While the corporate income tax in Illinois will rise to 7% on a temporary basis, companies that do business in the state of Illinois are taxed on profits from the location of their customers – not the physical location of the business. Moving across the state border will not affect a business’s Illinois income tax bill. For example:
· The only way for the company to avoid paying Illinois corporate tax is for the company to cease selling their product to Illinoisans; relocating out of Illinois will have no effect on the amount of money paid by a company to the State of Illinois.
· A company that has $1 million in profits from $10 million in sales – $4 million of which was generated by sales in Illinois – will pay the same amount in income taxes ($28,000 under the 7% rate) whether they are located in Illinois, Wisconsin, Indiana, or even Montana. [Emphasis added.]
So much for my secret plan to re-incorporate in South Beach.
* I’ve been perusing the online letters to the editor sections of Illinois newspapers lately so you don’t have to. It’s never a fun thing to do. The amount of misinformation and weirdness that newspapers allow into their publications is truly beyond the pale. Here’s one theme that I see everywhere these days…
Dear Governor Quinn:
When you get a chance, you might want to call a guy named Chris Christie in New Jersey. He has some interesting ideas on actually cutting taxes and reducing spending - the key words being cutting and reducing
There’s been a huge amount of hype about Gov. Christie, but what has he really done? New Jersey’s deficit for the current fiscal year was projected at $10.7 billion last spring. The state’s deficit for next fiscal year is now projected at around $10.5 billion. At that rate, his budget will be balanced in about 53 years.
Either the bottom has completely fallen out in New Jersey, or Christie didn’t actually cut much at all, or some of both. He claims to have balanced the budget, but how could he do that and still be facing a $10.5 billion deficit? Color me skeptical.
And after skipping last year’s $3 billion pension payment, Christie plans to skip $2.5 billion of the state’s payment next fiscal year.
In other words, so far he’s been all talk. Yes, he has “ideas,” but they haven’t actually made a dent in his real life deficit.
I live in Indiana, the state to the east of Illinois. I’m sorry about the financial mess your politicians left you in, but not so sorry for the outcome.
You see, in Indiana we elect politicians who realize we don’t want them to spend us broke, or they don’t get re-elected. It has worked well lately, because we’re in the black, and our taxes are lower then yours.
Actually, no. Indiana increased taxes in 2008. That’s a big reason why they have been able to weather the storm. And some of their counties levy as much as a 3 percent corporate income tax. It ain’t all roses over there. Their unemployment rate is higher than ours as well. So much for the miracle.
“We were wondering how a sad sack like Pat Quinn could get elected governor. We found some of the answer in the $250 million hand off he gave to the Black Caucus. He’s taking the money out of you and your friends’ pockets to repay them.”
I have a suggestion for our esteemed leaders in Springfield/Chicago regarding the income tax increase in Illinois. Another way to raise money for the state is to reduce welfare benefits by 2 percent. Fair is fair.
That $250 million was for education funding, not for black people, but whatever. And the state’s Department of Human Services Budget was cut by over 14 percent this fiscal year alone.
* And, of course, there were the illiterate screeds about Chicago…
All this could be solved with one simple solution: Let Chicago succeed from Illinois. Chicago is a cesspool of spending abuse and corruption that threatens to take down the entire state.
In other words, there was nothing particularly extraordinary about the Cook County vote last year except that Republicans completely failed to do whatever it took to make inroads during their greatest year since 1994. Back then, their gubernatorial candidate (Jim Edgar) actually won the county.
Wisconsin Gov. Scott Walker says he’s looking for ideas for a wager with Illinois Gov. Pat Quinn on the NFC Championship Game [between the Bears and the Packers]. […]
Walker wants to broker a bet with Quinn on the outcome. He says he’s thinking about offering beer, sausage or cheese, but would like get more creative. He’s looking for suggestions from the public through his Twitter account.
* Of all the dumb things to do, this ranks right up there…
During her final days in office, former state Rep. Careen Gordon scored a lucrative state job after casting an important vote that helped pass Gov. Quinn’s controversial 67 percent income tax increase.
Gordon (D-Morris) and a spokeswoman for the governor said there wasn’t any deal to trade Gordon’s vote for the $85,886-a-year seat on the Illinois Prisoner Review Board.
