* Eric Zorn offers some only partly tongue-in-cheek advice that I’ve been hearing a lot from others lately…
Suggestion for members of the General Assembly:
Today’s headlines bannered the proposed 75 percent increase in the state income tax (to 5.25 percent from 3 percent), a proposal you didn’t vote on before adjourning for the weekend.
If you should decide to scale this back to a 33 percent increase (to 4 percent from 3 percent) , as Gov. Pat Quinn was proposing during last year’s campaign, one way of selling it to the public would be as a 24 percent tax cut (5.25 percent down to 4 percent) compared to last week’s proposal.
The problem with that is it wouldn’t do nearly enough to get the state out of hock, which is why Quinn’s budget team claimed last fall that a tax hike would have to be much higher than the governor was saying. Cut the tax increase to a single percentage point and Democrats would have to find billions more cuts. If, however, they left the currently proposed 1.5-point tax hike for the deficit in place and kept the quarter-point tax hike for borrowing, they could still pull it off and lower the overall increase by half a point. That would be something, at least.
But that would mean killing off part of the increase for schools (eighth of a point increase - although the $1 a pack cigarette tax hike would still give schools $377 million) and human services (eighth of a point) and property tax rebate checks (quarter-point).
When asked if the ultra-high numbers being thrown about on the tax hike was simply a way to come back lowering the final amount and make the hike more palatable to the public, [GOP state Sen. Matt Murphy] said that was possible.
“Madigan sending his members home Friday lends to that picture, but Quinn and Cullerton very much want this increase,” Murphy said. “In the new session it becomes much more difficult to pass a tax increase, so it’s doubtful that’s the strategy, but it’s not impossible.”
While Madigan reportedly is more hesitant about the tax hike, the other two Democratic leaders are gung-ho, Murphy said.
“Madigan is certainly less interested in this monstrosity than the other two, so it’s an interesting dynamic to watch.”
Many of the Democratic leaders expect some changes to be made to the plan before it comes up for a vote. But they refer to those changes as “tweaks,” and Mautino said he expects the tax component to stay pretty much intact.
“At the end of the day, I think it’s going to be pretty close to what you see,” Mautino said.
* However, could gaming expansion fill some of the holes created by a scaled-back tax hike? Maybe…
Although [Republican state Rep. Jil Tracy] is not a fan of gambling, she would support a gaming expansion because it would generate money for the state without hitting all Illinoisans. She considers gambling expansion as more acceptable than the income tax hike.
* The Tribune has a story about a couple of bond speculators demanding even more from Illinois, but it does include this…
“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.
But bond experts say a move to raise the income tax could help stave off another downgrade. Brian Battle works for the Chicago bond-trading company Performance Trust Capital Partners. He says a tax hike gives bondholders more hope that Illinois won’t default on its debt.
“This is the first positive news we’ve had since last summer about Illinois being proactive about doing something to plug this budget gap that we have and now we need to see what they’re going to do about it long-term,” Battle says.
Battle says bond investors want reassurance that the state can pay its debts many years from now. So he says the market won’t really get interested in Illinois bonds until state leaders start cutting the budget in addition to raising revenue.
Drop the massive borrowing. Built into the package is a plan to borrow a whopping $12.5 billion to pay off a $3.7 billion pension bill and to make $8 billion in outstanding payments to hospitals, schools and social service agencies. We support borrowing for the pension payment only. If Illinois skips its payment, it will lose out on millions in investment income and the pension systems could be forced to sell off precious assets.
But borrowing beyond that, to pay for the basic operations of government, goes too far. Delayed payments to schools and hospitals are outrageous, and we sympathize with the urge to make them whole. But borrowing to pay them back — pretending, really, that Illinois can continue to support spending at current levels indefinitely — is worse.
* Dropping that quarter-point tax hike for borrowing would mean the state would struggle for years - maybe decades - with overdue bills. From Illinois Issues…
If lawmakers fail to act on budget solutions, the state could face $7 billion to $10 billion in unpaid bills by the end of the current fiscal year, according to a quarterly fiscal report issued today by Comptroller Dan Hynes.
