Governor Quinn Becomes Chair of the Midwestern Governors Association
llinois Governor Pat Quinn assumed the duties of Chair of the Midwestern Governors Association (MGA) earlier this week.
“I am honored to become Chairman of the Midwestern Governors Association. The association has a long history of governors who are committed to working together to improve our entire region, and I look forward to continuing that legacy,” said Governor Quinn. “Now, more than ever, we need to band together to create sustained economic growth and success throughout the Midwest.”
Governor Quinn assumed office on Monday, January 10, 2011 and will serve as chair through February of 2012.
The MGA includes Wisconsin and Indiana. At least we beat them in this little battle.
We don’t want things to get too out of hand, though. Remember this Onion piece?…
Hopes for a Midwest peace accord were dealt a severe blow Monday, when a bomb ripped through a toll booth on the I-90 Illinois Tollway. The attack, which killed six and delayed westbound traffic for hours, is believed to be the work of Iowa-based militant Lutheran extremists.
The explosion is the deadliest in the troubled region since Oct. 4, 1997, when a bomb went off in a crowded Kankakee flea market, killing 22.
Illinois governor-elect George Ryan denounced the attack as “the work of cowards.”
“If there is to be any hope of a lasting peace in the Middle West, these sorts of despicable acts of violence must not be tolerated,” said Ryan, speaking before an emergency session of the Illinois legislature. “All sides in the Midwest crisis must demonstrate a genuine commitment to honoring the terms of the Lake Geneva Convention.”
Also, if you don’t understand the headline, click here.
Bring it on Wisconsin, Cullerton tells Gov. Walker
SPRINGFIELD, IL - Illinois Senate President John Cullerton extended a warm “thank you” to Wisconsin Gov. Scott Walker for highlighting Illinois’ low tax rates.
“Between our investments in infrastructure, our recent moves to stabilize our budget and now Governor Walker leading the marketing effort, we hope to see a lot of interest in Illinois from businesses,” said Cullerton. “I’d like to thank Wisconsin’s governor for helping spread the word.”
Even now, after Illinois raised rates to balance its budget, state taxes remain lower than that of its northern neighbor.
In Wisconsin, citizens are subjected to five tax brackets with a maximum rate of 7.75 percent. Essentially, anyone making more than $10,000 a year pays more state income taxes in Wisconsin than Illinois.
Compare that to Illinois where the flat personal income tax will increase for four years to 5 percent from the current 3 percent. It will then drop to 3.75 percent after 2015 and 3.25 percent after 2025.
Wisconsin’s corporations also face a 7.9 percent income tax, almost a full percentage point higher than in Illinois.
In Illinois, the corporate income tax rate increases to 7 percent from 4.8 percent. It will drop to 5.25 percent after 2015 and go back to 4.8 percent after 2025.
Not only does Wisconsin have higher taxes, but a state budget agency recently informed lawmakers there that they face a nearly $2.5 billion deficit. So, the bottom line is Wisconsin may have to raise taxes in the coming years, while Illinois’ tax rates are scheduled to drop in just a few years.
Apparently unaware of the numbers, Wisconsin’s governor has been telling the media that he’s thinking of revising a 1980s tourism campaign entitled “Escape to Wisconsin” in an effort to lure Illinois businesses.
The reality is that, thanks to Gov. Walker’s actions, the slogan has lately become “Escape from Wisconsin.”
Train-maker Talgo Inc. is considering relocating from Wisconsin to Illinois because Governor Walker rejected millions of federal dollars for a high-speed rail project. The 4,000 jobs and federal dollars might now instead come to Illinois.
In November, after Walker pulled the plug on the project, jobs and money, a billboard went up along I-94 sarcastically thanking him.
“Dear Scott Walker, thanks for the money & jobs! Love, Illinois,” the billboard read. It was paid for by the Wisconsin Democratic Party.
Illinois has a strong shot at being Talgo’s new home because Illinois is investing in high-speed rail as part of a nearly $31 billion program to maintain and modernize the state’s roads, bridges, schools, hospitals and other infrastructure. The program was approved with bipartisan support in 2009.
The construction itself has begun putting thousands to work. The overall program is designed to maintain and modernize the state’s essential infrastructure for citizens and businesses alike, keeping Illinois as a great state in which to live and do business.
While Illinois lawmakers acted to finally resolve Illinois’ budgetary problems, it appears Wisconsin and Gov. Walker have some tough times ahead.
“Don’t get me wrong. Wisconsin is a great state,” said Cullerton. “They’ve got great cheese and lots of people vacation there.”
In exchange for the free marketing from Gov. Walker, President Cullerton said he’s available for consultation to help prevent economic collapse in Wisconsin.
I have long been in favor of declaring war on a neighboring state (I don’t really care which one), so I can’t really complain. But this fighting between states is the worst I’ve ever seen it. And I don’t think it’s going to calm down any time soon.
Also, Cullerton failed to mention Illinois’ 2.5 percent personal property replacement tax. It’s not technically a corporate income tax, but it is a tax on income.
And another thing: The last time I remember somebody in power saying “Bring it on,” things didn’t turn out too well.
SPRINGFIELD – January 13, 2011. Governor Pat Quinn today took action on the following bill:
Bill No.: SB 2505
Provides revenue needed to stabilize the state’s budget and sets unprecedented limits on state spending.
An Act Concerning: Revenue
Action: Signed
Effective Date: Immediately
That was quick.
At least he didn’t draw out the media coverage over the next several days by dithering.
As you already know, Gov. Pat Quinn is trying to snatch away a rail car manufacturer from Wisconsin after that state’s new governor rejected federal high-speed rail money. Well, Scott Kluth of CouponCabin.com has said recently that the so-called “Amazon Tax” passed by the General Assembly in a few days’ time could drive him out of Illinois…
Scott Kluth runs CouponCabin.com from an office in downtown Chicago. Some days, he says, he can see Indiana from the top of his company’s building.
Even though Friday was typically grey and frigid, the kind of weather for which the Second City is infamous, Indiana was looking brighter this morning than ever before.
That’s because Kluth says he faces the loss of up to a third of his business if Illinois Gov. Pat Quinn signs into law a measure that would require online retailers such as Amazon.com and Overstock.com to collect taxes of 6.25% on web purchases made by state residents that came to those retail sites from Illinois-based web sites like CouponCabin.com. Consumers who visit the CouponCabin site can find digital coupons for discounts from such online retailers as Sears Holdings Corp., The Home Depot Inc. and Vistaprint, each of which is part of the Internet Retailer Top 500 Guide. Because those retailers pay CouponCabin a commission when consumers make purchases with those coupons, they would be subject to the sales tax law, and likely would cut ties with CouponCabin rather than collect the levy from shoppers, Kluth says.
“Our only remedy would be moving out of state,” he says.