“There was no quid pro quo,” Quinn spokeswoman Annie Thompson said Saturday. “Bottom line, she was appointed because of her extensive background in criminal justice. . . . She was just the ideal candidate.” […]
“There was no deal. That’s untrue,” she said. “My background is a perfect match for someone on the Prisoner Review Board. I’m done talking about it. I’m done being called a liar.”
Gordon said she and Quinn discussed the tax increase when she approached him about the appointment in November, but he didn’t ask for her vote.
This appointment could have, and should have, waited. I, for one, don’t think there was a direct, absolute quid pro quo here. You can get around that pretty easily. In politics, some things are just left unsaid. And the way the “Honest Services Fraud” law has been diluted by the Supreme Court, you’d have to prove a direct bribe to bring any charges, so that’s not gonna happen.
But giving Gordon a job this soon certainly makes it look like something fishy is going on. Stupid, stupid move, governor. Truly.
Lame ducks would be dead ducks, under a Constitutional amendment some Downstate Republicans want Illinois voters to decide.
The income tax hike which passed the legislature in the final hours of the 96th General Assembly — Tuesday night in the House and in the wee hours Wednesday in the Senate — got the minimum votes needed to pass: sixty in the House and thirty in the Senate. Of those voting Yes, twelve representatives and one senator were not coming back when the 97th General Assembly was sworn in at midday Wednesday.
Representatives led by Chapin Rose (R-Mahomet) want to change that. Rose has filed a Constitutional amendment which, if the legislature and governor approve, would allow voters to decide that the outgoing General Assembly could not convene between an election and the inauguration of the new one.
The proposal, discussed at news conferences in Champaign and Decatur Friday, comes in light of not just the tax increase, but also the death penalty repeal and civil unions, also approved during the post-election veto session or the January lame duck session.
* To the Wayback Machine, Sherman! Decatur Herald & Review, January 13, 1997…
Democrats took control of the Illinois House last week as a result of the swearing-in of legislators elected in November.
Republicans were unable to give up control of state government without a final show of power.
Their actions included redistricting the Illinois Supreme Court to give the 4-3 Democratic body a 4-3 Republican split, ending straight-party voting, and imposing enormous new paperwork burdens on the Cook County assessor.
It was the straight-party campaign, run by Cook County Assessor Tom Hynes, that resulted in Democrats winning back the House. “They were obviously acts of retribution,'’ said state Rep. Michael J. Madigan, D-Chicago, who became speaker the day after the Republican efforts.
State Rep. Lee A. Daniels, R-Elmhurst, who relinquished the speakership to Madigan, was fairly candid in his last hours of power. It could, Daniels acknowledged, be labeled “a partisan last day, obviously with some justification.'’
There is little new under the Statehouse dome.
* Statehouse roundup…
* Senate lawyer: Monken out as Illinois State Police director
* New bill would impose pension reforms on existing participants [fixed link]
* Unpaid rent, bills add up as legislator, CPS feud
* Tax credit is incentive to hire temporary workers
* Gun pointed at Rep. Acevedo: A van pulled up to him and an occupant pointed a gun at him, but did not fire it. Acevedo loudly announced his office and the van “took off,’’ police said.
* Illinois death penalty decision leaves uncertainty
* This is probably something that the Democrats neglected to properly consider when they raised taxes…
Annually, the increase will equate to whole paychecks they’ll be handing over to the state.
Two percent of one’s income is, indeed, about equal to a week’s wages. Gov. Pat Quinn and the Democrats better worry that nobody else picks up on this theme. It could be extremely powerful. And quite dangerous. Nevermind that the total state income tax burden prior to this was only about one and a half weeks’ worth of wages. This new one week of pay taken away and given to the brain trust running our ever-so-competent government is something that people can very easily understand.
* But in the meantime, we’ll just have to endure false propaganda like this from the Heartland Institute…
Land of Lincoln? Land of Larceny. […]
The legislation does include a spending “cap,” but it allows spending to grow 18 percent from fiscal 2011 levels over the next four years – and they’ll likely ignore the cap, just as they’ve ignored the state’s balanced budget requirement and a 1995 law requiring proper funding of pensions.
