* Subscribers were told about this development early today. AP…
Gov. Bruce Rauner’s office estimates a Senate proposal to break a nearly two-year Illinois budget deadlock would still leave the treasury billions of dollars in the red.
The review obtained Wednesday by The Associated Press shows tax increases floated in the Senate plan would increase revenue by $1.7 billion. But it says it adds more than $4 billion in spending. […]
But the budget office estimates the compromise Senate Democrats and Republicans put forth last week would only reduce the expected deficit by $1 billion [down to $4.3 billion]
As I told subscribers, after two years without a real budget nobody really cares about this fiscal year’s deficit as long as next fiscal year is balanced.
* The trouble is, GOMB’s analysis claims that next year’s proposal is out of whack, too…
The governor’s budget team says that $4.3 billion deficit for the current financial year would fall to $2 billion in the next one as money begins to roll in from the taxes proposed in the Senate’s budget framework, according to a copy the Chicago Tribune obtained.
The projected FY 18 deficit is actually $2.3 billion.
* More…
The math breaks down like this: Because of a series of court orders and laws that’s kept most of government spending on autopilot, the budget office estimates the state will spend $35.1 billion in the financial year that ends July 1. The analysis projects the Senate plan would bring in an extra $1.7 billion during that period, which would leave the state with $35.4 billion to spend. But the Senate plan calls for spending an additional $4.4 billion this year — including nearly $2 billion on employee health care that’s gone unfunded during the long-running impasse — hence the $4.1 billion deficit, according to the analysis.
Again, policymakers don’t care a huge amount about this fiscal year because it’s already half over, so coming up with a complete, balanced solution by the end of this June would be too painful on both the revenue and spending sides. There is a big push, however, to get a balanced budget by the end of next fiscal year. That’s understandable and desirable.
* Subscribers have a copy of the complete GOMB analysis (plus an analysis of the Senate’s “reform” proposals), but here’s what it says about FY 18…
Annualizing the new revenue sources in the Senate Plan for FY18 brings in an additional $5.4 billion in revenue compared to previous GOMB revenue estimates. This would bring total available general funds resources to $38.8 billion.
The Senate Plan does not include appropriations for FY18. As such, spending estimates rely on spending estimates previously contained in the GOMB 5 Year Report issued in November of 2016, which placed FY18 expenditures at $40.6 billion. Several items in the Senate Plan require adjustments to this spending level, including $650 million in pension savings, $85 million in procurement savings, an increase of $221 million related to CPS pension parity, and $1.1 billion in debt service for the $7 billion on General Obligation Bonds included in the plan to pay down old bills. With these adjustments, FY18 spending would total $41.1 billion.
With $38.8 billion in available resources, the projected spending total of $41.1 billion would lead to an FY18 budget deficit of $2.3 billion.
The Senate Democrats disputed these numbers yesterday, but haven’t yet put that on paper.
*** UPDATE *** From the Senate President’s spokesman…
We’ll check it out and see if changes need to be made.
The goal all along has been to produce a balanced, sustainable budget. We filed the legislation to invite input and constructive criticism.
The proposals remain under construction. We’ll look into this and take steps as needed.
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Moody’s: Get a sustainable budget already
Wednesday, Jan 18, 2017 - Posted by Rich Miller
* Moody’s Analytics has prepared yet another economic forecast for the state. The whole thing is worth a read, but here’s some of it…
Illinois is one of the Midwest’s weakest links, reflecting both soft job creation and the state’s descent into fiscal quicksand. The state trails the nation in most metrics and political gridlock is imposing significant economic costs. The jobless rate has resumed its descent after rising late last year into early 2016, but much of the decline owes to a sharp drop in the labor force and population losses. […]
To be a solid-performer longer term, the state must navigate its fiscal challenges without doing lasting damage to its business climate. The state’s demographics present it with another challenge, as an aging population coupled with a trend toward fewer workers hampers job and income gains, which are forecast to be below average over the extended forecast horizon. […]
Aside from private industries, the state’s fiscal problems have worsened. Repeated credit downgrades will harm Illinois’ economic climate. […]
Illinois’ budget problems are its biggest headache, and an escalation of the state’s fiscal problems and weakness in the public sector suggest limited upside potential even as other parts of the economy improve. […]
Business climate. Illinois, and Chicago in particular, is in general an appealing location to corporate headquarters and companies that need highly skilled workers and are willing to pay for top talent. Despite Illinois’ advantages, however, uncertainty stemming from the state’s fiscal crisis threatens to discourage firms from locating or remaining in the state. This is a concern since manufacturing in the state is already sputtering, and downstream industries have been strong performers for Illinois during the recovery and in years past.