So, Wisconsin’s Lt. Governor Rebecca Kleefisch left Kluth a voicemail message the other day inviting him to move to her state. Check it out…
LG Keelfisch is the person who ended up apologizing for some quite intemperate remarks she made during the recent campaign about gay marriage…
“This is a slippery slope in addition to that — at what point are we going to OK marrying inanimate objects? Can I marry this table, or this, you know, clock? Can we marry dogs? This is ridiculous.”
Something to consider when contemplating a move to the Cheese Head State. Then again, this proposed tax hike would, indeed drive Kluth out of business. He’d have to go somewhere else. Gov. Quinn needs to consider that when he decides what to do.
Perry on Thursday said he was troubled by the Illinois Legislature’s move to “tax the rich without talking about how to make the thoughtful prioritized decisions on how to govern.”
Tax the rich? Hey, Illinois just raised taxes on everybody, right down to the poorest of the poor.
Senate Republicans have already started their fight to repeal the income tax increase approved Wednesday morning, even though Gov. Pat Quinn hasn’t even signed it into law yet.
Sen. Matt Murphy, a Palatine Republican, said he filed legislation this morning to repeal a tax hike Quinn is expected to sign. It would increase the personal income tax rate to 5 percent and corporate income tax to 7 percent for the next four years.
The state Senate narrowly passed legislation early Wednesday easing the way for construction of a second large coal gasification plant in Illinois that could force residents to purchase roughly a quarter of their heating gas from these expensive facilities and likely will raise home heating rates beginning in 2015. […]
An analysis by the Chicago-based Environmental Law and Policy Center, an opponent of the bills, indicates gas rates in Chicago, where Peoples Gas is the provider, and the northern suburbs served by North Shore Gas will be 5% above where they otherwise would be beginning in 2015 if Power Holdings’ plant is built on schedule. For North Shore Gas, that percentage jumps to 14% in 2016 and stays at roughly that level through 2020 as the South Side plant comes on line and its effects are felt.
The plants were opposed by the Citizens Utility Board and Peoples Gas, but the state’s other gas utilities were neutral. A spokeswoman for Illinois Attorney General Lisa Madigan, the state’s chief consumer advocate, said she couldn’t support the bills without rate caps protecting utility customers. But she never formally filed a position with the Legislature opposing the bills, which were backed by her father, House Speaker Michael Madigan.
* The justification for the two new plants is that Illinois coal would be used to make the synthetic gas. But a plant that would’ve used an Illinois coal gasification process to generate electricity (supplanting dirty coal plants, unlike clean burning natural gas) was voted down and now the developer is looking at his options…
The Illinois Senate on Wednesday rejected Tenaska’s proposed $3.5 billion Taylorville coal-to-gas-fired power plant, a spokesman for Tenaska told Reuters Wednesday.
Tenaska said the lack of legislative support would stall development of the 602-megawatt gasification plant which had been selected for a $2.6 billion federal loan guarantee and a tax credits exceeding $400 million. The plant had been seen in operation in mid-2015.
“We are evaluating our next course of action,” said Bart Ford, Tenaska vice president.
The Taylorville project required state approval because Tenaska of Omaha, Nebraska, was seeking to recover costs for building and operating the plant from power ratepayers.
* So, to review: Coal gasification to supplant natural gas is OK. Coal gasification to make electricity is not OK. Why? The State Journal-Register has the answer…
We would not be bringing this all up again today if we believed the Taylorville plan had died a natural death in the legislature. In this case, though, it was death by lobbying and hysteria, as the state’s biggest electricity producer went all out to ensure competition didn’t enter its market. Exelon, which produces and sells electricity, mounted a lobbying blitz that had legislators and the public believing that minor assistance to the Tenaska project would lead to the loss of millions — millions! — of jobs in Illinois in the coming years. Being the nation’s largest producer of nuclear energy, Exelon has no interest in keeping coal plants going or seeing new ones built. […]
So why did the Chicago plant win approval while Tenaska (apparently) was killed? The Capitol Fax newsletter provided the most succinct explanation: “The Chicago plant will produce synthetic natural gas to be burned in homes, so Exelon and ComEd didn’t care about it.” Without an army of lobbyists spreading tales of terror, senators saw the gasification plant as a much-needed economic opportunity for an economically depressed area.
Remember those statements by the STOP Coalition’s Phil O’Connor about how the rate increase caused by the Tenaska plant would kill all those jobs? Here’s one…
Philip O’Connor, chairman of the STOP Coalition (Stop Tenaska’s Overpriced Power), said in a statement the Senate made the right choice.
“It would have been damaging to the state’s job-creation climate,” said O’Connor.
Well, earlier this week, O’Connor was arguing for a $396 million ComEd rate increase before the ICC, saying it would create jobs.
Police say two fur coats were reported missing at the Illinois Inaugural Ball earlier this week.
The (Springfield) State Journal-Register reports that a Springfield woman checked her full-length $7,000 mink coat at the Prairie Capital Convention Center around 9 p.m. Monday. She says her coat was gone when she tried to claim it about two hours later.
According to police reports a Quincy woman also reported her $2,000 black coat with faux fur collar missing.
Even if Gov. Pat Quinn signs legislation that would repeal the death penalty, it would have no bearing on 15 inmates on death row. […]
“It will only affect future sentencing,” said Sharyn Elman, a Corrections spokeswoman, said Wednesday of the proposed ban.
With the 15 men on death row, Quinn has three options: leave the moratorium in place and the inmates on death row; lift the moratorium and “the inmates could eventually be put to death;” or commute their sentences to life or something other length, Elman said.
I checked with Sen. Kwame Raoul, who sponsored the bill. He said the measure only applies to future sentencing.
Brian Dugan earned the death sentence he faces for raping and murdering 10-year-old Jeanine Nicarico in 1983, the Naperville girl’s father said Tuesday.
That’s why Thomas Nicarico thinks the move by Illinois legislators to repeal the death penalty — which would spare Dugan’s life if it’s signed into law — is “the wrong thing to do.”
“He’s earned capital punishment,” Nicarico said of the 54-year-old Dugan, who was sentenced to death in 2009. “He’s earned the most severe punishment the state can give — and now the state is taking it away.”
Dugan was sentenced to die by a DuPage County jury for Jeanine’s murder, though he also was convicted of two other brutal killings.
Everybody really needs to calm down, including the reporters. Take a breath, people. Look at what actually passed.
Sneed’s bet: Gov. Quinn will move to abolish the death penalty.
† Sneed’s tip: If Quinn does, watch for Sen. Kirk Dillard , Republican leader of the Judiciary Committee, to push to reinstate the death penalty for the worst of the worst crimes: mass murder and the murder of children and law enforcement officers.
Lawrence Marshall, a Stanford Law School professor who had represented several freed Illinois Death Row inmates, said the problem with trying to limit the death penalty to “heinous” crimes is that the emotion surrounding those crimes can lead to errors.
“It’s the very kind of passion that triggers the desire for the death penalty in a particular case that does have the potential to be blinding,” said Marshall, who co-founded the Center on Wrongful Convictions at Northwestern University.
