SOTS stuff
Thursday, Feb 5, 2015 - Posted by Rich Miller
* Gov. Rauner didn’t talk much about state income taxes yesterday, but Speaker Madigan was asked about the topic afterward…
Madigan said he will keep an “open mind” when it comes to Rauner’s tax ideas and suggested the governor do the same. Madigan noted many Democrats would support increasing the income tax rate — an idea the speaker said he raised with the governor but Rauner rejected. A Rauner spokesman later said the governor “believes we need to work within the framework of a 3.75 (percent income-tax rate) budget.”
Failing any more money, Madigan said he will work with Rauner to plug the budget hole using a combination of techniques that could include giving the governor more authority to cut spending, or dipping into roughly $600 million in specially designated funds.
“We have budget deficits, there’s no dispute about that. They can’t be eliminated simply by cutting,” Madigan said. “I think there has to be a balance in reduction in spending and (new) revenue.”
Subscribers know more about the spending cut authority and the special funds.
* An interesting point by the Tribune…
And while he urged lawmakers to make “choices about what’s best for the next generation, not the next election,” Rauner also unveiled a series of proposed constitutional amendments, including several he wants voters to consider in 2018 — his re-election year — rather than the next statewide election in 2016.
Few if any of those proposals will pass. Asking for the 2018 date is probably more of a subtle dig at Quinn, Madigan and Cullerton for attempting to gin up turnout with several statewide referenda last year.
* Reboot has more of Speaker Madigan’s response to yesterday’s speech…
“I’ve known Mr. Rauner before he decided to be a candidate for governor. He has a lot of strong views on a lot of public issues. He enunciated a lot of those views in the speech today, which he should do,” Madigan said in a press conference following the speech. “Now those views, those issues, those bills will be before the Legislature and they’ll be disposed of by the Legislature, some favorably, some not favorably. That’s the American democratic process.” […]
Madigan’s press conference was illuminating if only to appreciate how deftly he mixed a pledge to work with Rauner and a warning to the governor about his true feelings on some of the ideas in the speech. Here, for example, is Madigan’s answer when asked about Rauner’s desire to let local communities decide if workers in union workplaces can opt out of union membership.
“Right-to-work and right-to-work zones are a favorite topic of, let’s be kind and call them right-wing thinkers. There are others that disagree with it. It all gets into economics, it gets into putting people to work. I’m for putting people to work,” Madigan said. “That’s the best thing we can do for the state. So am I going to reject it out of hand? No. Do I want to know more about the details? Yes. And we’ll take it with everything else that’s before the Legislature.”
* Sun-Times…
On the whole, Rauner gave one of his most detailed speeches yet. But Democrats still found themselves scratching their heads when it was over — wondering how the governor would find new money for the investments in education. He also wants to hire more correctional officers for the state’s prisons.
“The administration is interested in balanced budgets, they’re interested in restraining the growth of state spending,” Madigan said after the speech. “But today they’re asking for an increase in appropriations for child care and for the Department of Corrections. Not being critical, but this just explains how difficult it is to manage state government when there’s a shortage of resources.”
* SJ-R…
Madigan said the immediate concern should be dealing with the estimated $1.5 billion deficit the state faces in its current budget. Already the state has said money has run out for the program that provides subsidized day care for the poor.
* And…
Senate President John Cullerton, D-Chicago, called Rauner’s first State of the State speech a missed opportunity.
“Unfortunately, too much of the governor’s opportunity was squandered with campaign rhetoric that denigrates the reputation of the state,” Cullerton said in a written statement. “With each speech that Governor Rauner delivers, I am reminded that the new governor has a lot to learn if he is to build on our successes in Medicaid reform, workers compensation, pension reform, cutting the bill backlog and meeting our obligations.”
* Back to the Trib…
Rauner got applause for calling for a minimum wage hike, but drew gasps and laughter from some Democratic lawmakers when he outlined it would be phased in through 2022. Hours earlier, Senate Democrats advanced a bill to raise the rate to $11 an hour by 2019. The full Senate could vote on the measure Thursday, though support remains questionable in the House.
Some Democratic lawmakers? Try “most, if not all.”
* Speaking of the minimum wage…
Rauner’s seven-year minimum wage plan did not get rave reviews from all business groups either, including the Illinois Retail Merchants Association. Rob Karr, the group’s president, said the costs of a minimum wage increase would “fall disproportionately on the retail industry.”
After fumbling the minimum wage issue early in his campaign, Rauner eventually focused on tying a minimum wage increase to business-backed reforms. Still, there is recognition the governor’s agenda is politically daunting, with the state government’s finances reeling.