At the midpoint of this fiscal year, the backlog of unpaid bills is higher than it was at this time last year.
* And Mark Brown has supported a tax hike for a long time, but he’s frustrated by the secrecy of this whole thing and of the governor’s refusal to comment or explain…
I called the governor’s office Friday practically begging to find someone who could help me make the case for them. All I got was a canned statement insulting our intelligence. I keep thinking Quinn will understand the problem of putting the cart before the horse, but I guess I’m giving him too much credit.
Amen to that. It’s been almost impossible to get information from the governor’s office this past week. They’ve locked everything down on the tax hike, so they get what they deserve.
* Meanwhile, the stimulus effect here of the federal payroll tax cut would be canceled out by the state’s personal tax hike…
As part of that deal, Social Security payroll taxes were trimmed back for 2011 in an attempt to plump up take-home pay for workers and get them to spend more.
But any benefit from that stimulus could be eaten away in Illinois by a larger bite of state taxes. On the other hand, the federal benefit may initially mask the pain from any state hike.
“It could work itself out where it will be more or less a wash for many taxpayers,” said Joe Rebman, Illinois tax analyst for CCH, a tax research firm based in north suburban Riverwoods.
“It’s a windfall for moving van companies,” said Greg Baise, president of the Illinois Manufacturers Association. […]
“I was shocked,” said Doug Whitley, president of the Illinois Chamber of Commerce. “It’s counterproductive to what they’ve been saying since the election that creating jobs is a priority. It sends up another red flag that Illinois has an anti-business approach, which is exactly what we’re trying to get away from.” […]
With dozens of locations and 23,000 employees in Illinois, Caterpillar Inc. doesn’t see a 75 percent corporate income tax increase as the medicine the state needs, noting that when its business plunged in late 2008, the Peoria-based company restructured.
Don’t strangle Illinois businesses. The proposed package would raise the corporate income tax rate from 4.8 percent to 8.4 percent. After another universal business tax is factored in, this change would give Illinois one of the highest corporate tax rates in the country. We think this is a mistake, potentially jeopardizing the slow economic recovery under way here. A smaller, scaled-back corporate tax increase is about all Illinois corporations can take.
* In other news, House Speaker Michael Madigan has put off his constitutional amendment to cap state spending…
A spokesman for Madigan, D-Chicago, said late last week not enough time is left in the current legislative session to get the amendment through, but Madigan plans to introduce it again in the new General Assembly, which starts work on Wednesday.
“He believes it’s an important idea, and spending discipline is an important ingredient in any recipe to fix the state’s budget,” spokesman Steve Brown said.
The unions and other groups worked that hard in the House and the Senate. Madigan had no choice.
* Whew! What a week! I’ll be back Sunday afternoon because the House is coming back to town.
Also, I’m still working on that Inauguration event list which I promised subscribers. I’m going to keep at it this afternoon and evening until I finish. Check back a bit later.
* Gov. Pat Quinn was pinned down by reporters last year on taxes and some folks still remember…
The [income tax hike] proposal puts Quinn in an awkward position. It would boost the tax rate by 2.25 percentage points, but the governor - while running for re-election - promised last year to veto any increase above 1 percentage point.
Last summer, a Quinn aide suggested taxes might have to be raised by 2 points. Quinn quickly disavowed the comments and said he opposed anything beyond his proposed hike of 1 percentage point.
“I’m going to veto anything that isn’t my plan,” Quinn said at the time.
Quinn’s office didn’t comment Thursday on the conflict between the tax plan and his campaign promise.
It wasn’t completely clear that he’d veto anything above 1 point, but it was pretty darned close…
* The Question: How would you advise Gov. Quinn to deal with this campaign promise?