* It’s conceivable that a Republican Senator who voted for the death penalty repeal could consider that new bill…
Downers Grove Mayor and Republican state Sen. Ron Sandack joined with a group of 32 senators voting to repeal the death penalty in Illinois on Tuesday.
The Senate’s vote, which did not split on party lines, came after the House also voted to approve the measure, and the death penalty repeal bill now goes to the desk of Democratic Gov. Pat Quinn for consideration.
“The experience in Illinois tips the balance, to my mind at least, in favor of abolishing the penalty,” Sandack said in a statement Tuesday. “Alarming failures were the cause of the current moratorium on the use of the death penalty. It has been in place for over 10 years now, yet we still do not have a system which instills confidence that the system is without flaw, and that innocent people will not be sentenced to die.”
While Sandack voted in favor of the repeal bill, he said he still thinks the death penalty is appropriate in some situations, though the punishment “as employed in recent years in Illinois, has failed us all.”
* Roundup…
* Quinn refuses to be pinned down on death penalty repeal - Governor says he’ll follow conscience - Daley opposes a ban
* Quinn won’t say if he’ll sign bill banning executions
* This looks like really bad staff work, or poor self-staffing to me…
[Carol Moseley Braun] said she had hoped to apply $140 million she expected to get from an expected state income tax hike — which she opposes — to plugging the city’s deficit. But she was surprised to learn from the editorial board that the state income tax proposal includes no new “local share” for cities.
“I thought we were getting money from the state but I guess we’re not,” Braun said.
It’s been known for days that municipals weren’t getting a cut of the tax hike. A group of aldermen (including some of her supporters) even held a press conference over the weekend attacking the exclusion.
For her to march into the Sun-Times with an exact figure the city would get from the tax increase is just downright weird.
* Braun is against the state tax hike, but rival Miguel del Valle is in favor...
“The mayor says, ‘No,’ I don’t understand that. He understands that we need that money,” del Valle said. “Chico and Carol are against it — it is irresponsible [to oppose it] It is pandering at it’s worst. How can we deal with the $16 billion deficit? We need those dollars.”
And del Valle also opposes legislation that would all but strip teachers’ right to strike…
Mayoral candidate Miguel del Valle slammed candidate Rahm Emanuel on Tuesday over Emanuel’s support for a bill that would curtail Chicago teachers’ right to strike.
“Let’s stop attacking teachers,” del Valle said after a tour of Telpochcalli Elementary School on the Southwest Side. “Trying to take away teachers’ right to strike is a direct hit on the teachers. Let’s not try to punish the Chicago Teachers Union by saying ‘We are going to take away your right to strike’ when they haven’t had a strike in 23 years. I think it’s a slap in the face of teachers. I want to stop the teacher-bashing.”
Backers of the “Performance Counts” legislation, including Emanuel, hoped to pass their bill before new legislators take their seats Wednesday. But the bill, which would make it easier to fire bad teachers, appears stalled in the state Senate.
Chicago has too many government vehicles and the city fleet gobbles up too much fuel, Rahm Emanuel said Tuesday.
If he’s elected mayor, Emanuel vowed to save at least $5 million during his first year in office by purchasing more fuel-efficient vehicles and encouraging city employees to share cars, take bicycles and use mass transit.
$5 million would be just a 3.7 percent cut in the city’s annual $135 million expenditure on its fleet. It’s a start, I suppose.
* McPier to cut most of staff: The Metropolitan Pier & Exposition Authority will cut more than half of its corporate staff as it splits off management operations of Navy Pier and turns over management of McCormick Place to a private operator.
* Ald. Burke: “Hard-Pressed Not To Be For Chico”: I don’t think there’s any question about that fact that I’ve been with Gery. I circulated his petitions. My brother, who’s in the legislature, enjoyed the support of Gery Chico and all the people in his last election. He won by 690 votes. Am I gonna turn my back on those folks now?”
* Chicago mayoral candidates report campaign fundraising: Since just the start of the year, Chico raised $60,500 from nearly three-dozen donors and Emanuel reported raising $27,500 from five donors. City Clerk Miguel del Valle raised $15,300 and Carol Moseley Braun reported raising no money since the start of the year, the newly released records show.
* Chico, del Valle will face question of unity candidate: Latino elected officials and community leaders have divided their support among the main four remaining mayoral candidates. From the start, Juan Rangel, president of the powerful United Neighborhood Organization, has supported Rahm Emanuel, while state Sen. Martin Sandoval has endorsed Carol Moseley Braun. Former 1st Ward alderman Manny Flores, chairman of the Illinois Commerce Commission, is backing Chico, but 22nd Ward Ald. Ricardo Munoz has endorsed del Valle.
* Rahm Emanuel talks mayoral race on WGN Morning News
* De Jesus opts out, supports Chico: The minister garnered controversy in 2009 when he was among those considered to be 26th Ward alderman to replace Billy Ocasio. (Roberto Maldonado was selected.) New Life has taken a hard line against same-sex relationships. According to a position paper on gays and lesbians by the Assemblies of God—with which the church is affiliated—”[h]omosexual behavior is sin because it is disobedient to scriptural teachings” and “[h]omosexual behavior is sin because it is contrary to God’s created order for the family and human relationships,” among other beliefs. In addition, De Jesus commented in an October 2008 Christianity Today article that “opposing abortion and homosexuality [had] been the paramount moral issues for him” until the treatment of illegal immigrants captured his attention.
* Gery Chico Supports Medical Mega Center in Chicago
For some lame-duck lawmakers who were either retiring or defeated in November, consideration of a post-legislative career in a Quinn administration was under discussion for votes. For others, a second round of construction bonding offered prospects for new pork projects to bring home to their districts. Still others wanted assurances that new political maps being drawn to reflect the federal 2010 census would protect them from an election challenge.
Remember this from the governor’s inaugural address?…
“We have replaced a government of deals with a government of ideals.”
The whole package nearly got derailed at the last minute when a $1.01-a-pack increase in the state cigarette tax was voted down in the House. The increase was expected to generate about $377 million to be earmarked for increased education funding.
Members of the General Assembly’s Black Caucus insisted that if taxes were raised, additional money had to be devoted to both education and property tax relief. When the cigarette tax failed, there was no money available for that increased education funding.
“That caused a problem, and rightfully so,” said Senate President John Cullerton, D-Chicago.
For Anthony DeLuca, a freshman state representative from Chicago Heights, it was a private moment with Quinn in his ornate second-floor office, where the governor agreed to breathe life into DeLuca’s idea of a bipartisan panel of lawmakers to recommend a half-billion dollars in state program cuts each year. The panel’s recommendations would be binding, unless lawmakers disapproved.
Quinn liked the idea, one longtime ally of the governor said, so much so that the governor will make the proposal part of his February budget address. In exchange, DeLuca, the former mayor of Chicago Heights, became the 60th and final House Democratic vote to boost the state’s income tax.
