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How will we pay for a capital bill?

Monday, Apr 29, 2019

* From the Tribune

Beyond a once-a-decade mega-transportation bill, lawmakers are looking for ongoing road and transit related funding sources. One possibility is an increase in the state’s 19-cent-per-gallon motor fuel tax, a levy that has not been increased since 1990, when it was 16 cents per gallon. Lawmakers also are looking at tying the gas tax rate to inflation, allowing it to grow over time.

The Illinois Chamber of Commerce has backed a motor fuel tax hike in exchange for eliminating the state’s sales tax on gasoline, a move that could provide cover for some Republicans. But others say that instead of eliminating the sales tax on gas, which goes to overall state spending, the state should slowly transfer its revenues to transportation-related spending. […]

There have been talks about funding building projects, known as “vertical infrastructure,” through taxes on legalized marijuana and sports betting. That, however, would take away money that Pritzker has dedicated to other parts of his budget. […]

Already there appears to be a general reluctance among some Senate Democrats to vote on a capital bill until the General Assembly addresses the income tax change.

1) Indexing the MFT to inflation is a no-brainer and should’ve been done decades ago;

2) Redirecting the state sales tax on gas and diesel to capital projects isn’t a bad idea, but only if the budget can sustain the hit;

3) Pritzker has only tapped into cannabis/sports betting licensing fees in his proposed budget, leaving open the possibility that usage revenue could be spent on something else down the road;

4) Vegetables before dessert, please.

- Posted by Rich Miller        

28 Comments
  1. - Honeybear - Monday, Apr 29, 19 @ 8:58 am:

    -Vegetables before dessert, please-

    yeah sure
    but
    watch
    who gets the vegetables
    and who gets the dessert

    One thing I’m seeing but there are a lot of other angles. JB is splitting trades and Public unions
    What Rauner should have done
    To defeat Labor
    Trades get Dessert
    Publics get Veggies


  2. - Eastside - Monday, Apr 29, 19 @ 9:10 am:

    Pritzker is is using one-time revenue from the sale of cannabis and sports gaming licenses for base spending (filling the budget hole). Therefore, other revenue will have to fill-in next fiscal year when that one-time revenue is game. Safe to assume the recurring revenues from these two ventures will go to backfill the loss of one-time license revenue that is supporting general spending.


  3. - wordslinger - Monday, Apr 29, 19 @ 9:20 am:

    So much heavy-lifting proposed for the next five weeks.

    It will be interesting to see in what order they are all addressed. Seems to me one false move and it could all fall apart.


  4. - Rich Miller - Monday, Apr 29, 19 @ 9:20 am:

    ===Safe to assume the recurring revenues from these two ventures will go to backfill===

    That’s very possible, but it’s also safe to assume that when they’re looking for ways to pay for a capital bill without raising the MFT, they could start eyeing pot dough.


  5. - Anon - Monday, Apr 29, 19 @ 9:29 am:

    I keep bringing this up but don’t see it mentioned anywhere. Why are the legislators ignoring electric vehicles? They don’t pay anywhere near the license fees gasoline cars do and don’t pay one cent for gasoline tax (obviously). Yet, they have tons of torque, are usually heavy and get to ride for free. As I’ve said in the past as well, I’m all for incentivizing EV to get more on the road, but something has to give obviously and since they pay no road fees, perhaps start there.


  6. - Wow - Monday, Apr 29, 19 @ 9:35 am:

    Can’t do capital without doing a bigger gaming bill tied in with sports betting. Chicago, Rockford, south suburbs.. way more upfront and continuing revenue than sports betting alone


  7. - Grandpa2 - Monday, Apr 29, 19 @ 9:42 am:

    I agree with Anon that electric vehicles and hybrids need to pay their share of highway maintenance. One option is to expand tolling to all Illinois interstates, which may become possible with contemplated federal action (see https://thehill.com/policy/transportation/335318-trump-congress-head-for-fight-over-tolls).


  8. - Pot calling kettle - Monday, Apr 29, 19 @ 9:48 am:

    Someone needs to sit down with the Republicans and ask them about the revenue sources they are willing to support to pay for these projects. If they are not willing to stand up for revenue, they need to sit down and stop asking for spending. Those who actively oppose revenue, should get (in funded projects) exactly what can be afforded under the revenue they propose. (AKA nothing.)


  9. - Roman - Monday, Apr 29, 19 @ 9:49 am:

    Hearing a lot of “JB will get the votes for all this stuff by spreading around pork from a capital bill.” That kinda glosses over the fact that the capital bill will require another tax or two on an already long list (and the capital-related taxes will likely be the biggest in the bunch.)

    Bag tax, tobacco tax, fair tax, motor fuel tax, video poker tax, and not to mention rolling back the retailer’s deduction and foreign income decoupling…that’s a lot of vegetables. Better be one hell of a dessert.


  10. - Original Rambler - Monday, Apr 29, 19 @ 9:49 am:

    I’m in agreement with expressed sentiment to tax electric vehicles for their road use. Either by increased registration fee or a special tax on tires and/or batteries or some other novel approach. I don’t think converting to toll roads is the answer due to the logistical headaches (not even addressing the political ones). But I’d be open to some proposal. Indexing the MFT to inflation makes a lot of sense. Should be considered for other taxes.


  11. - City Zen - Monday, Apr 29, 19 @ 9:55 am:

    ==Indexing the MFT to inflation is a no-brainer==

    Just as indexing tax brackets to inflation is.


  12. - Rich Miller - Monday, Apr 29, 19 @ 9:55 am:

    ===I’m all for incentivizing EV to get more on the road===

    Doesn’t sound like it.


