, & retailer licenses — not to mention taxes on sales — the state will at least cut costs on cannabis prosecution.
http://www.leg.state.or.us/13reg/measpdf/hb3300.dir/hb3371.intro.pdf
- walkinfool - Thursday, Mar 7, 13 @ 11:30 am:
Usual babble from the usual suspects. No problem. Just get to work.
Pension fix, before budget.
- TwoFeetThick - Thursday, Mar 7, 13 @ 11:30 am:
=== Did Rep. Bradley want Quinn to read every budget line?===
Shhhhhhh… Don’t give the governor any ideas. (”And now, moving to line 137, on page 363 of my budget for the great State of Illinois, Land of Lincoln, home to all of our hard-working citizens, great citizens, noble citizens…”.)
- Both Sides Now - Thursday, Mar 7, 13 @ 12:45 pm:
I see no reason as to why we should give a tax break for products made out of state. As far as I’m concerned, that loophole can be closed permanently.
- ANON - Thursday, Mar 7, 13 @ 12:46 pm:
Before I start with FY ‘14…Did we ever pass a budget implementation bill for FY13?
- dave - Thursday, Mar 7, 13 @ 1:23 pm:
**Did we ever pass a budget implementation bill for FY13**
Yes. But there was one BIMP that the Senate passed that the House never did.
- Blockhead - Thursday, Mar 7, 13 @ 2:49 pm:
RE: raising corporate tax rates
When asking a bank robber WHY he robs banks……
He answered, “because that’s where the money is”
Should we increase taxes on the lowest wage earners and unemployed? Maybe the homeless?
- ejhickey - Thursday, Mar 7, 13 @ 3:21 pm:
closng a tax loophole to possibly collect another $445 million in revenue is a nice start but ut will hardly make a dent in the almost $10 billion in unpaid bills. someone, including Quinn , needs to think bigger in terms of raising revenue
- jake - Thursday, Mar 7, 13 @ 6:24 pm:
Re: “Should we increase taxes on the lowest wage earners and unemployed? Maybe the homeless?”
The total income of the highest 1% of income of Illinois taxpayer is greater than the total income of the bottom 60%. But total state and local tax burden on the top 1% is between 5 and 6% of their income while it is between 11 and 12% on the bottom 60% Our tax system systematically looks for revenue where the money ISN’T.
- Blockhead - Thursday, Mar 7, 13 @ 7:20 pm:
It’s no secret that Illinois has had and continues to have a revenue problem, even with the increase in state tax rate. No pension bill or reform will fix the fact that there is not enough for all the programs and services needed/wanted by our citizens. Why our state will not join the 21st century to move toward a more equitable and revenue producing graduated tax is dumbfounding but certainly explainable when you look at the influential and wealthy who pressure our lawmakers to keep socking it to those who have less than they do.
- RNUG - Thursday, Mar 7, 13 @ 8:09 pm:
I’ve said it before and I’ll say it now, tax the biggest untaxed pile out there: services. That pile is estimated to be big enough ($9B) that, like the initial income tax in 1970, it will take the GA about 5 years to run through all of it before they have to start borrowing again. In the meantime, they can use most of that money to pay off the annual lapse and aggressively pay down the pension debt.
- silverback - Thursday, Mar 7, 13 @ 8:49 pm:
Blockhead, please see IL. Constitution,
Article IX, section 3a
- Blockhead - Thursday, Mar 7, 13 @ 9:33 pm:
As much as it might be pointed out that it would take a constitutional amendment to change our tax structure, many don’t object to amending the constitution regarding constitutionally guaranteed pensions. Isn’t it the same massive undertaking to change the ILlinois constitution?
- ejhickey - Thursday, Mar 7, 13 @ 11:37 pm:
Blockhead
here is one of the problems with amending the constitution to allow for a graduated income tax: time. this is just a guess but i think it would take about 2-4 years to get an amendment passed , voted on and implemented. Illinois does not have time on its side . the need for more revenue is immediate. if we wait for a graduated tax , our financial problems will only worsen. i am not saying this type of tax should not be a goal, only that we can’t afford to wait.