“That is why, for my particular vote, that is the reason why,” DeLuca said. “I think it was important that we just didn’t pass the bill and walk away. This has to be a continuing effort.”
Some of her friends and neighbors may be unhappy with the tax vote but she won’t be facing any political consequences or voter backlash. And here’s why: She stepped down as an Illinois State Representative at noon on Wednesday. After one week on the job. That’s right—one week. She was, in simple terms, the lamest lame duck in a feckless Springfield flock. A billion-dollar baby.
“She” is Kathy Moore, a Lincoln Park friend and former public school teacher who was put in that unenviable position by the stark reality of political hide-and-seek. Or, in this case, seek-and-hide. Her reliably Democratic 11th District, which includes Lincoln Park and Lakeview, elected a brand new state representative, Ann Williams, in November, to replace John Fritchey, a popular long-time rep who won election to a seat on the Cook County Board. Fritchey began his new job in December, so Williams could have been sworn in as a state rep a month ago to represent the district in the lame-duck session going on in Springfield this past week. That was her initial plan.
But there were questions about how she would vote if a tax plan was on the lame-duck agenda. Williams claims that local Democratic leaders, including Fritchey and Senate President John Cullerton, wanted her commitment to support the tax hike before arranging for her to be sworn in. They say she got cold feet and decided not to start early—choosing instead to wait until Wednesday, when the rest of the freshman legislative class was sworn in. […]
So when the tax bill passed, without a single vote to spare, our lawmaker-for-a-week was a major reason. She says she’s not happy about voting for a gargantuan tax increase but she doesn’t think that she, or the state, had any other choice. Even though, as of Sunday, she hadn’t seen a bill. Or a press release. Or a fact sheet. Or a list of cuts, accountability measures and streamlining to go along with the increase.
Thoughts?
*** UPDATE *** Former Rep. John Fritchey replied to Shaw’s post…
Andy, even though I have previously said this to you, let me be 100% clear. At NO time did I ever pressure, or even ask, Ann Williams to vote for an income tax hike. Period.
To the contrary, I repeatedly told her that I was taking no position on the matter and that how she voted on a tax hike and whether or not she wanted to be appointed early was entirely up to her and was something to be figured out between herself and Democratic leadership. Any statement to the contrary is a patent lie. […]
I also had zero conversations with Kathy Moore about the income tax issue or vote. In fact, my only conversation with her while she was in Springfield was a 5 minute phone call to make sure that she was able to get access to any information that she may need for any of the matters that may be coming before the House for action.
* The tax increase debate has brought in a raft of new commenters. Most of the newbies are furious at the tax hikes.
I feel your pain. Really. I don’t like paying more taxes. But stupid, empty, angry drive-by comments are not welcome here. You will be (and have been) deleted and banned. This is not a newspaper website or a typical blog. Tone it down or go away.
Forget cheese curds along Interstate 94 or speed traps designed to nab Illinois vacationers on the way to the North Woods.
Wisconsin thinks it has a new strategy to make a buck off of Illinois thanks to Gov. Quinn and the state Legislature’s backing of a 46-percent increase in corporate income taxes.
New Wisconsin Gov. Scott Walker, a Republican, launched an unprecedented blitz of the Chicago media Wednesday to woo tax-weary Illinois businesses into the Dairy State with his vision of two years of tax-free existence there if they move.
“I pulled out an old bumper sticker from the ‘80s when Tommy Thompson was governor that said, ‘Escape to Wisconsin.’ That was the tourism campaign back then. But that’s a message we’re sending now to employers in Illinois,” Walker told the Chicago Sun-Times in a phone interview.
Yet, there was not one mention [There was a brief mention, at the very bottom] in the article of Wisconsin’s much higher personal income tax rate. Yes, it starts at 4.6 percent, but that’s for single people making less than $10,070 a year. Make more than that and it’s 6.15 percent, up to about $20K in income. From there it ranges between 6.5 percent and a whopping 7.75 percent. For a lot of business owners, the personal rate is more important than the corporate rate because they don’t pay much or any of the corporate tax.
Our new corporate rate will be lower - 7 percent vs. 7.9 percent - but we also have that 2.5-point personal property replacement tax, which puts us higher. Still, Wisconsin has a state property tax.
“Wisconsin is not the mecca where everybody is going to be running off to,” predicted Illinois Manufacturers’ Association President Greg Baise. “The last time I looked, their climate is a lot s——- than ours.”
If Gov. Pat Quinn signs the bill as expected, “this plan will undermine the state’s ability to attract new investment and business development, in particular relative to its lower-tax neighbors like Indiana and Missouri,” said Tax Foundation Staff Economist Kail Padgitt.
If you make more than $9,000 a year in Missouri, your tax rate is 6 percent. Our corporate tax rate will be higher, but it already is if you include the replacement tax.
Indiana will have a lower state income tax than us, but its counties are allowed to impose their own income taxes, and some of them are as high as 3 percentage points. Its corporate rate is currently 8.5 percent, plus those local rates. We’re still competitive.
And some observers say the virulent reaction in the business community is somewhat overblown.
Economic development consultant Robert Weissbourd, president of RW Ventures LLC, said companies do not look solely at tax costs but at whether they get value for the costs, in the form of good roads, good police protection, a well-trained work force and the like.
“Chicago has had quite an attractive tax value proposition and it can stand to raise it a little bit,” he said. “I don’t think this is a total killer.” Still, the government needs to address inefficiencies and fragmentation in the way the state markets itself, he said.
For many middle-income Illinois taxpayers, the reductions from the federal payroll tax cut may balance out the costs of the state tax increase, resulting in little immediate impact on withholding from paychecks. But the goal of the payroll tax reduction was to increase take-home pay and stimulate consumer spending, a benefit that Illinois taxpayers may not share in.
There’s also this to consider: The payroll tax windfall expires after this year, so in 2012 it will no longer cushion the blow of the state tax hike. That increase is to remain in full force through 2014 and then ratchet down in stages over the next decade, dropping to 3.75 percent in 2015 and then 3.25 percent in 2025 — still higher than the current rate.
* Also, keep in mind that after the 2014 gubernatorial campaign, much of the rate hikes will sunset…
the current 4.8 percent corporate rate would go to 7 percent until 2015, when it would drop to 5.25 percent. And in 2025, it would return to the current 4.8 percent.
As for the belief that legislators will let stand a requirement to draw back the increase by 1 1/4 percent within five years, Ellis calls that “hogwash.”
“If this increase isn’t even covering the deficit, there’s no way they’re going to allow a decrease. When was the last time you remember legislators cutting taxes?”
The 1983 temporary income tax hike was allowed to sunset.