The reason spending appears to be growing from this fiscal year is because we currently can’t pay our bills.
* And the Tribune recklessly printed this Cal Thomas screed, which starts with Illinois as an example and then goes national…
Suppose there was a groundswell of taxpayers who announced they will no longer pay for government and, in fact, will start reducing payments to government if politicians won’t significantly cut spending? That would get their attention.
There aren’t enough prisons to house thousands, perhaps millions, of taxpayers who cry “enough” and demand that Washington live within its means. It’s time to starve the beast. If Dracula doesn’t get blood, he dies. If Washington can’t suck more money out of us and must stop borrowing, it will be forced to cut back, like so many Americans have done in this recession.
So much for toning down the rhetoric.
* Northwest Herald executive editor Chris Krug listed those who voted for Pat Quinn, including…
Idiots, buffoons and the terminally stupid.
Sheesh.
* But James Warren includes a wake-up call for the warring Midwestern states over Illinois’ new tax hike…
But a cautionary note came from [Rich Neimand, a Washington media and political strategist]: Economic health involves more than competitive tax rates and cheap land; it involves thinking far beyond Racine, Prairie du Chien, Carbondale and Elgin.
“Both governors should note that the weather is a lot sunnier in Mexico, the local officials infinitely more generous, the environmental regulations more lax and the gang violence probably no worse than Chicago or Milwaukee,” Mr. Neimand said.
So ridicule Illinoisans picnicking in the Dells, Badgers. But realize that it’s folks around the world who are really eating your lunch, Mr. Walker, and ours.
What were the alternatives to a tax hike? The state could have kept limping along as it is, with bills piling up and getting paid later and later, if ever. That means the vendors and local service organizations that do business with the state would have paid the price for their association with Illinois. Some people might call that unfair.
There is the stubborn belief that cuts alone - just the waste, mind you, not the good stuff - will solve the problem, despite repeated assurances from all sorts of budget experts that those kinds of cuts are a fantasy, that the numbers involved are just too big. You’re talking about wholesale elimination of about half of Illinois government.
Of course, no one likes paying higher taxes. In the end, though, there were no other reasonable alternatives.
He does not necessarily buy into the assumption by many that the tax hike, which raises individual income taxes from 3 percent to 5 percent and the corporate rate from 4.8 percent to 7 percent, will not be temporary. The tax is scheduled to drop to 3.75 percent in 2015.
Thompson signed a law that temporarily increased the tax from 2.5 percent to 3 percent. That increase took effect on Jan. 1, 1983, and went back to 2.5 percent on June 30, 1984.
“I went through and the people of Illinois went through in 1982-1983 the second-worst recession in American history,” Thompson said. “(The tax increase) wasn’t renewed, and so it can be done.”
The key to not continuing this year’s tax increase, according to Thompson, will be budget cuts and a better economy.
*** UPDATE *** Not that I usually care what they think, but I forgot to include this editorial from the New York Times…
For years, Illinois, like so many states, pretended that it had not fallen off a budgetary cliff. It was spending too much and taking in too little revenue, but every year it would kick its problems into the next. Unable to pay its bills, it finally accepted reality last week and raised taxes on incomes and businesses — a first step toward getting its house in order.
The action was immediately ridiculed by several governors around the nation who are still pretending that they can cut their way out of the enormous shortfalls they face, without raising taxes. Wisconsin and Indiana predicted a windfall of angry corporations and residents would head their way from Illinois. Even Gov. Chris Christie, the New Jersey Republican, vowed to fly to Illinois to invite businesses there to defect to his state.
That makes great political theater. But businesses and voters in Illinois, and around the country, should take a closer look at the facts and figures, including their own. […]
With federal stimulus aid ending, states are in for their worst year in generations, and they cannot get out of it by either cutting or taxing alone. Illinois is figuring that out, finally. Too many other states are still in denial.
* Don’t follow Illinois’ lead: “The idea of competing on state tax rates is … hopelessly out of date,” said Ed Morrison, economic policy adviser for the Purdue Center for Regional Development.