  13. - Skeptic - Monday, Apr 29, 19 @ 10:03 am:

    “I agree with Anon that electric vehicles and hybrids” My hybrid gets about the same mileage as non-hybrid Toyota Corolla.


  14. - Sue - Monday, Apr 29, 19 @ 10:05 am:

    GivingEV owners a tax break is not consistent with Gov Fair Tax. Mostly 1 percenters own EV’s. How about an annual registration fee to compensate for the lost gastaxes


  15. - A Jack - Monday, Apr 29, 19 @ 10:24 am:

    Perhaps tolls for vehicles over a certain weight. We have semis zipping through Illinois, possibly not even refueling. So we need to get some road maintenance from those vehicles.

    Tolling passenger cars and trucks might be more problematic when you have out of state vehicles. Although Florida has figured out how to toll out of state visitors quite well.

    And with electronic tolling, you take much of the toll booth traffic jam out of the picture.


  16. - Wylie Coyote - Monday, Apr 29, 19 @ 10:39 am:

    Illinois gets its money from every truck that travels through Illinois. It’s called IFTA - International Fuel Tax Agreement - and the states divvy up motor fuel taxes paid by all interstate trucks based on the number of miles they travel in each state - no matter where they buy their fuel.


  17. - BW - Monday, Apr 29, 19 @ 10:43 am:

    Illinois and most states catch the semi’s even if they don’t buy diesel in Illinois with quarterly IFTA reporting and payment requirements.


  18. - Dan Johnson - Monday, Apr 29, 19 @ 11:02 am:

    We already have the infrastructure in place to assess a fee on semis who use our roads. They are the heavy vehicles that break the roads, not little hybrids. We should levy a dime a mile on every semi (which it appears they can collect and pay with existing agreements already in place nationally) and put it all into bridges.


  19. - grand old non-partisan - Monday, Apr 29, 19 @ 11:09 am:

    “Just as indexing tax brackets to inflation is”

    income tax already naturally rises as wages increase, since it’s a percentage. The gas tax is a flat amount per gallon. It doesn’t change when the price of gas changes, or when the income of the person paying it increases. It does, however, decrease (per mile) as fuel efficiency standards increase.


  20. - anon2 - Monday, Apr 29, 19 @ 11:31 am:

    Whatever the ultimate revenue sources, many Republican legislators can be counted on to vote No. Some of those No voters will then shamelessly vote to spend the money they declined to help to raise.


  21. - City Zen - Monday, Apr 29, 19 @ 11:35 am:

    ==income tax already naturally rises as wages increase, since it’s a percentage.==

    Does $50,000 in 1970 mean the same as $50,000 today? Nope. It’s sound fiscal policy to index tax brackets to inflation. 15 states with graduated tax brackets (including CA and MN) already do this.


  22. - Chicagonk - Monday, Apr 29, 19 @ 11:42 am:

    I’m a big fan of increasing tolls on heavy vehicles. I also am for (and know this won’t happen) Illinois looking trying to get more bang for their buck when it comes to road construction costs and reform (not saying to get rid of) prevailing wage laws.


  23. - The Bashful Raconteur - Monday, Apr 29, 19 @ 12:18 pm:

    So many BIG legislative issues….sensing a Jenga moment.


  24. - Downers Delight - Monday, Apr 29, 19 @ 12:21 pm:

    City Zen at 11:35a - Wouldn’t it be unsound fiscal policy to index tax brackets to inflation? From the government’s perspective, less income falls into the higher rate buckets annually.

    Let’s say for example Anthony Rizzo earns $950k in IL and has to pay the progressive rate. In year 1, $700k is charged at the proposed higher progressive rates above $250k. In year 2 with a 2% CPI adjustment, only $695k is charged at the higher rates.

    From a taxpayer’s perspective this is helpful because as you said $50k in 1970 is surely worth more than $50k today. But that won’t help the State’s budget as income tax receipts will decrease if salaries do not keep up with inflation, especially in times of higher inflation (e.g. greater than 3%, which hasn’t been seen since the financial crisis).


  25. - Becky - Monday, Apr 29, 19 @ 1:28 pm:

    Honeybear
    What do you mean by

    Splitting trades and public unions


  26. - DuPage - Monday, Apr 29, 19 @ 2:04 pm:

    @- Anon - Monday, Apr 29, 19 @ 9:29 am:

    ===I keep bringing this up but don’t see it mentioned anywhere. Why are the legislators ignoring electric vehicles? They don’t pay anywhere near the license fees gasoline cars do and don’t pay one cent for gasoline tax (obviously). Yet, they have tons of torque, are usually heavy and get to ride for free. As I’ve said in the past as well, I’m all for incentivizing EV to get more on the road, but something has to give obviously and since they pay no road fees, perhaps start there.===

    Incentives for electric vehicles are to encourage drivers to buy them, to reduce air pollution. Electric vehicles cost substantially more to buy, so the state gets more in sales tax. I don’t know if the sales tax on vehicles is earmarked for roads, but if it isn’t, it should be.


  27. - Anonymous - Monday, Apr 29, 19 @ 5:49 pm:

    MFT needs to be increased, add electric vehicles fees nd the gas sales tax windfall with the newly much higher gas prices


  28. - theCardinal - Monday, Apr 29, 19 @ 5:59 pm:

    MFT bigger increase on diesel smaller increase on gasoline combined with electric vehilces fees increase. Trucks traffic is what wrecks roads not cars. Tollway did a study on that years ago, one truck is like 20,000 cars as far as impact to road.


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