Colleagues say that outgoing Rep. David Miller has been released from a Springfield hospital and is resting at home after he collapsed on the Senate floor as lawmakers debated an income tax increase early this morning. […]
Colvin said Miller had been suffering from a respiratory illness for several weeks and doctors think he coughed so hard that it may have disrupted a nerve, which cut off his oxygen supply to the brain.
Colvin said Miller had lost consciousness for several minutes, but did not stop breathing. He said Miller quickly returned to his easy-going self, though some senators were upset they could not accompany him to the hospital because of the looming tax vote.
It’s really good to know he’s OK. Those were some very scary moments last night.
* Michael Madigan spoke today after being elected to his 14th term as House Speaker. He talked about the past and the future.
Madigan said the last session had been one of the most controversial, contentious and successful sessions in history. He said that the “national economic collapse” had resulted in tax receipts declines of 25 percent, leading to the need for new revenues. And here’s what he said about the next two years…
* Quotes…
* Education: “We have more to do in the area of education. We have to work to provide for a better performance by the educational system in general and by the teachers that work inside of that educational system. And clearly the time has come once and for all to change the Illinois law so that incompetent teachers can be taken out of the classroom.”
* Workers compensation reforms: “We did not accomplish our goal. But we’re not finished. We’re coming back next session and we’re going to work as hard as we possibly can to recognize that this is a system that needs changed. We need to bring down the cost so that Illinois is no longer the second most costly state in the nation in workers’ compensation cost.”
* Protecting changes: “We have to learn to live within our means. We cannot backtrack on those changes that we made in the Medicaid system. We cannot backtrack on those changes we made in the pension systems. And that’s going to require courage. That’s going to require people to say ‘No.’”
* The budget: “The spending restraint put in the tax bill, mainly because of Rep. Nekritz, will be a great help to us as we move through the next four years in terms of moderating the cost of state government and living within our means.”
* Senate President Cullerton also delivered his acceptance speech after being reelected today…
“We could not overcome this challenge just with cuts alone,” he said of the budget crisis. Cullerton defended the tax hike as “a measure that will guarantee payment to all that are owed money [and] provide enough funds to maintain basic government services as our economy improves and as our resources increase.”
“We have to immediately address substantial education reforms,” Cullerton said, adding, like Madigan that he wanted reforms to make it easier to remove bad teachers. He also, like Madigan, pledged to continue pushing for workers compensation reforms.
The Senate President said the state must now “reexamine the need for so many units of local government that result in higher taxes and less efficiency.”
* Quinn was asked about breaking his campaign promise to not raise the income tax by more than a point. He essentially said Wall Street made him do it…
“As the last couple months have ensued, it was pretty clear from talking to major entities that lent money to the state of Illinois that the opportunity to borrow was fast eclipsing, and we had to do some very serious things on an emergency and temporary basis in order to get our fiscal house in order. You have to do what’s necessary at this moment, and that’s what I did.”
“Probably the panic will subside,” said Gary Pollack, managing director at Deutsche Bank Private Wealth Management in New York, cautioning the state still needs to balance its budget on an ongoing basis. […]
Domenic Vonella, an analyst at Municipal Market Data, said there were signs some Illinois bonds were trading stronger on Wednesday although trading was light.
“The market’s relieved something has happened,” said Tom Spalding, a portfolio manager at Nuveen Investments in Chicago. He also said the state must take a harder line on the spending side of its budget.
The state’s credit default swap, or insurance against a bond default, fell to 295 basis points on Wednesday, 30 basis points tighter than on Tuesday and the first time in more than a month that it was below 300, according to Markit Intraday.
Lots of suckers lost money on credit default swaps today. I have a hard time feeling sorry for those mopes.
* But, the governor was asked, after promising only a one-point hike, why did he originally back a 2.25-point tax increase?…
“I never asked for that. I never did.”
* The governor was also asked about the new Wisconsin governor’s joke about relaunching the old “Escape to Wisconsin” TV ads to attract Illinois business.
“Well, lots of luck to them, but that’s not gonna happen,” Quinn said.
“Facts are stubborn things. This past year we’ve created more jobs, far more jobs, than Indiana and Wisconsin,” he said.
The governor added: “We’re after [rail car manufacturer] Talgo, which [the Wisconsin governor] decided to kick in the shins when he didn’t want to support the high speed rail in Wisconsin. I think you’ll see that’ll be a big mistake.”
The burgeoning fiscal crises in state and local governments took a turn toward fiction Tuesday, with Indiana Gov. Mitch Daniels comparing Illinois’ problems to an episode of “The Simpsons.”
“You guys are nothing if not entertaining over there,” he said with a laugh on the Don and Roma show on WLS-AM. “It’s like living next door to the Simpsons — the dysfunctional family down the block.”
* Quincy business leaders sound off on Illinois income tax hike: Knapheide said downstate businesses are expected to pay for “the Chicago political machine” that is “destroying not only Chicago and Cook County, but the enconomy of the entire state of Illinois. The machine carefully takes care of their political cronies at the expense of the Illinois taxpayer. Their arrogance, greed and corruption leave the people of Illinois with high income taxes, high property taxes and high unemployment.”
* Convicted liar Rod Blagojevich went on WLS Radio this morning to criticize the General Assembly for passing a tax hike. Then he said this…
Blagojevich refused to take responsibility that the tax hike was in part due to decisions made during his administration. He said although he did invest funds in health care and education, he didn’t do it on the back of taxpayers, and says he stood up to House Speaker Michael Madigan and other legislative leaders who wanted the tax increase.
How completely clueless can one man be?
Seriously, the mind boggles.
He did nothing to prepare the state for the steep “ramp” in future pension payments. Instead, he did a pension bond program and then “drew down” many of the longterm savings right away. That was just one example of his countless one-off revenue “fixes,” which, when added to his numerous unfunded program expansions, fatally wounded Illinois’ budget as the economy began to dive into the ditch.
He proposed the single largest tax increase in the history of the state - actually, in the history of any state. He claimed this wasn’t a tax hike on “people,” but the Gross Receipts Tax would’ve hit business incredibly hard. If you think corporations are upset with this current tax hike, imagine what they would’ve done if the GA had passed Blagojevich’s. We’d be empty by now.
And he “stood up” to Madigan by engaging in a needless, endless war which stopped all progress on literally everything while the national economy nosedived.
Yeah. He was “Mr. Responsible” alright.
What a freaking crock.
* Mayor Daley has also refused to make any really tough choices about his own budget, which is why he’s leaving city finances in such incredibly sorry shape as he slinks into the history books…
Mayor Richard Daley today predicted the increase in the corporate income tax rate passed by state lawmakers overnight will prompt a quiet exodus of jobs to neighboring states.
“Businesses don’t have press conferences like this and announce they’re moving 50 people out, 60 people out, 70 people,” Daley said.
Daley doesn’t like tax hikes, and I agree with him. There will definitely be some upset corporations in this state and undoubtedly millions of unhappy residents.