* Tax hikes will prove to be an onerous burden, local business people say: To make matters worse, Poe doesn’t know how she’ll be able to afford the additional taxes, given that the state owes her business money that hasn’t been paid. She has no idea what happened to some of the expenses for which she asked for reimbursement and has been resubmitting claims to no avail. “Many of the bills are eight months out that need to be paid,” Poe said. “We just got payment recently for something in 2009. I have no idea if they just went into a black hole because we’re not getting payment on them.”
* R&R courtesy of good government: It was Illinois Sen. Paul Douglas who led the long battle a half-century ago to set aside the precious [Indiana] dunescapes. Business interests put up a stiff fight, but in the end a compromise set aside land for steel mills — and jobs — while preserving much of the rest.
* My weekly syndicated newspaper column takes a look at the recent tax hike…
Whether they admitted it or not, a large majority of Statehouse denizens was relieved last week when the General Assembly approved the income tax hike.
Ironically enough, Republicans may have been the happiest. The state’s horrific structural deficit was finally addressed, which is good news all around. And since they didn’t put any votes on the tax hike bill, the Republicans now get to use it as a wicked political hammer against the Democrats.
Their silent, but tacit consent came late in the evening when several Republicans, including the Senate GOP Leader, joined the Senate Democrats to support a borrowing plan to make the state’s pension payments this year. The Republicans wouldn’t put votes on the bill last spring until they got some budget reforms. But now that the $3.7 billion borrowing plan was paid for with a tax hike, they explained they could now go along.
House Republicans offered up their own version of tacit acceptance shortly before the tax hike was approved in their chamber. They took what amounted to a rare “caucus position” against putting any votes on Gov. Pat Quinn’s $14 billion bond program to pay off old debts, but afterward privately said they would likely agree to the plan down the road, as soon as they could extract some concessions from Democrats. The tax hike proposal, of course, includes designated cash to pay off those $14 billion in bonds.
And while there was relief and even elation in the building after the tax hike finally passed, the tax hike is definitely causing an uproar amongst the general populace.
It is, in a way, a bit like the federal healthcare legislation. Like President Obama, Gov. Quinn would’ve been badly hobbled at the Statehouse if his tax hike had failed (undoubtedly even worse, since no new revenues would’ve resulted in catastrophic budget cuts).
But also like Obama, Quinn and legislative Democrats will pay a steep political price for passing a very big plan without a clear popular mandate. Again, it will likely be worse for Illinois Democrats because most people tell pollsters they actually like individual pieces of that federal healthcare law. Not many are gonna love any part of this tax hike.
History may eventually look kindly on what the Democrats did last week. But the foreseeable future is going to be absolutely brutal.
There has also been much consternation about the “temporary” nature of this tax hike. For some reason or another, Illinois memories only go back to 1989, when the last “temporary” income tax increase was approved. That one never went away, goes the reasoning, and neither will this one.
That previous temporary tax hike was made permanent after the 1990 election. Republican Jim Edgar campaigned for governor on a pledge to make it permanent. Democrat Neil Hartigan said he would kill off the income tax hike. Edgar won and he got what he, and the voters, wanted.
But income taxes were also raised temporarily in 1983, during a deep, dark recession. That tax increase was even more controversial than this one because it came after an election when Republican Governor Jim Thompson had promised not to raise the income tax at all. It was allowed to expire on its own.
There is no doubt that the planned 2015 expiration of most of this tax hike will be the prime focus of the 2014 governor’s race. It’s probably a good bet that the permanency of the increase will likely be decided by whoever wins the next governor’s race. Just like it was in 1990.
Even so, voters last year thought they were electing a guy who backed just a one-point tax hike. Gov. Quinn said last week that conversations over the past couple of months with financial institutions that lend the state money led him to break his campaign promise on taxes. The state’s ability to borrow was about to be eclipsed, Quinn said.
Last summer, Quinn promised not to sign any tax hike above one percentage point. He made that pledge after his top budget aides were caught on video telling an out-of-state financial reporter that a 2 percentage point increase would likely be passed in January to deal with the structural deficit. It’s hardly believable, therefore, that the governor came to this realization just since the election.
If Quinn runs again, he’ll probably have to put his house up as collateral against his new promises.