* It’s never easy to do anything big in a legislature. This tax hike plan is no exception. The Republicans hate it, some conservative and/or politically vulnerable Democrats despise it, and even some liberals have found a way to diss it…
Leading black lawmakers, including former Chicago mayoral candidate James Meeks, vowed Wednesday to oppose any increase in the state income tax if it does not explicitly set aside money for schools and property tax relief.
Gov. Quinn, Senate President John Cullerton (D-Chicago) and House Speaker Michael Madigan (D-Chicago), who were expected to reconvene on more tax talks Wednesday afternoon, have discussed several tax-increase scenarios — though none appear to have the tax-swap features that Meeks helped pass through the Senate in May 2009.
That plan raised the individual income tax rate from 3 to 5 percent, increased exemptions for property taxes and imposed sales taxes for the first time on services like haircuts, auto repairs and dry cleaning.
“I cannot support anything that does not put money toward property tax relief and education. For eight years, I’ve carried a school funding bill, and its main essentials were money for education and money for property tax relief,” Meeks said.
“All of a sudden, the proposal we’re hearing about now does not have either of the two,” said Meeks, who made his position known during a closed-door Senate Democratic caucus earlier Wednesday.
* But Senate President John Cullerton told reporters yesterday that spending won’t go up…
Senate President John Cullerton told reporters tonight that raising the rate 2 percentage points is probably the most legislators can accept.
“Hopefully, that’ll be the last meeting because we have to have an agreement or we’ll run out of time,” Cullerton said of Thursday’s planned meeting.
Cullerton said spending in the next budget cannot go up.
“We have such a great loss in federal revenue dollars that we know that the spending can’t go up,” he said. “This is all premised on the fact that there will be no spending increases, moratorium on new programs and what we’re trying to avoid is deficit spending. That’s really what the fight’s about.”
* And watch Cullerton’s interview to see that he predicts property tax relief will be included in the final package…
State Sen. Dale Righter, R-Mattoon, said the proposal will return the “struggling” program to a safety net for the poor, instead of a catch-all for the potentially ineligible.
“It’s struggling for the people who need it the worst,” he said. “We’re talking about the people who are on the lowest rungs of the economic ladder, the people for whom access is a truly critical issue. The people who aren’t mobile. People who can’t drive two hours and take a day off because it’s not a big deal to make sure that their child can get to a medical provider.”
* But even though the Republicans had demanded Medicaid reform before considering a tax hike, Sen. Righter yesterday said that idea was now a non-starter…
“This (Medicaid) is an issue unto itself,” Righter said. “This is not a trading card in other areas of public policy.”
*Requires that 50 percent of Medicaid recipients be in managed care programs by 2015.
*Sets the income level for participation in the All Kids program to 300 percent of the federal poverty level, or about $66,000 per family.
*Ends the practice of automatically re-enrolling participants once they are part of Medicaid. They will be required to annually prove they are still eligible.
*Places a two-year moratorium on expanding eligibility for participation.
*Allows pharmacies to provide 90-day supplies of some maintenance drugs.
*Creates civil penalties for Medicaid fraud.
*Phases out the practice of paying Medicaid bills from one budget year with revenue from the following budget year.
* And in other news, the Senate-approved gaming bill has been altered in the House…
“[The new additions] provide that our race tracks in Cook County may relocate within three miles of their current location, under certain conditions. It provides a $2-million renovation tax credit to be utilized by all riverboats in the state of Illinois,” Lang said.
“The [legislation] provides that all of the [casinos] authorized under this bill might build temporary facilities. Because we know that it may take up to two years to build a new [casino]. We want to get the money flowing, we want to get people hired, we want to bring in this money.”
But those temporary sites would have to wait for Illinois’ other gambling expansion to get up and running first. Lang’s legislation requires that 2,000 video poker positions be opened before new casinos are established.
Existing casinos also would see a tax sweetener under Lang’s legislation. The nine current riverboats and the one casino being built in Des Plaines would receive a decade-long, 5-percent credit to help offset any losses to the new casinos.