But what Daley prefers instead is one-time revenue pops like selling off assets, including parking meters, and then spending all the money right away. He, like Rod Blagojevich, is leaving his successor with a truly gigantic budgetary mess, which will require deep cuts and almost assuredly some new taxes that Daley refused to raise.
*** UPDATE *** From a Carol Moseley Braun press release…
Illinois lawmakers are set to raise the income tax rates from 3% to 5%; the first income tax hike in two decades is set to take effect immediately. In a desperate early morning attempt to fix the state’s budget crisis during a lame-duck session, lawmakers agreed to a 66% income tax increase. The increase means an Illinois resident who now owes $1,000 in state income taxes will pay $1,666 at the new rate. Chicagoans stand to pay for the increase, but are not guaranteed to see that money come back to the city as a “local share” provision was not implemented in the bill. Under the current tax structure, municipalities receive a share of income tax revenue. Today, mayoral candidate Carol Moseley Braun came out against the income tax increase because it will have an especially adverse effect on Chicago’s working class families without allocating additional money to Chicago.
The current tax structure guarantees that 10% of income tax revenue will go to municipalities to help defray operating costs. 10% of the 2% increase is not guaranteed to return to municipalities. All of the revenue from the tax increase will go to the state’s general fund because the proposal fails to include a “local share” provision for cities. The provision would have provided Chicago with an additional $280 million from 2011 to 2015, $140 million from 2016-2025, and $70 million from 2025-onward.
“While I understand the state has a structural deficit, Chicagoans are being forced to pay this extra income tax, and we have never gotten our fair share of state revenues. This bill is extremely flawed. It takes from Chicago without giving back. It offers no property tax relief, no additional revenue for public safety or Chicago schools. Chicagoans deserve to have their income taxes support their city, their public schools, their police officers and firefighters.” said Moseley Braun, “As Mayor Washington’s floor leader, I ensured that money from Chicago got back to Chicago. As mayor, I will make sure that we no longer send our money to Springfield and get nothing in return.”
It’s understandable that local governments are not happy with being cut out of the pie. But a bigger tax hike to get them a “fair share” would’ve been very, very tough, if not impossible. And if the tax hike didn’t pass, they would’ve been in danger of losing some, most or maybe even all of their current revenue share cash. The Tribune editorial board has repeatedly demanded that current revenue sharing be cut in half.
The locals will now be paid in a more timely matter. That chronic lateness was causing a lot of hardships. They should feel fortunate to get what they’re getting, frankly.
* I’ve been working all night and I need some rest before the new General Assembly is sworn in today. You’ll find all you need to know in the posts below, including links to relevant news stories. I’ll post some other stuff later today. The governor is planning a 10:30 am press conference, so hopefully we’ll have some video of that as well.
* The Question: If you were the governor, how would you sell this income tax hike to the citizenry?
Try to avoid snark. I know many of you are upset about this, but a fact is a fact. The bill is passed and it will soon be the law of the land. Stick to the question, please. Thanks.
* 1:20 am - The Senate passed the tax increase bill with 30 votes.
During his closing remarks, Senate President John Cullerton promised the Republicans that he would close any loophole in the expenditure cap that they might find. Republicans had suggested the bill would allow the governor to skip pension payments. Democrats countered with intent language that declared this was not the case.
* 1:25 am - The Senate passed the pension bond biill with 42 votes. Republicans had vowed to oppose the bill. They apparently changed their minds.
* 1:48 am - Gov. Pat Quinn has not talked to the Statehouse press corps since the passage of the civil unions bill. But we caught up to him behind the Senate chambers after his visit with Democrats who voted for the tax hike bill. Nobody thought to hold an elevator for him, so there was a welcomed delay for us as we tried to get him to answer questions. He didn’t say a whole lot, promising to talk to us tomorrow. Notice the last little bit in the video. I couldn’t resist…
* Roundup…
* Daily Herald: “When would we run out of money?” Rep. Linda Chapa LaVia, an Aurora Democrat, asked during a hearing Tuesday. “Some would argue we already have run out of money,” replied David Vaught, Quinn’s budget director.
* Tribune: With no votes to spare and no Republicans on board, the House approved the plan to hike the personal income tax-rate by 67 percent and the business income tax by 46 percent. The plan nearly faltered in the Senate hours later when black lawmakers balked at the House’s decision to remove a property-tax relief component from the plan and failure to approve a cigarette tax hike for schools. But after a late evening closed-door meeting of several black lawmakers with Gov. Pat Quinn, a fellow Democrat, an agreement was reached and the Senate approved the tax increase plan 30-29 without a vote to spare shortly before 1:30 a.m. The action came as a new General Assembly was to be sworn in midday Wednesday, replacing a handful of departing Democratic lawmakers whose support was counted on for the tax plan.
* Sun-Times: The House twice voted down a bid to borrow $8.75 billion to pay unpaid bills owed by the state and rejected a $1.01-a-pack hike in the state cigarette tax that would have pumped $375 million into cash-strapped school districts. Other things thrown on the legislative scrap heap included a $1 billion-a-year plan to open a Chicago casino and four others and a proposal to overhaul the state’s worker’s compensation laws that was bitterly opposed by labor unions.
* SJ-R: Cross was also said the notion the tax would be temporary is “clearly false.”
* ISN: GOP leaders also point out that the 2-percent cap builds upon itself. Even with the spending cap Illinois government will grow nearly 17 percent in four years, they said. Quinn budget director, David Vaught, said the administration needs some room for the spending caps. He expects Illinois to have to pay its multi-billion dollar pension payments and cover the rising cost of Medicaid in the future. “Just those two forms of increased spending, that are very difficult to control, will eat up this spending cap change. Everything else will have to be flat or decline,” Vaught said.
* AP: The increase means an Illinois resident who now owes $1,000 in state income taxes will pay $1,666 at the new rate. After four years, the rate drops to 4 percent and that same taxpayer will then owe $1,333.
* 1:02 am - Rep David Miller collapsed onto the floor of the Senate chambers tonight during debate on the tax bill. Witnesses say he is conscious. Paramedics have arrived.
* 1:09 am - Rep. Miller was taken out of the building by paramedics. He appeared to be conversing with them and was wearing a neck brace. He fell very hard, causing a loud thump.
* 2:18 am - From a friend of David’s…
Saw your post on the blog. Here at St. John’s with Miller. He’s doing much better. All his vitals are normal and he’ll be discharged pending a blood test result.
* 6:46 pm - The House is now debating the income tax bill.
The House attached an amendment that eliminates the property tax rebate program. The provision had encountered resistance from this who represent more affluent areas and those who wanted to use the money to close the state deficit.
* As of about a half hour ago, the HDem poll had this at 57 hard yes votes. Fun stuff.
* 7:32 pm - Five more members are requesting time to speak as of now.
* Like the Senate, the House also plans to change its rules to require a three fifths vote to move any bill from 2nd to 3rd Reading which amends the expenditure cap.
* One more speaker before the vote.
* 60-57. The bill passes.. It now goes to the Senate.