* Debate strategy for mayoral rivals: Go after Rahm Emanuel: Braun replied, “No. Tampons. Let’s talk about Tampons. I don’t go to the NRA. This isn’t about guns. This is about Tampons and how women would feel about somebody who said that in the workplace.”
* Braun, Walls Spar at Mayoral Forum: Braun: “You have run for mayor, you have run for senate … No body knows what you’re doing. Let’s get some honesty.” Walls: “State the facts, state the facts. You got ran out of office.”
* Black wards adding more voters, while Hispanic wards lag behind: In just 10 weeks since the November midterm elections, every ward in the city showed a jump in the number of registered voters, indicating a high level of interest in the upcoming mayoral contest.
* Blagojevich trial hangs over Rahm’s campaign: Another mayoral candidate, Gery Chico, had his own Blagojevich issue. The Sun-Times has reported that Chico hosted a fund-raiser for Blagojevich the night before he was arrested. Chico told the Sun-Times he is a Democrat so it is not surprising he would host a fund-raiser for the state’s Democratic governor.
* Illinois disciplinary flaws highlighted in doctor’s sex case - State missed convicted physician’s admission of at least 3 sexual relationships with patients
* 13 fewer deputies on the job after layoffs: On the day 13 St. Clair County Sheriff’s Department deputies were laid off because of a budget impasse, a lawyer for the Fraternal Order of Police said no negotiations are scheduled to try to get them back on the beat.
* Springfield inexpensive place to live, studies show: Using 100 as the national average, Springfield rated an 86. The figures for other Illinois communities were: Chicago, 113; Kankakee, 100; Peoria, 100; Champaign-Urban, 98; Bloomington-Normal, 97; Decatur, 93; Rockford, 91; Danville, 89; and East St. Louis area, 87. According to local economic development groups and the Greater Springfield Chamber of Commerce, the relatively low cost of electricity from City, Water Light and Power is a major factor in the Springfield figure.
* Fix is in for Capitol offices: Senate Republicans are flooded out of their third-floor Capitol offices for the next two weeks, even as senators and staff are gearing up for the start of a new session. About two dozen GOP staff members will have to be relocated to other areas of the Capitol complex while workers dry out offices soaked by a sprinkler system pipe that broke last week.
* Chef creates ‘invasivore‘ dinner, but experts say that’s not the way to halt finned intruders
* Remember last year when ComEd offered the cash-strapped state $500 million in exchange for guaranteed future profits? Well, the company is back again, but this time there’s no $500 million offer…
Commonwealth Edison Co. plans a big legislative push this spring that would allow electric and natural-gas utilities to hike delivery rates each year and would sharply curtail state utility regulators’ power to control the price for power and heat.
The measure, modeled in part on a controversial rate-freeze bill ComEd tried to move through the General Assembly last May, would give the state’s utilities far more certainty about recouping infrastructure investments in a timely way. But consumer advocates warn it would increase utility bills.
In a major change from the previous legislation, the new version would involve all of the state’s gas and power utilities rather than just Chicago-based ComEd. That means ComEd can enlist industry allies and add clout to its lobbying effort.
Under the proposal, utilities that agree to invest in their systems at a specific level would be allowed to automatically change their rates each year based on their costs. That would enable them to avoid the Illinois Commerce Commission’s review process, which often stretches to 11 months. The ICC instead would be given a narrower, after-the-fact review to ensure the costs aren’t egregious. […]
“To the extent the bill looks like the one they introduced last session, that’s not good for consumers,” says David Kolata, executive director of the consumer watchdog group Citizens Utility Board. “It would reduce ComEd’s risk and put it on the backs of consumers. We believe consumers would be stuck with higher rates than they would otherwise.”
* And they’ve got their ducks lined up. From a ComEd press release…
“This is the right time to decide the right way to modernize a major part of Illinois’ infrastructure,” said Kevin A. McCarthy, Illinois State Rep., 37th District. “Similar to how we facilitated the rapid technology boom in the telecom industry and brought countless advantages to customers, we can manage infrastructure investment and keep necessary consumer protections in place while unleashing the full resources needed to make Illinois an economic hub. This would be a win for everyone, and it is the kind of innovative public policy action our state needs right now.”