* Madigan visits state Senate floor to press for tax hike: “This is Madigan’s, certainly his way of telling you that, ’something has to be done, and I’m going to be the one to do it,’” said Sen. Lou Viverito, D- Burbank, a longtime Madigan ally who spoke to the speaker for several minutes.
* Madigan Refuses to Be Pinned Down on Tax Increase Amount: Republican Minority Leader State Sen. Christine Radogno said she met with Gov. Quinn on Wednesday to talk about spending cuts. “He said they’ve already cut spending by $3 billion, but what they’ve done is not pay bills,” Radogno said.
* As income tax talks heat up, some suburban lawmakers remain cool to it
* Ill. lawmakers move closer to income-tax increase: But outgoing Rep. Elizabeth Coulson, R-Glenview, Ill., will not budge. “I am not going to all of a sudden change my mind where my district comes from and say, ‘take the money and run with it,’” Coulson said.
* VIDEO: House Rep. Lou Lang discusses gaming changes
* Sweeping teacher tenure, strike bill pushed in Springfield
* State Senate rejects Taylorville Energy Center clean-coal project: The loss came a day after state Sen. Kyle McCarter, R-Lebanon, announced he would vote against the project because of the high cost of electricity to commercial and industrial consumers. McCarter, who represents a district adjacent to where the plant will be located, had campaigned throughout the fall saying he supported the plant.
* Tenaska bill falls short in Senate: Sponsoring Sen. Deanna Demuzio, D-Carlinville, used a parliamentary maneuver to keep the bill alive for another possible vote, but time is literally running out for the General Assembly to act.
* VIDEO: St. Clair County Clerk Bob Delaney testifies in Springfield about his county’s late military and overseas ballots.
* Navy Pier to be leased, run by not-for-profit: Reilly said McPier will provide seed money for renovations and deferred maintenance at the pier. He estimated about $50 million might be available.
* It can’t be fixed: Lawmakers have had 10 years to reflect — and act — on the failures of a system that sent at least 20 innocent men to death row. Illinois hasn’t executed an inmate since 1999, the year before then-Gov. George Ryan declared a moratorium that continues to this day.
* For reasons unknown to mere mortals, Carol Moseley Braun extended the media coverage of her initial refusal to release her tax returns by dribbling out a bit more information yesterday. And she actually plans to keep the story alive by releasing more information sometime today…
Carol Moseley Braun on Wednesday released longer versions of her 2008 and 2009 tax returns, expanding on the two-page summaries she put online the day before.
Her disclosure brought her closer to matching two of her mayoral challengers: Rahm Emanuel and Gery Chico, each of whom has released five years’ worth of tax returns. Braun’s campaign indicated she plans to make her 2005, 2006 and 2007 returns available as soon as today.
This is just pure torture. Why would anybody operate this way?
Newly released pages of her 2008 return show she claimed a loss of more than $120,000 for a public speaking business, CMB One Corp., even though she indicated a day earlier that her financial troubles stemmed from her organic food company. […]
The newly released documents indicated that $122,000 of those 2008 losses came from CMB One, her speaking enterprise, but a tax schedule that could offer more details was not provided by the campaign. […]
In the 2009 Schedule C disclosure about income related to “public speaking,” Braun reports income of $10,556 but a net loss of $6,322 after factoring in expenses that included more than $8,000 for use of her home.
However, in another part of the tax return, under Schedule E, she reports that CMB One, which she has listed in other public documents as her public speaking firm, actually lost $17,505. The return notes that the $17,000 loss is described in yet another document, Schedule K-1, but Braun did not release that document Wednesday.
So, she raised more questions than she answered with yesterday’s document dump. The mind boggles.
* Meanwhile, Braun held a press conference yesterday at the still bloody scene of a shooting and appeared to botch that as well…
As to this particular shooting, however, Braun’s information was a bit suspect.
According to police, two boys were shot at the location, not three, and more importantly, nobody had died as a result, although one of them was said to be critically wounded. The medical examiner’s office confirmed it had not been notified of a death, so either Braun is really on the cutting edge of this murder statistic cover-up by police, or she got her facts wrong.