Although lawmakers are mindful of their state’s business tax climate, in the past they have often opted to entice businesses with lucrative tax incentives and subsidies instead of broad-based reform aimed at reducing the above-average personal and corporate income tax burdens prevalent in the state. There is a recurring pattern of such behavior in Illinois, and it is not clear whether business incentives will generate enough money to pay back these costs. A far more effective method to improve the business tax climate over the longer term is to focus on more broad-based income tax reforms and provide firms more certainty as to what their future tax burdens might be. This can be accomplished only by getting the overall budget situation on a more sustainable, and certain, path. […]
The state’s longer-term outlook is tarnished primarily by its budget woes and weak population trends, not its high costs relative to nearby states. Business costs in the state are lower than they are nationally and have trended downward for the past few decades. Costs are lower than those in Wisconsin and Michigan but higher than those in neighboring Indiana, Iowa, Kentucky and Missouri. Firms in Illinois tend to pay less in taxes and their utility costs are below average, but labor is on the expensive side. By and large, though, business costs are pretty favorable and lower than those in states that have similarly large metropolitan areas with unique features that appeal to businesses such as California and New York.
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Our sorry state
Wednesday, Jan 18, 2017 - Posted by Rich Miller
* David Leonhardt at the NY Times…
(T)he earnings gap between four-year college graduates and everyone else has soared in recent decades. The unemployment rate for college graduates today is a mere 2.5 percent. […]
The share of lower-income students at many public colleges has fallen somewhat over the last 15 years.
The reason is clear. State funding for higher education has plummeted. It’s down 19 percent per student, adjusted for inflation, since 2008, according to the Center on Budget and Policy Priorities. The financial crisis pinched state budgets, and facing a pinch, some states decided education wasn’t a top priority.
“It’s really been a nightmare,” said Diana Natalicio, UTEP’s president and herself a first-generation college graduate. “The state does not recognize — and it’s not just in Texas — the importance that the investment in public education has for the economy and so many other things. Education was for me, and for many of the rest of us, the great opportunity creator.”
* The chart…
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I hadn’t thought of it that way
Wednesday, Jan 18, 2017 - Posted by Rich Miller
* But he’s right…
Heh.
* Meanwhile, Greg Hinz updated his story from yesterday to say that Bobby Rush isn’t going…
According to his office, “The congressman will not attend as his wife is hospitalized.”
* And Greg points to this tweet by Jan Schakowsky…
* Back to Gov. Rauner…
Gov. Bruce Rauner told reporters Tuesday that his choice to skip President-elect Donald Trump’s inauguration wouldn’t have a negative impact on Illinoisans.
“People understand in Washington and around the country that Illinois has big challenges and they know, and respect the fact, that I am one hundred percent focused in Illinois, working on getting a balanced budget with structural change to the system,” Rauner said. “And they respect that and they appreciate it.”
Yeah. People all over the country know he’s working so very hard. /snark
More…
“I do have close, good working relationships with a number of incoming members of the Trump administration, as well as members of his transition team, and I’ve worked with the Vice President-elect for years,” Rauner said. “There’s no issue of us not having a good, solid working relationship with the incoming administration.”
Rauner noted that he “worked hard” to form a close relationship with the outgoing Obama administration, including former Secretary of Education Arne Duncan and Secretary of Commerce Penny Pritzker. He now hopes to work with the Trump administration on infrastructure and schools in Illinois.
He worked so hard forming close ties to Penny Pritzker that she’s now “all in” for one of Rauner’s top opponents. /snark2
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Question of the day
Wednesday, Jan 18, 2017 - Posted by Rich Miller
* Demonstrations at the Statehouse are currently banned above the 1st Floor…
No demonstrations are allowed above the first floor of the Capitol Building; this includes singing, chanting or shouting in a loud voice of the type that could interfere with the business conducted in the building.