“ComEd’s proposal to ensure long-term investment in the electric grid would provide thousands of labor jobs for our members in communities throughout northern Illinois,” said Dean Apple, president, I.B.E.W., Local 15. “Many parts of the grid are aging and in need of replacement to ensure system reliability. This plan would include much-needed programmatic upgrade work and minimize the need for emergent repair work.”
* I heard this rumor the other day and ran it down pretty darned thoroughly over a couple of days. As far as I can tell, it’s bunk…
Tom Cross said he’s hearing Quinn made a deal to get votes for the big tax hike in exchange for promising to sign the bill abolishing he death penalty.
“You know, they were having a tough time getting the votes in the House and the Senate, so I’m told, and in exchange for a number of folks voting in exchange a number of folks voting who were in support of the death penalty abolition, he said he would sign it,” Cross said.
In response, the governor’s office says, “Baseless political attacks do a great disservice to the elected members of the General Assembly who had the courage to take the action necessary to bring economic recovery and budget reform to Illinois.”
First of all, re-read that Cross quote. It makes no sense.
I first heard the rumor from opponents of the death penalty abolition bill. Republicans were also spreading it. At the time, the rumor was that some abolition proponents were threatening to withhold their votes from the tax hike unless Quinn signed the death penalty bill. Some had heard the rumor, but nobody - and I do mean nobody - involved with the tax hike (or the abolition bill) were involved in such a plot that I could discern.
This is just irresponsible on Cross’ part. He’s passing along rail gossip to undermine both bills with this story, and, of course, WLS trumpets whatever nonsense that fits their meme.
* And I’m sure the Republicans, including the four Senate Republicans, who voted for the abolition bill are pleased as punch with his rumor mongering…
The four Republican senators who switched ideological sides were more intellectually honest. They included Dan Duffy of Lake Barrington, who was a small-business owner and political neophyte when he won an open 26th District seat in 2008.
Mr. Duffy is an ultra-conservative and, when tracked down, he was fuming about the big tax increase that also passed at the end of the legislative session. He calls it “the nuclear bomb of jobs bills,” adding, “It will destroy all jobs in Illinois.”
He said he was pro-death penalty until he started researching the issue recently and morphed into a late co-sponsor of the legislation to bar it. […]
Another Republican vote came from Senator Tom Johnson, both a former prosecutor and House member picked by the Republican Party to fill the seat of Randy Hultgren, who was a west suburban senator and is now a new congressman. Mr. Johnson has served on the Illinois Prisoner Review Board since 2004 and was a proponent of the death penalty.
But over time, he said, he discerned a system whose application made it “impossible to rationally use as an effective tool,” especially with state’s attorneys in 102 counties making separate decisions on which defendants were “death eligible.”
* Roundup…
* Judge denies Coleman’s request to delay murder trial: Judge Milton Wharton today denied a defense motion to delay the Feb. 15 start of Chris Coleman’s murder trial until Gov. Pat Quinn decides whether to sign a bill to abolish the death penalty.
* Will Quinn end Illinois’ death penalty? We look at his past comments.
* House lawmakers roast blunt wraps ban: Rep. Jim Sacia, a Republican from Pecatonica, said the legislation is part of a dispute between Chicago-based Republic Tobacco and Kentucky-based National Tobacco Co.
* The Statehouse press room was evacuated today. A water pipe may have burst or a fire sprinkler turned itself on, but whatever happened, the place is flooded. The office that I share with the Daily Herald wasn’t touched, but others got drenched and there’s now a strong moldy smell permeating the whole place, which will be empty until Tuesday at the earliest.
* The Question: Analogies?
We had so much fun with yesterday’s QOTD that I couldn’t resist doing it again today.
* Senate President John Cullerton told Fox Chicago this week that he’d be willing to lower the new, higher corporate income tax rate rate by closing some tax loopholes…
Cullerton said if he can replace the revenue some other way, he would be willing to move immediately to cut the new income tax rate on business, presumably to a level even with Indiana’s 8.5 percent or even lower.
Cullerton said if certain tax “loopholes” were closed, the overall rate could be reduced.