Ed Wehmer, chief executive of Rosemont-based bank operator Wintrust Financial, said Rauner’s phased-in minimum wage increase and workers’ compensation and medical malpractice reforms are “all good initiatives but maybe not all the most important ones.”
“Illinois has so many issues that Bruce Rauner’s State of the State speech would have to be turned into a mini-series if you wanted to cover them all,” Wehmer said.
* The Tribune followed up with ratings agencies…
(R)ating agencies say the most critical issue for Illinois is to match the state’s tax revenues to spending without hiding deep, festering financial wounds under temporary bandages.
The past is littered with proposals to “right the ship, but they didn’t get there,” said Karen Krop, an analyst for Fitch. “We’re looking for an effective balanced budget and a pension solution.”
* And…
At least one major bond rating agency disagrees with Rauner’s idea.
In a report for the General Assembly’s fiscal forecasting office, Moody’s Analytics said it is not clear whether right-to-work laws affect economic growth.
“The lack of clarity is mainly due to the fact that union strength is just one factor businesses look at when deciding whether to set up shop or relocate,” the report notes.
The report also notes that right-to-work laws could actually hurt Illinois’ long-term economic growth.
That report is here.
* Greg Hinz gets the last word…
It’s true that, if you don’t ask, you don’t get. It’s also true that Rauner the successful private-equity mogul is used to firing off orders and is on a governmental leaning curve. Maybe we’ll learn that he’s one tough guy who will get what he wants. Or maybe he’ll learn that he has something to learn.
- Toure's Latte - Thursday, Feb 5, 15 @ 11:21 am:
==”…those bills will be before the Legislature and they’ll be disposed of by the Legislature…”==
Excerpted QOTD.
- truthteller - Thursday, Feb 5, 15 @ 11:24 am:
The only Rauner claim which rings true is that revenues don’t match expenditures. That is the state’s biggest problem, the magnitude of which sets it apart from the other 49.
Almost nothing he said, worker’s comp and unemployment cuts, right to work, etc., deals with the problem.
Great sound bites for his business buddies, but nothing that truly addresses the state’s big problem
- Bogey Golfer - Thursday, Feb 5, 15 @ 11:29 am:
“and is on a governmental leaning curve.”
At least it’s not a leanin’ curve.
- William j Kelly - Thursday, Feb 5, 15 @ 11:32 am:
I think dick Uline is going to have to write a lot more million dollar checks to the iPi 5o1c3 if Rauner’s agenda is going to be successful.
- slow down - Thursday, Feb 5, 15 @ 11:33 am:
The reality is that Rauner can talk until he’s blue in the face, but it will be Madigan and his staff that ultimately put the budget together that becomes law.
- Anon - Thursday, Feb 5, 15 @ 11:33 am:
Hiring more Corrections officers seems like a good idea if the numbers make sense. I know a couple of folks who do this job and while they do make quite a bit more $ in OT when they are just talking off the record they are also pretty upfront about saying they’d be willing to give that up in order to have more officers, be home more and have greater safety in the facilities. So what do the numbers say? How many more new officers could be hired if they reduced the overtime of existing officers?
- walker - Thursday, Feb 5, 15 @ 11:35 am:
The Speaker was generous and non-confrontational in his reactions. So far so good.
We will find that Madigan is also economically astute and fairly conservative, even when compared to some Republican members. He does not, however, control his caucus members as tightly as outsiders might assume.
Historically, Madigan has dealt better with Republican governors than with Democratic ones. My guess is that Madigan will go half way on fiscal and economic issues, and it will be up to Rauner to meet him there.
- Larry the Cable Guy - Thursday, Feb 5, 15 @ 11:39 am:
Chapter Two of Bruce Rauner’s Excellent Adventure begins. Chapter 3 begins after the spring session:
Chapter 1 — The Campaign: The more money you spend, the more likely you are to be elected king.
Chapter 2 — Governing: The more money you have in your campaign fund while governing, the more leverage you have to get your way.
Chapter 3 — Reality Check
- Anotheretiree - Thursday, Feb 5, 15 @ 11:46 am:
I may not understand this completely, but isn’t it already too late for taxes to help with the 2nd half of the current budget ? One month of lower tax revenue has already passed. Even if something gets passed, it wont take effect in time to help this half year mess. Isn’t it all going to have to be fund transfers and cuts ?
- A guy - Thursday, Feb 5, 15 @ 11:46 am:
Love him or hate him, the Speaker can turn a phrase. There might be (as Walk suggests) more fertile ground for compromised agreement than meets the eye.
