Question of the day
Thursday, May 13, 2021 - Posted by Rich Miller
* Press release…
In a report released today, the Civic Federation offered its general support for Governor JB Pritzker’s proposed FY2022 budget. The reasonable one-year proposal holds most areas of agency spending flat at a time of uncertain revenues, makes the full statutorily required pension payment and appropriately shifts some capital funds to the operating budget for one year. The Federation’s full analysis is available at civicfed.org/FY22ILRecommendedBudget
Governor Pritzker unveiled his spending plan earlier this year, before billions of dollars in funding were made available to the State of Illinois and local governments as part of the federal American Rescue Plan Act (ARPA). To balance the budget at that time, the Governor urged the General Assembly to implement $932 million in corporate tax treatment changes.
“Fortunately for the State of Illinois, more than eight billion dollars in federal funding will soon be deposited in its coffers, which will give officials a little breathing room as budget negotiations continue in the coming weeks,” said Civic Federation President Laurence Msall. “Given the increased flexibility, the proposed business tax changes should be excluded from the enacted budget. Increasing taxes during a recession can easily exacerbate the negative impacts of the recession and hamper the economic recovery.”
Because Illinois has a long, bipartisan fiscal tradition of proposing gimmicky budgets during economically difficult times, the Federation was pleased that Governor Pritzker’s initial proposal largely broke with that tradition to hold most agency spending flat and not rely on dubious revenues. The federal stimulus should therefore be used responsibly rather than reversing the Administration’s efforts to balance the budget.
“Not to spoil the potential eight-billion-dollar spending party before it gets started, but these funds absolutely should not be used to create new multiyear programs or new areas of ongoing spending obligations,” said Msall.
Little information about how the bulk of Illinois’ ARPA funding would be spent has yet been made public. Governor Pritzker, Illinois Senate President Don Harmon and Illinois House Speaker Chris Welch previously expressed plans to prioritize paying off $2.0 billion borrowed from the Federal Reserve under the provisions of an earlier stimulus package. Following guidance issued this week by the U.S. Department of Treasury, it is now unclear if the State can pay any debt service with the proceeds. The Office of Illinois Comptroller Susana Mendoza has asked the Treasury for additional direction.
“The Civic Federation eagerly awaits additional detail on how the federal ARPA funds can and will be used by the State,” said Msall. “No matter the permitted uses, the State must seize this opportunity to work on its long-term plan so that it will not enter future economic crises in the worst shape of any state in the nation.”
In order to achieve fiscal stability, a comprehensive, long-term plan would aim to ensure annual budgets are balanced, eliminate the bill backlog, assist struggling local governments, set aside adequate reserves and address long-term, structural challenges such as unfunded pension liabilities and infrastructure needs.
The full report is here.
* Meanwhile…
A compromise could be on the way to reduce the fee on small trailers many Illinoisans have decided not to comply with over the past year.
The fee for small trailers in 2018 was $18. That increased to $118 as part of the governor’s capital construction bill enacted in 2019.
State Rep. Katie Stuart, D-Edwardsville, said her House Bill 36 is an effort to drop it back to $18. She said there was obvious sticker shock last year.
“According to the Secretary of State we had 150,000 fewer trailer license applicants last year compared to the previous year and I worry that we’re going to see that number continue to decrease as people don’t register their trailers,” Stuart said.
* The Question: What’s your outlook for the new state budget?
- AC - Thursday, May 13, 21 @ 3:36 pm:
Considering that small utility trailers rent for less than $20/day, it would take about 6 days of usage a year just to break even on the license fee. For a lot of people, it would make more sense to rent than to license. I suspect lowering the fee might actually increase revenue.
- Downstate - Thursday, May 13, 21 @ 3:44 pm:
State of Illinois has a lifetime trailer fee of $19, if the pulling vehicle and trailer don’t exceed 8,000 pounds. That covers lots of small utility trailers and boat trailers. Again, it’s a one time fee.
- Anonymous - Thursday, May 13, 21 @ 3:44 pm:
If only the Feds would give us $8B every year…
- Dysfunction Junction - Thursday, May 13, 21 @ 3:48 pm:
AC, that’s exactly the calculation I made. I had three (two with boats on them, one utility trailer), but pulled two off the road completely.
While the politicians try untangling this mess, anybody in the market for a trailer with low miles?
- Shield - Thursday, May 13, 21 @ 3:53 pm:
==* The Question: What’s your outlook for the new state budget?==
Keep the course steady and things could continue to look up, even if the budget times are still tough. At least we’ll breathe a wee bit easier.