“We could easily do that. We just need cooperation from Republicans,” Cullerton said. “We would actually be shifting taxes, not raising them. We won’t have to raise taxes any more.”
That could open up a whole new can of worms, and I’m not sure the Republicans would cooperate. Those “loopholes” have been in place a very long time and they’re mostly devised to allow the bigger companies avoid paying the full freight.
The reason Cullerton said he’d need GOP cooperation is that it now requires a three-fifths vote to advance a bill that changes the tax hike law.
The Indiana Economic Development Corporation is already targeting companies that have publicly stated they are looking to leave Illinois. The revelation was included in Governor Mitch Daniels’ budget presentation to the State Budget Committee. Lawmakers in Illinois approved massive tax hikes this week, and Governor Pat Quinn signed the increases into law Thursday. […]
A bill to decrease Indiana’s corporate income tax rate is being filed at the Statehouse. State Senator Brandt Hershman (R-7) says it is the result of several hearings into the issue, not a sudden reaction to developments in Illinois.
Republican lawmakers have nixed GOP Gov. Scott Walker’s plan to give tax breaks to small businesses and replaced it with a measure that would cut taxes for businesses of any size that create jobs.
Rep. Robin Vos (R-Rochester), co-chairman of the Joint Finance Committee, said Wednesday he planned to make changes to Walker’s bill so that it would provide businesses a $1,000 tax deduction for each job they create. Walker said Wednesday he could support the idea.
Illinois has one of those as well and it’s bigger, $2,500 vs. Wisconsin’s $1,000. Illinois’ applies to companies with 50 or fewer employees, but that’s 95 percent of Illinois businesses. Illinois’ credit expires in June.
As for the state divide, Mr. Walker is happy to talk about it beyond business and the economy. “I was kidding the Chicago media guys, saying ‘Have me back on when the Packers are ready to beat the Bears, and I’ll talk some smackdown.’”
Yeah. OK. That’ll help attract lots of Illinoisans.
But New Jersey? Trenton is about 900 miles from Springfield, Ill. Jersey City is a 13-hour drive from Chicago. None of that deterred Gov. Chris Christie, a New Jersey Republican who spent much of last fall stumping around the country, from speaking up even before Gov. Patrick J. Quinn of Illinois, a Democrat, had signed the legislation.
“I’m going to Illinois,” Mr. Christie said in an interview on Wednesday. “I mean soon. I’m going to Illinois, personally, and going to start talking to businesses in Illinois and get them to come to New Jersey.” […]
Illinois raised its personal income tax rate to 5 percent from 3 percent, and its business income taxes to 9.5 percent from 7.3 percent. Despite the eye-catching increases in Illinois, New Jersey may have a tough time making the case that it offers businesses a friendlier environment.
New Jersey’s personal income tax — 6.37 percent for married couples earning more than $150,000 a year, and 8.97 percent for those making more than $500,000 — is among the nation’s highest. The state’s business income tax is 9 percent for businesses with income over $100,000, so Illinois’ is now somewhat higher, but Illinois has lower sales and property taxes.
Keep in mind that many small businesses and corporate execs are more concerned with the personal income tax than the corporate tax. It’s no contest there, especially considering that state’s high property taxes. And things are not going so great there…
After cutting spending for schools by about $1 billion last year, the Christie administration today was ordered by the New Jersey Supreme Court to prove the reduced funding can sufficiently provide a “thorough and efficient education” to the nearly 1.4 million children in the state’s classrooms.
If nervous investors were looking for another excuse to stay out of the battered municipal bond market, they got it from New Jersey Gov. Chris Christie on Thursday.
Speaking at a town hall meeting, the Republican governor warned that healthcare expenses for public workers “will bankrupt” the state if those costs aren’t reined in.
Christie may not have meant it to be taken literally, but a governor probably shouldn’t be dropping the B-word in a muni market that is already so badly spooked by fears over state and local government budget woes.
Prices of muni bonds fell broadly for a fourth straight session Thursday, driving yields on some securities to new two-year highs.
Oops.
* Related…
* N.J. cuts bond sale after Gov. utters ‘bankrupt’ - New Jersey Gov. Chris Christie said Tuesday that health care costs “will bankrupt” the state; minutes later, the state Economic Development Authority slashed a bond offering by about half.