Her campaign never responded to my request for clarification as to the identity of the victim, which is one reason I strongly believe the latter explanation.
Mistakes happen. Even without a death, the blood alone was enough to convince anyone this was the scene of a serious crime.
What’s less easy to overlook is Braun’s reckless suggestion that crime statistics showing murder to be down are misleading.
Everyone was in place at Carol Moseley Braun’s Jan. 4 LGBT meet-and-greet at Downtown Bar & Lounge ( including media figures from the print and television worlds ) —except the mayoral candidate herself.
However, she did make an appearance, of sorts. After some patrons waited more than two hours, event organizer Marc Loveless let attendees know that Braun would be unable to personally make the event ( apparently because of double-booking ) —but that he had her on the phone. He then put the phone up to the mic; unfortunately, the volume output was so low that only those closest to Loveless could hear what she said.
* I’m not sure I’ve ever heard a candidate bragging about being the “poorest candidate” before, but at least he had some spin…
City Clerk Miguel del Valle today said he has raised about $150,000 in his run for Chicago mayor and argued that those who are raising more money are doing it by using political connections.
“I will be the poorest candidate. I want to announce that today,” del Valle said at an event where he was talking about helping small businesses grow if he’s elected mayor. “I will be the poorest candidate with the most to offer.”
Gery Chico, a former chief of staff to outgoing Mayor Richard Daley and ex-president of the Chicago Board of Education, earlier this week announced he had raised $2.5 million. Former White House Chief of Staff Rahm Emanuel is expected to announce later this month that he raised millions through the end of the year.
Del Valle took aim at the two, and Chico by name, saying they used their government connections to help themselves personally and with their fundraising. Chico’s recently released income tax returns show he’s made millions from his law firm that lobbies City Hall, while Emanuel made millions of dollars after leaving the Clinton White House.
When city clerk hopeful Susana Mendoza heard Tuesday about mayoral candidate Rahm Emanuel‘s recent announcement, she said she was stunned and exclaimed: “Hey, that’s my idea.”
Barely two weeks after Mendoza proposed raising money for the cash-strapped city by selling ads on city vehicle stickers, Emanuel announced Tuesday he would raise money for after-school programs with “new ads on the city’s vehicle stickers, on garbage trucks and an other public venues, like farmers’ markets.”
Asked if she felt that Emanuel had stolen her idea, Mendoza replied, “That’s maybe how some folks would see it. I was surprised to see it in the paper as his idea.”
CBOE Holdings Inc., parent of the Chicago Board Options Exchange, is supporting Rahm Emanuel for mayor, said CEO Bill Brodsky, who also is personally supporting the candidate.
Mr. Emanuel was Chicago-based CBOE’s go-to member when he served in the House of Representatives and he understands the exchange’s business, Mr. Brodsky said at an annual lunch with reporters.
“I think there’s a real substantive basis for our support,” Mr. Brodsky said.
CBOE will provide unspecified financial support to Mr. Emanuel, as it has in the past for Mayor Daley, Mr. Brodsky said.
The campaign is shelling out about $700,000 on cable and broadcast spots that began airing Tuesday and will appear through at least Jan. 16. The commercial is the third in two months.
Emanuel spent about $800,000 on his first ad, which aired only on broadcast TV for one week in November. In December, his ads were only on cable, costing almost $200,000.
* Related…
* Face of City Has Changed Dramatically, Census Estimates Show: The city’s black population fell by about 11 percent between 2000 and 2009, a pattern reflected in many neighborhoods across the South and West Sides. Twenty-four of the 25 city-designated community areas with the largest black populations in 2000 saw declines, according to the analysis of the five-year population estimates for 2005-9… Estimates of the city’s overall white population increased only modestly because of large declines in their numbers on the Northwest and Southwest Sides. Meanwhile, Hispanics continued to supplant whites in the bungalow belt.