As for the trailer taxes, why not double ‘em from $118? It’s not like it goes to support the roads the trailers are driven on or anything.
- walker - Thursday, May 13, 21 @ 4:05 pm:
As long as the GOPers stay focused on their trailer fee outrage, the more difficult issues can be confronted without distraction by the Dems.
- Dysfunction Junction - Thursday, May 13, 21 @ 4:13 pm:
Shield, educate yourself. I have driven exactly eight miles on public roads in the last three years with all three of my trailers combined. And I’m not exactly an outlier. Unfortunately, a licensed trailer is often required for parking in boat clubs etc., whether or not the trailers ever leave the property. I suspect Rich is literally in the same boat, as he’s on the same lake.
This particular class of light trailer (TA) generally doesn’t see a lot of miles and isn’t much of a burden when it does actually see pavement. At 3x$18 annually, it was easier to just write a check. At 3x$118, it was suddenly in my interest to think more carefully about how much I actually liked those old boats I rarely used. Answer: not enough.
Ironically, the heavy semi trailer (ST) plates that actually do damage to the roads are still just $19. Maybe double those ones, eh?
- Candy Dogood - Thursday, May 13, 21 @ 4:16 pm:
It’s shaping up to be a good solid kicking of the can. Hopefully when we catch up with it we’ll be ready to address our revenue issues like adults.
- AC - Thursday, May 13, 21 @ 4:19 pm:
==As for the trailer taxes, why not double ‘em from $118? It’s not like it goes to support the roads the trailers are driven on or anything.==
Because a registration fee roughly double that of a car, pickup truck or minivan would be silly for something that can cost less than $2,000 brand new, often weights around 1000 lbs, and typically gets used a few times a year for weekend projects.
To get to the question, my outlook is very good for the state budget for the next fiscal year. The economy is improving, there was a lot of economic stimulus, people are anxious to get back to normal as much as possible, and all this is good economic news for the state, at least in the short term.
- RNUG - Thursday, May 13, 21 @ 4:36 pm:
If they stick to the proposal, hold the spending in check, don’t start new programs, and use the $8B to repay debt (however they can do it), I will feel good about the budget and the State starting to get serious on proper budgeting. It’s a start … just need to continue it in future years.
As to the trailer fees, I sold one trailer and licensed one. My son just borrows mine while his sits unlicensed. Heck, we could just move the plate as needed since both are titled as homebuilt.
One friend went from 5 trailers down to two; they unfortunately need both for different purposes or they would only have one.
At the moment, you can’t hardly give a trailer away. It’s tough to justify a $118 annual fee (plus initial title fee) on a trailer you only paid a few hundred to buy or build.
- Al - Thursday, May 13, 21 @ 4:40 pm:
I see Cannabis revenues continue to grow.
- AlfondoGonz - Thursday, May 13, 21 @ 4:45 pm:
Better than anything offered up by the former guy.
- 47th Ward - Thursday, May 13, 21 @ 4:49 pm:
As Tom Skilling might say, “mostly sunny and mild, with high clouds, plenty of visibility, and very little chance of rain.”
- Alice - Thursday, May 13, 21 @ 5:28 pm:
They really should look into eliminating high leases and rents- especially downtown. Workers who have been producing at home could continue to do so and it will save millions per year. If they go back to office I feel like old habits will creep back in and they won’t even consider this option in a year.
- Roman - Thursday, May 13, 21 @ 6:00 pm:
The egg heads at the Civic Federation often seems okay with increasing the tax burden on middle and lower income folks (they’ve come out for taxes on services and retirement income,) but they push back on taxes that are likely to burden wealthier folks (they’re were against JB’s progressive tax and now are against tightening corporate tax credits.) Might that have anything to do with the political priorities of their corporate benefactors or is it just a coincidence?
- RNUG - Thursday, May 13, 21 @ 7:09 pm:
== Might that have anything to do with the political priorities of their corporate benefactors or is it just a coincidence? ==
Possibly.
Or it might have to do with the fact the rich have ways to avoid taxes the middle class doesn’t, which makes the middle classes taxes more consistent and predictable, this a guaranteed steady stream of money.
- filmmaker prof - Thursday, May 13, 21 @ 8:52 pm:
Budget will pass on straight party lines. All Dems, zero Repubs.
- Josh Evans - Friday, May 14, 21 @ 7:16 am:
I see a path by which the legislature can pay down debt and meet its obligations. I see a path to finally investing in a roadmap to equitably and sustainably fund disability services in Illinois….if the General Assembly makes it a priority.