* Gov. Quinn signed a bill yesterday appropriating money for the MAP grant scholarship program without actually funding it…

State lawmakers last week agreed to appropriate an extra $200 million for the program but without deciding where to get the money.

The “best and quickest way” to get the revenue is with the passage of a statute allowing for so-called interfund borrowing, Quinn said Sunday. That would enable the state to borrow money from some state accounts that have large surpluses. He plans to identify the accounts this week, he said.

“It’s a financial technique used by many, many states,” Quinn said. “We have proposed a bill to the General Assembly about that. We hope to get it passed.”

More…

After students and university presidents took their pleas to Springfield to restore the grants, Quinn announced a plan to borrow $1 billion from some of the state’s roughly 600 special funds. While the state needs only $205 million to pay for MAP grants for the spring semester, Quinn on Sunday did not say what the remaining roughly $800 million would be used for. He has said the dollars could be used for “unmet needs,” such as the state’s backlog of medical bills.

Any money borrowed from accounts would be repaid in 18 months, Quinn said.

Since a tax hike appears off the table for the foreseeable future, borrowing, deferring and cutting is the only way out of this mess - even though it just buries the state deeper and deeper in red ink.

* But since both Democratic gubernatorial candidates are battling over their dreamy tax hike plans, the Institute on Taxation and Economic Policy out of DC has a new suggestion for Illinois policy makers: Implement the original Pat Quinn tax hike plan now and then do Dan Hynes’ plan later…

While much of the press coverage of these two sets of recommendations has emphasized their differences, the reality is that Illinois policymakers would be wise to adopt both of them. In the short run, given the depth of the state’s fiscal woes, the restrictions imposed by its constitution, and the extremely regressive nature of its tax system, the most progressive, most economically sound, and most timely option available to state legislators for generating additional tax revenue is an increase in Illinois’ single income tax rate. In the long run, a graduated income tax would be preferable, as it would further enhance tax equity and would put Illinois’ tax system on a more sustainable path. The former does not – and should not – preclude the latter, nor, due to the time likely required to enact it, is the latter a complete substitute for the former. Indeed, policymakers should view an increase in the existing single income tax rate as a bridge to a graduated rate structure, a bridge that could be removed once that new structure is in place.

The problem, of course, is that Quinn’s plan was never taken all that seriously. There were so many exemptions that the tax rate had to be increased too high to produce needed revenues. Quinn eventually backed all the way off his proposal by the end of the legislative session. Then again, the Hynes income tax hike plan won’t be all that easy to pass, either. Keep that in mind when reading this excerpt from ITEP’s press release…

In particular, the report finds that:

· the income tax plan put forward by Governor Quinn in March 2009 would reduce the taxes paid by 27 percent of Illinois residents – and leave them unchanged for another 15 percent – yet would still generate roughly $3 billion, if in effect in 2011. Of that $3 billion, close to $2.5 billion would come from the wealthiest fifth of Illinois residents.

· the Hynes proposal to create a graduated income tax would represent an even more targeted approach to generating additional revenue, but would be less effective in helping to balance the budget. Approximately 95 percent of the additional $2.2 billion the Hynes plan would yield if in effect in 2011 would be paid by the richest 1 percent of Illinois taxpayers, taxpayers whose average income is expected to exceed $1.5 million that year.

Again, I seriously doubt that either plan is likely to see the light of day any time soon, unless the political climate abruptly shifts.

* Meanwhile, almost nobody wants to talk about one of the biggest elephants in the room: The total tax exemption on pension incomes. The phrase “Seniors ride free” doesn’t just apply to mass transit…

Give up the pass, seniors. The free rides are over. Not right away but soon enough. What never should have happened in the first place is about to be fixed.

If common sense prevails, the General Assembly soon will overturn a ridiculous law passed last year allowing anyone 65 or older to ride for free on the Chicago Transit Authority, Metra and Pace.

We apologize to our elders, but it was only a matter of time before you had to pay up again.

Thoughts?

* Related…

* AP: : Hynes, Quinn gloss over tax facts

* Sun-Times editorial: Illinois needs a new tax system — one that treats lower earners more fairly and generates more income. Until we get it, we’ll keep romping in dreamland until the state goes broke.

* Hynes: Plan to fix budget won’t be popular: Next, he said, the state must look to a number of revenue measures, including expanding the sales tax base to include “luxury” services such as elective cosmetic surgery, country club memberships and dating services; expanded gaming; and closing some corporate tax loopholes. The “toughest part,” he said, will be persuading voters to adopt a new, graduated state income tax, as opposed to the current flat 3 percent individual income tax.

* Zorn: Which political TV ad for governor should we trust?

* Free rides for seniors proving too costly for RTA: A University of Illinois at Chicago Urban Transportation Center analysis found that free rides for seniors and disabled individuals will equal a loss of more than $1 billion for the CTA, Pace and Metra by 2030.

* State just digs another hole with MAP vote

* Legislature reinstates MAP Grant on Lobby Day - Some wonder if controversy was real

* McCarter: Democrats plan new sales taxes: But Steve Brown, the spokesman for House Speaker Mike Madigan, shot down McCarter’s prediction that new taxes are on the agenda when the statehouse’s next regular session begins in January. “I would say his perception is not terribly accurate,” Brown said.