* Definition of demonstrations…
“Demonstration” means demonstrating, picketing, marching, rallying, selling non- commercial printed matter or materials, moving in procession, holding of vigils, singing, chanting, or shouting in a loud voice of the type that could interfere with the business conducted in the building, and all other forms of public demonstrative activity that involve the communication or expression, orally or by conduct, of views or grievances, engaged in by one or more persons, the conduct of which has the effect, intent, or propensity to draw a crowd or onlookers within 100 feet of the buildings named in Section 2005.10, on the Capitol Complex grounds, or within the building or the Capitol. Demonstration shall also mean demonstrating, parading, picketing, speechmaking, holding of vigils, sit-ins, or other activities, conducted for the purpose of demonstrating approval or disapproval of governmental policies or practices (or the lack thereof), expressing a view on public issues, or bringing into public notice any issue or other matter. However, nothing in this Part shall be construed to govern lobbyists or lobbying as defined by the Lobbyist Registration Act [25 ILCS 170], nor shall a demonstration mean the peaceful contact or discussion by one or more persons with elected representatives during a legislative session, or with executive branch officials, concerning their view on a public or personal issue.
* The Question: Should this demonstration ban be rescinded? Take the poll and then explain your answer in comments, please.
bike trails
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Rauner: “We need a capital plan”
Wednesday, Jan 18, 2017 - Posted by Rich Miller
* Today in Champaign, Gov. Rauner said he wants a capital plan…
I’d like to get a balanced budget and a capital bill with a balanced budget, and put a lot of resources into our universities across the state, but especially U of I… The U of I is a major economic engine for this state and I want to take them to a whole other level… We need a budget to do it, we need a capital plan to do it…
He didn’t say when he’d like to roll out a capital plan or how he intends to pay for it, however.
* Raw audio…
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Exelon files yet another appeal on Byron plant
Wednesday, Jan 18, 2017 - Posted by Rich Miller
* Every year since 2012, Exelon has appealed the property tax assessment on its Byron nuclear power plant. The 2012 case finally made it to the Illinois Property Tax Appeal Board this past spring when it held a hearing that lasted six weeks. The board hasn’t yet issued a ruling because lawyers are still arguing the case.
And so, right on schedule, Exelon has filed yet another appeal, which seems a bit greedy since Exelon just got a big state bailout.…
Exelon Generation officials say the $546 million assessment, set in the fall by county Supervisor of Assessments Jim Harrison, is about 48 percent too high. Their appeal sets the value at $295 million. […]
Harrison set the plant’s value $64 million higher than last year’s assessment of $482.4 million because Exelon officials succeeded in late 2015 in getting the licenses renewed for the two reactors for 20 more years. […]
Exelon paid more than $33.7 million in real estate taxes in 2016 to 11 taxing bodies: Ogle County, Rockvale Township, Byron School District, Oregon School District, Oregon Park District, Byron Fire District, Rock Valley College, Byron Public Library District, Byron Museum District, Byron Forest Preserve District, and Kishwaukee Community College.
The Byron School District received the largest share – $18.6 million.
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The Pepsi challenge
Wednesday, Jan 18, 2017 - Posted by Rich Miller
* The Southern Illinoisan takes a look at the proposed sugary drink tax…
As frequent retailers themselves, [John Rains, executive vice-president and general manager of Pepsi Mid-America in Marion] said, schools might also feel the sting.
“Schools rely on businesses in the area to support a lot of their programs and businesses won’t be in a position to be as supportive,” he said. “And the schools themselves if they’re going to (use the products) for resale are going to be taxed.”
Overall, Rains said he would prefer legislators to focus on spending.
“Rather than continue to put burdensome taxes on the consumers, they need to look at running the state in a more professional and businesslike manner,” he said. “You just can’t tax, you have to look at how you’re spending money.”
Easier said than done, John. My advice would be to either suggest ways to cut spending or increase revenues, because this tax is most definitely in the mix.
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Put up or shut up
Wednesday, Jan 18, 2017 - Posted by Rich Miller
* Illinois Policy Institute…
One of the most foolish things politicians can do to an economy suffering from a weak recovery and a shrinking tax base is to pass tax hikes. Hitting residents and businesses when they’re struggling risks sending a faltering economy into a tailspin.
And for an economy edging toward recession, tax hikes are even worse.
Unfortunately, a multibillion-dollar tax hike is exactly what Illinois politicians are proposing for a state economy that’s been remarkably weak and is now showing signs of recession-like shrinkage.
Illinois’ falling tax collections hint at looming recession
According to the December 2016 monthly briefing from the Commission on Government Forecasting and Accountability, or COGFA, Illinois’ corporate income tax collections are down $386 million in the first six months of fiscal year 2017, when compared with the same time last year.
Personal income tax revenues are off by $189 million. And sales tax collections are also weak, up only $45 million.
State revenues are down by nearly 5 percent year to date, and when all sources are taken into account, total revenues are down nearly 7 percent.