* Democrats voting No: Crespo, D’Amico, Farnham, Franks, J Gordon, Mell, McAsey, Osterman, Phelps, Sente. No Republicans voted for it.
* The bill reached 62 votes on the big board at one point, then fell back to 60. Here’s the video of the vote…
D’Amico switched at the last second. See anyone else?
…Adding… The other was Republican Rep. Ron Stephens. This is an old, battle-tested floor trick. Put up a phantom “Yes” vote and hope nobody notices, then pull it off at the last possible second before the other side can replace it. Didn’t work.
* 8:47 pm - The governor’s $14 billion bond plan to pay off past due debt came up short. No Republicans would support it.
* 6:28 pm - The cigarette tax hike fell short in the House a little while ago, getting just 51 votes.
The cash from the tax hike was supposed to be used to provide education a funding boost. That extra money was a key factor in convincing Black Caucus members to go along with an income tax increase. Now, schools will be $377 million short of the $700 million or so Black Caucus members were promised. No word yet on whether the income tax hike is now in even more danger of failure.
The Illinois House today shot down a $1.01-a-pack cigarette-tax increase to provide more money for schools.
The measure got 51 votes, but needed 60 to pass.
The cigarette-tax increase is part of a budget package that includes a major income-tax increase that has yet to be called in the House. The smoke tax hike could come back for another vote, but time is running out as a new General Assembly gets sworn in Wednesday and the reset button on legislation is hit and several lame-duck lawmakers leave.
The cigarette-tax hike vote came as a top aide to Gov. Pat Quinn said the governor is in “full support” of an income-tax increase plan under consideration at the Capitol.
* Meanwhile, is Gov. Pat Quinn coming around on eliminating the death penalty? He supported the death penalty during the campaign, but now that the House and Senate have sent him an abolition bill, many of us have been wondering what he might do. CBS2 talked to some people close to the governor…
In a campaign debate last fall with Republican nominee Bill Brady, Quinn declared himself a supporter of capital punishment. After today’s State senate vote to repeal, sources close to Quinn signaled that he might sign the measure.
Said one, “The governor’s kept the moratorium on executions, because he’s very concerned about flaws in the system.”
That could be two big campaign promises broken on one day. Death penalty and possibly the income tax hike. Quinn, you’ll recall, said he supported only a one point hike and indicated he would veto anything above that.
* The Senate Executive Committee is meeting this afternoon. The SDems sent over today’s agenda…
Executive Committee Agenda:
- Senate rule changes regarding spending caps - SR 1157.
- Subject matter hearing on revenue increases - HA#2 to SB2505.
- Annually required reauthorization of the capital bill - HB 5960.
The Senate rule change would require a three-fifths vote to advance any changes in the tax hike bill’s annual spending caps from 2nd to 3rd Reading.
* The Senate Judiciary Committee approved the death penalty abolition. Final floor action is expected around 2ish…
A measure to abolish the death penalty in Illinois is a step closer to Gov. Pat Quinn’s desk as supporters push to pass the measure in the waning hours of the General Assembly’s lame-duck session.
The ban on executions won approval today in the Senate Judiciary Committee 7-4, clearing the path for a vote by the full Senate. The measure passed the House last week.
The action comes 10 years after then-Gov. George Ryan placed a moratorium on the death penalty in Illinois following revelations that several people sent to Death Row were later exonerated.
Quinn has not said whether he would sign the ban, but during last year’s campaign said the moratorium should stay in place to see whether reforms have worked.
…Adding… The death penalty bill is on the floor now. They moved it up, apparently. Listen or watch by clicking here.
*** UPDATE - 2:58 pm *** The death penalty bill just passed 32-25-2.
Illinois Treasurer Dan Rutherford is closing six satellite offices around the state.
Rutherford said Tuesday that few people use the offices in Mount Vernon, Effingham, Rockford, Rock Island, Riverdale and Collinsville. They’ll close within a month.
The Republican, who took office just a day earlier, says closing them won’t save much money but now the offices can be leased to other state agencies.
Rutherford made closing the offices a major campaign issue. Each office had one full-time staffer. One person was let go and the rest are being moved into other jobs.
* I checked the blog’s usage stats and discovered that yesterday was our second busiest session day during the past 12 months.
To give you an idea of how the blog has grown over the years, yesterday’s page view count was actually higher than it was the day after Rod Blagojevich was arrested in December of 2008.
Democrats didn’t fault Quinn for not being more specific.
“This is his day. He’ll have the chance for the bully pulpit coming up for the long term,” said Rep. Frank Mautino, D-Spring Valley.
“I don’t really think it was the role of the governor today to use his inaugural to talk about a pending legislative item,” said Rep. Lou Lang, D-Skokie. “The governor’s made the case for his tax increase.”
Sen. Kirk Dillard, R-Hinsdale, wanted more.
“I’d like to hear more specifics on how we’re going to get the state working again and how we’re going to fix our fiscal deficit,” Dillard said. “Inauguration speeches are for nice platitudes, but at this time, in this crisis in Illinois, I would have liked to hear a little more substantively from the governor about how he’s going to put Illinois to work and how we’re going to get out of this fiscal crisis.”
* The Question: Should Gov. Quinn have offered up a list of specifics that he intended to accomplish? Explain.
* The House just finished debating an amendment to SB 3336, which would boot RTA Chairman John Gates from his job, require defibrillators on Metra trains and require Metra to set up a Wi-Fi system for its trains.
The amendment passed 57-55-2, but it clearly has a way to go before the actual bill can reach 60 votes.
* The measure was requested by Gov. Quinn, who opposed doing away with the free rides for seniors program and wanted something else out of the deal. It’s now not totally clear whether he’ll sign the free rides reform legislation…
The Illinois Senate approved the measure 54-2 without debate. Sen. Donne Trotter, D-Chicago, said the change still would allow senior citizens 65 or older to travel free of charge on local transportation, such as CTA, PACE and Metra, if they are eligible for the circuit breaker program that provides property tax and pharmaceutical assistance.
“Almost 60 percent of the seniors currently riding for free will still be eligible to ride without charge under the new eligibility requirements,” Trotter said. “The remaining seniors would still be able to ride for the discounted price.”
A household of two senior citizens with an income of less than $34,000 a year still would be eligible for free rides, said House Majority Leader Barbara Flynn Currie, D-Chicago.
Seniors ineligible for the free rides still would be able to ride for half price, Trotter said.
* This bill has not yet been assigned to a Senate committee, but it’s expected that the chamber will call it for a vote…
The Illinois House pushed through a bill on Monday that would limit certain state workers’ rights to join a collective bargaining unit.
The bill, which is backed by Gov. Pat Quinn, passed on a 64-49 vote and now heads to the Illinois Senate, where it must pass before noon Wednesday in order to head to the governor’s desk.