* Better Government Association sues Chicago Police Department: The BGA, a not-for-profit corporation, claims the Chicago police refuses to release documents about the protection and transportation of Burke (14th) as requested in an Aug. 24, 2010, Freedom of Information Act request, according to the complaint filed in Cook County Circuit Court.
* Suit alleges police hold back info on alderman’s protection: The Chicago Police Department also said in its letter to the Better Government Association that it does not keep expense or travel records related to the security detail and referred the group to the alderman’s office for that information.
* Keep in mind that nothing is set in stone yet. Here’s the Sun-Times’ take on what’s going on…
Gov. Quinn and the two Democratic legislative leaders honed in on a potential tax-hike deal Tuesday that could raise the state’s share of workers’ paychecks to as much as 5 percent, a 66 percent jump.
Multiple options remained on the table and nothing had been finalized, but Quinn administration sources held out hope a tax-increase pact with House Speaker Michael Madigan (D-Chicago) and Senate President John Cullerton (D-Chicago) could be struck as soon as today.
Among the proposals discussed during two rounds of closed-door meetings between the three Democrats were increasing the individual income tax rate from 3 percent to 5 percent or increasing it by as little as one half of a percentage point. In both cases, the leaders were contemplating making at least part of the increases temporary, sources said.
Publicly, no one in the talks would divulge specifics on a tax plan, though Cullerton late Tuesday characterized both tax-hike scenarios as “pretty accurate.”
The governor also is floating the idea of borrowing approximately $14 billion, to be repaid over 14 years, largely to catch up on a backlog of unpaid bills, fully fund state worker pensions this budget year and help pay the costs for next year, a key lawmaker said. The borrowing would be repaid by raising the income tax rate by a quarter- or half-percentage point, above any other tax hike lawmakers might approve.
But internal polling of Madigan’s House Democrats showed significant support for a temporary 1-percentage-point increase in the state’s 3 percent personal income tax rate, with some arguing the hike would be too small to fix Illinois’ long-term budget imbalance, said a source familiar with the vote-counting effort who was not authorized to speak publicly. […]
One factor that could hurt Democratic support is Quinn’s reluctance to agree to limit state spending at current-year levels or lower. A spending cap has been a condition for some downstate Democrats to back an income tax hike.
It’s not an argument, it’s true. If they don’t make big cuts, a one-point hike ain’t enough.
“It’s political suicide for a lot of people, and we all know that, but the right thing has to be done here,” Lyons said. “Being popular isn’t always right. Being right isn’t always popular. The old cliche is so applicable toward this thing. It’s sad.”
* Meanwhile, House Speaker Michael Madigan advanced his latest constitutional amendment yesterday…
A state constitutional amendment aimed at making it harder to sweeten public employee pensions moved to the floor of the Illinois House Tuesday, but its sponsor, House Speaker Michael Madigan, couldn’t answer key questions about the measure.
If approved by voters, the amendment would require three-fifths votes by legislators to increase pension benefits for employees of state and local governments and school districts. Such changes now take only majority approval.
The bill passed out of the House Personnel and Pensions Committee on a 7-3, party-line vote with all Republicans, including Reps. Raymond Poe, R-Springfield, and Rich Brauer, R-Petersburg, voting “no.”
The two Republicans listed, it should be noted, have a whole lot of state employees in their districts.
Lawmakers last spring and last month approved slimmed-down pension benefits for new teachers, state university employees, state workers, judges, legislators, firefighters and police officers. But Madigan said he’s worked on his proposal for the past two years so the sins of the past aren’t repeated – especially after he’s left the Legislature.
“Certain representatives of those organizations have been telling people in casual conversations ‘We’re just going to wait it out until Madigan’ s out of there, and then we’re going to run bills to repeal all of it.’ That’s their attitude, and that’s what you’re looking at going forward,” he said. “And so this is designed to raise the bar. And simply say, ‘Look we now know, given the fiscal condition of the state pension systems and the local systems, that this is an extraordinary situation. This is not something that should be handled in the ordinary course. There ought to be a high bar to move these bills.”