There have been more discussions and negotiations going on behind the scenes than people may realize. Everyone needs to work toward some progress.
- Rich Miller - Thursday, Feb 5, 15 @ 11:48 am:
===Even if something gets passed, it wont take effect in time to help===
Taxes can be made retroactive. I think Minnesota’s tax hike was retroactive for five months or more.
- RNUG - Thursday, Feb 5, 15 @ 11:50 am:
== Even if something gets passed, it won’t take effect in time to help this half year mess. Isn’t it all going to have to be fund transfers and cuts? ==
Short term they’re going to have to paper it over with delayed payments to everybody, fund sweeps, borrowing, etc. All those budget gimmicks Rauner was disdainful of.
- Norseman - Thursday, Feb 5, 15 @ 11:56 am:
=== but it will be Madigan and his staff that ultimately put the budget together that becomes law. ===
Don’t count on it. Madigan is going to insist on Republican support. The Gov. is going to have to wear the Carhartt on the budget.
- Kerfuffle - Thursday, Feb 5, 15 @ 12:15 pm:
===Maybe we’ll learn that he’s one tough guy who will get what he wants. Or maybe he’ll learn that he has something to learn.===
Nice summation of the situation and boy will it ever be interesting to find out which way it goes. My guess is a little of the first and a lot of the last.
- VanillaMan - Thursday, Feb 5, 15 @ 12:56 pm:
I agree with John Cullerton.
Hinz is being kind. That isn’t a curve. It is a wall. It doesn’t matter how tough he is, Rauner will not lift our state by pretending he can tunnel through. Rauner needs to either learn to compromise and start climbing, or he can just spend the next four years banging his head against that wall.
Last week was ridiculous. It was like hearing a ship’s captain on a sinking ship claim the can stop it from sinking by throwing half the guests overboard, plus the ship’s crew.
Finally - we all know that our budget wasn’t going to cover the fiscal year if there was no tax extension. For Rauner and his folks to continue claiming complete shock over this fact either shows a complete ignorance of what getting elected Illinois governor in 2014 meant - or they think citizens are too stupid to understand what it obviously means.
Either way, the Rauner team is a loser and the more they bring this up, the bigger losers they appear to be.
Just stop, Mr. Wealthy Gold Mountain.
- Yatzi - Thursday, Feb 5, 15 @ 2:35 pm:
In the past the Gov has issued an”order” and agencies did not spend a percentage of the authorized approp. - this was often done at the beginning of the SFY - sometimes later - many times the funds were released later in the SFY- all depending on the states income (Thompson can teach him)
- Grandson of Man - Thursday, Feb 5, 15 @ 2:57 pm:
“The lack of clarity is mainly due to the fact that union strength is just one factor businesses look at when deciding whether to set up shop or relocate,”
If unions are as bad as some make them out to be, businesses would never locate anywhere.
- RNUG - Thursday, Feb 5, 15 @ 3:53 pm:
Listen to what businesses are saying. They want low cost everything (who doesn’t?), but the #1 thing they want is CERTAINTY. They need to know what it will cost them (both taxes and regulatory) to produce a good or service so they can figure out if it is profitable to do so. Then they can make a decision on things like location, unions, etc. and/or attempt to get a tax break.
Right now Illinois is providing ZERO certainty on taxes or regulatory improvements.
We don’t need to lead a race to the bottom, but we do need to be somewhere in the middle third of the pack. Even if it is wrong, Illinois needs to do something to chart a path forward.
- Pot calling kettle - Thursday, Feb 5, 15 @ 4:03 pm:
The minimum wage proposal was good, in that it would essentially prevent the wage from continuing to lose value. It was not enough because value has already been lost since the last increase.
If $10/hour in seven years is a stating point for negotiations, that’s a good sign. If keeping pace with the cost of living will be incorporated in the final deal, that would be be great.
- JS Mill - Thursday, Feb 5, 15 @ 5:03 pm:
@RNUG- To take your initial thought a little further, everyone wants services but no one wants to pay for them. That said, few people move to a community that does not have something to offer- parks, schools, libraries, public transportation. Cut, cut, cut sounds awesome to “let’s be kind and call them right-wing thinkers” as MJM said, but when it is something they like well…that is a different story. 2 year budget plan and some stability, with increased revenue would work for just about everyone, especially if the bills are getting paid.
- Arizona Bob - Friday, Feb 6, 15 @ 7:29 am:
@Grandson
=If unions are as bad as some make them out to be, businesses would never locate anywhere.=
Ummmmm….ever hear of “Right to Work” states, Grandson? That’s about the only place unionized companies are growing now.