The legislation, Senate Bill 3644, is aimed at 196 supervisory, independent and at-will employees, said House Majority Leader Barbara Flynn Currie, D-Chicago. It would not automatically exclude employees from collective bargaining units, Currie said, but would make it easier for executive branch officials to seek to have the workers reclassified as non-union employees. […]
[GOP state Rep. Raymond Poe] and others who voted “no” said most of the workers joining unions were mistreated by former Gov. Rod Blagojevich’s administration and then Blagojevich and Gov. Pat Quinn did not fight their inclusion in the union before the Labor Relations Board. The board decides who is eligible to be in a union when workers petition.
I’ve been telling subscribers about the unusual legislation since Saturday. I reported last year that half of the governor’s legislative liaisons and a large number of administrators had joined AFSCME.
Ninety-six percent of state government workers are currently covered by collective bargaining agreements, said the measure’s sponsor, House Majority Leader Barbara Flynn Currie, D-Chicago. With more petitions pending before the state’s Labor Relations Board, that number could rise to almost 99 percent, she said. Those numbers are up from 80 percent in 2002, she said.
“What the bill would do initially would be to say that some 196 clear supervisory, independent, at-will employees will go from the collective bargaining contract into management positions,” Currie said.
Currie said that at some state government work sites, there is nobody able to discipline workers because everyone is in a union.
“There need to be managers,” she said. “There need to be supervisors.”
After the initial round of booting people from the union, the Illinois Attorney General’s Office, Governor’s Office and others could petition the Labor Relations Board to remove other employees from the union if they are deemed management, Currie said.
Blame former Gov. Rod Blagojevich for the high number of administration workers joining unions, said Henry Bayer, executive director for AFSCME Council 31, the state’s largest public employee union. Employees sought out the protection of unions because of poor treatment by the Blagojevich administration, Bayer claimed.
“Their work was not valued,” he said. “They not only didn’t get pay increases, they got pay cuts, and they came flocking to the union(s) seeking representation.”
Because the state workforce was reduced under Blagojevich, many employees who once strictly were managers began doing more non-managerial tasks, leading to the current situation, Bayer said.
Braun said the reason this move is being pushed during the Legislature’s lame-duck session is because more than 700 senior public service administrators applied in December to join a union. The Labor Relations Board has 120 days to give the thumbs up or down on their applications.
*** UPDATE *** I didn’t watch the BlueRoomStream video of last night’s Inauguration party until after I had posted these videos. This one is a must-watch. Attorney General Lisa Madigan gets her groove on…
Who knew she could dance like that?
[ *** End Of Update *** ]
* Two Republicans who wanted to be governor, but came up short attended the governor’s inauguration yesterday. First up, Sen. Bill Brady…
Quinn, House Speaker Michael Madigan (D-Chicago) and Senate President John Cullerton (D-Chicago) floated a temporary, four-year increase in the 3-percent individual income tax to 5 percent instead of 5 ¼ percent as earlier proposed. They also pitched increasing the corporate income tax from 4.8 percent to 7 percent instead of 8.4 percent.
As part of the revised revenue package, spending increases would be capped at 1.7 percent per year over the four-year lifespan of the tax hike; any spending in excess would cause the tax rate to revert to its current level, legislative sources said.
That would be a 66 percent increase on the personal income tax and a 46 percent increase in the corporate tax.
* More on the expenditure cap from the LaSalle News-Tribune…
“Each year, since the pension obligations will eat up most of that [budget increase]… we will have to make additional cuts, and they will be program cuts,” Mautino said.
Trotter said the state would lose about out $775 million by cutting the personal income tax rate by a quarter point. Rep. Frank Mautino, D-Spring Valley, said the lower corporate rate wouldcost the state about $500 million of the $1 billion it originally projected to collect from that portion of the tax package.
Trotter confirmed that negotiators are looking at other ways of raising revenue from business. He described those ideas as closing loopholes. One idea reportedly under discussion would change the way businesses take certain expense deductions. In the end, the state could lose $250 million to $350 million in revenue.
In addition, lawmakers are looking at a $1-a-pack increase in the state’s current 98-cent tax on cigarettes. Money from the cigarette tax hike had been geared toward pumping new money into schools. A House panel advanced the legislation Monday. […]
Still under discussion was a plan to replace the state’s current property tax credit for homeowners on their personal income taxes. An earlier proposal to drop the income tax credit in exchange for a direct $325 annual check was rejected by suburban Democrats who said it would shortchange some Cook County homeowners of a tax credit worth thousands of dollars.
Sponsoring Rep. Barbara Flynn Currie, D-Chicago, said the tax increase would generate $375 million a year while also saving billions in the long run by discouraging smokers and saving on health care costs.
The money would be used to “supplement, not supplant” education funding, said Currie.
Opponents included groups representing convenience stores who say the hike will hurt small businesses, particularly along the border where smokers could easily buy cheaper cigarettes out of state.
The prospect of voting for a huge tax increase has some legislators running scared. Rep. Joseph Lyons, D-Chicago, called it a “potential career-ending vote.”
“Are the political will and votes there to do it or not? At this stage, I don’t know the answer,” said Lyons.
Mautino said lawmakers reluctant to support a tax increase should remember that without an influx of new revenue, the state may not be able to pay its bills in the coming months.
In addition, he said the state’s bond rating is on extremely shaky ground, which will make borrowing any more money fiscally irresponsible.
“We’re one step above junk right now,” Mautino said.
“[Today] is do or die,” said House Speaker Michael Madigan, D-Chicago, who has been reluctant to throw support behind a hike without Republican support. Monday night, he acknowledged working on a tax deal “because the state needs money to pay its bills.”
* The Tribune, as expected, lambasted the proposal…
To that end, we hope all of the holdover, lame-duck and rookie legislators all saw the Sunday Tribune story headlined, “Reduce spending, say bond investors.” Kathy Bergen’s report said the Democrats’ proposed fix, with its income tax increases and steep borrowing to pay bills and pension obligations, doesn’t go far enough to assuage many bond investors’ concerns about the risks of lending to a fiscally teetering Illinois. The story quoted bond specialist Brian Battle, director at Chicago-based investment firm Performance Trust Capital Partners, explaining that Illinois has to pay investors about 2 percentage points more on 10-year bonds than do states with top-rated credit. “What’s killing us are the long-term pension and health care payments, and nothing substantive has been done about that,” Battle said.
Amen to that, Mr. Battle. We fear that Tuesday will expose Illinois citizens to even more of the same old Springfield.
From that same article referenced in the editorial…
“The municipal bond market is unsettled, and the market for Illinois municipal bonds is fragile, so concrete steps, even if they aren’t 100 percent of what is needed for a balanced budget long term, will be looked at as favorable from where things are at now,” said John Miller, chief investment officer at Nuveen Asset Management, which has some Illinois bonds in its investment portfolios.
And Moody’s Investors Service has stated that legislation providing recurring revenues is among the changes that could lead to an upgrade in the state’s bond rating.