There’s no doubt that tax hikes right now aren’t optimal. But they never are.If the economy was going strong I assume the “Institute” would warn against harming the economy’s success.
But how would the “Institute” balance the budget? They don’t say. Drastic spending cuts will make things worse as well, after all. Much worse, considering how badly the budget is out of balance.
And it’s also quite possible that the impasse, with its reduced spending, is doing damage to the state’s economy.
So, let’s just get on with it, already. There’s nothing fiscally conservative about allowing unpaid bills to pile up by the billions year after year.
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Survey finds substitute teacher shortage
Wednesday, Jan 18, 2017 - Posted by Rich Miller
* Kiannah Sepeda at the AP…
Public-school administrators are scrambling to find substitute teachers for as many as 600 Illinois classrooms a day, a survey finds.
The review released Tuesday by the Illinois Association of Regional Superintendents of Schools revealed that teachers call in more than 16,500 absences each week. School officials have trouble finding replacements for nearly 20 percent of them.
Association president Jeff Vose, who is regional school superintendent for Sangamon and Menard counties, said that a 2012 increase in substitute teacher certification requirements may have discouraged some educators from applying to be fill-in teachers. The law increasing certification requirements raised the application fee to $100, bringing applicants’ total registration costs to around $200. It also added a background check to ward off concerns about “educator misconduct with students,” which accounts for roughly $50 of the total fee.
“Districts are desperate to get quality individuals,” Vose told The Associated Press in a phone interview Tuesday. “However, at some point, they’re just searching for a body to be in front of the classroom.” […]
Schools are amplifying recruiting efforts, helped along by a new law set to take effect next year. That law, signed by Gov. Bruce Rauner last week, will reduce the application fee by $50 and remove a pending basic skills test requirement.
It might also help to pay them more because as the economy has improved people have found full-time gigs. But, hey, money is always tight.
* The survey results are here. From the summary…
The survey of nearly 400 districts found:
* Schools have to cover more than 16,500 absences each week
* Schools cannot find substitutes to cover more than 3,000 absences each week, or about 18 percent of total absences (600 classrooms per day)
* Total absences are more common in schools in the Chicago suburbs. Substitute teacher shortages are more of an issue outside Chicagoland, led by southern and western Illinois.
The survey found that districts in far southern Illinois can’t find substitutes to cover teacher absences 26 percent of the time every week. The number was lowest in the Chicago area, but 16 percent of absences still can’t be covered there.
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Pot, meet kettle
Wednesday, Jan 18, 2017 - Posted by Rich Miller
* We’ll get back to the rest of this Tribune article a bit later this morning about the Senate’s “grand bargain” plan, but I wanted to highlight the end of it first…
Both chambers would have to agree on any budget plans before they’d reach Rauner’s desk. The division in strategy between the chambers already has raised some doubts.
“My experience has been, all the past budget plans we have passed have been in a bipartisan fashion, with all four caucuses and the governor engaged. Until we do that, based on what I’ve seen so far, nothing is going to happen,” said Rep. Fred Crespo, a Democrat from Hoffman Estates who serves on a House appropriations committee. “We can’t divide it this way, it just doesn’t work.”
That’s kinda rich coming from a guy in a caucus which as recently as last May attempted to unilaterally ram through a partisan budget that went nowhere in the Senate.
The House Democrats are infamous for their “take it or leave it” budget plans, often sending a package across the building and then adjourning.
* Yes, Crespo’s right that everyone will eventually have to be “engaged.” As I’ve already said, the Senate’s proposal should be seen as a bipartisan counter-offer to the governor. If it passes (and that’s still an “if”), the House can then put its own stamp (partisan or bipartisan) on the proposal or come up with its own counter-offer or just do nothing and everything collapses.
But don’t talk to us about “dividing” it this way. After what happened last year, the House Democrats have no room to criticize.
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Proft gets another cash infusion from Uihlein
Wednesday, Jan 18, 2017 - Posted by Rich Miller
* Tribune…
Liberty Principles PAC, the political committee run by radio host and former candidate for governor Dan Proft, reported a $500,000 contribution from Richard Uihlein, CEO of the packaging supply company Uline. The group works to elect Republican candidates to seats in the Illinois Capitol.
The group is also seen as a possible threat to Republicans who vote for an agreed tax plan.
Proft’s PAC ended 2016 with about $437,000 in the bank and $275,000 in debt, split between his gubernatorial campaign PAC and the Illinois Opportunity Project, a group he founded that spent hundreds of thousands of dollars last year backing Rep. Ken Dunkin (D-Chicago).
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