* Minnesota to Wisconsin: Pay up: Wisconsin is overdue in paying Minnesota $58 million — and Minnesota wants the money now.
With all the hyperventilating news coverage of the state’s new 2 percentage point income tax increase, almost nobody has reported what Gov. Quinn actually said Wednesday when asked why he broke his campaign promise not to raise taxes by more than a single percentage point.
“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.”
In other words, the big Wall Street bond houses laid down the law: Your problem is so horrible that you’d better fix your deficit now or forget about borrowing money at anything near a reasonable rate ever again.
When the bond guys say “Jump!” states usually ask “How high?”
Last spring, Illinois was threatened with a huge reduction in its credit rating if it didn’t immediately do something about its underfunded pension system. Within days, the General Assembly passed a sweeping pension reform bill.
But the bond houses never stopped making demands. They never do. “They always want you to raise more revenues,” said a onetime aide to former Gov. Jim Edgar, who said that Edgar always chafed at their insistent ways.
Illinois has built up so much debt, however, that we’re more vulnerable to the demands of Wall Street than most states. And so last summer, when the New York drumbeat increased in intensity, it seemed pretty obvious what was going to happen.
Back then, Quinn’s budget director, David Vaught, told Bloomberg News reporters that he expected the governor and the Legislature would pass a tax increase come January.
“We think it’s going to be substantial,” Vaught said. Asked to define “substantial,” Vaught pointed out that Quinn had testified to a House committee in favor of a 2 percentage point increase.
John Sinsheimer, Quinn’s director of capital markets, then piped up with a story about when he told overseas investors that Illinois could balance its budget with a 2 percentage point income tax increase.
“They looked at us and said, ‘Only a 2 percent increase?’ They were amazed by that.”
It doesn’t look so small now that the thing is the law of the land.
The truth is that this problem has been building for more than 30 years. Governors and legislatures have been skipping pension payments, pulling off one-time revenue gimmicks and increasing spending on things people demand, such as education and health care, without caring that Illinois didn’t have enough sustainable revenues to pay the piper.
Not enough was done when state revenues collapsed after the 9/11 attack, and nothing was done while the national economy collapsed in 2008.
The budget cuts made over the past couple of years haven’t stopped the flood of red ink because the problem was just too big.
Those of us who follow this stuff closely knew Quinn’s campaign promise last year to limit a tax increase to a single point was way too small to balance the budget. Not that his Republican opponent’s fish story was any better. Bill Brady promised to reduce corporate taxes and cut the budget by just 10 percent. One way or another, New York would’ve knocked all those ideas off the track because they wouldn’t have worked.
Were there alternatives to this tax increase? Yes. But Illinois didn’t elect an anti-government, slash-and-burn governor in November. We’re stuck with what we’ve got.
With his coveted income tax hike in hand, Gov. Pat Quinn quickly deployed his financial troops to New York in hopes of convincing rating agencies that Illinois bonds are now a safer haven for investors.
John Sinsheimer, director of capital markets for Quinn’s budget office, was slated to spend Thursday meeting with the nation’s Big Three ratings agencies: Moody’s, Fitch and Standard & Poors.
The object: Convince analysts that the nearly $7 billion that will be raised through the higher taxes is a major step in the right direction when it comes to shoring up the state’s still-shaky finances.
If the agencies decide the tax hike has set Illinois on a better financial path, they could upgrade the state’s ratings, which could give the state better interest rates when it borrows money.
Municipal bond investors had been steadily losing confidence in Illinois bonds in recent weeks as Wednesday’s deadline for the General Assembly to approve a fiscal bill grew nearer and a plan to cover the state’s pension obligations remained undefined. But after Tuesday’s vote, the bond market reflected a change in sentiment.
For example, a 2003-issued Illinois municipal bond with a 30-year maturity and coupon of 5.1 percent rose 1.5 percent in price on the secondary market between Tuesday and Wednesday after the income tax was approved, according to a bond trader at a Chicago-based investment management firm. The yield on this bond decreased 17 basis points one day after the tax increase was passed. The bond price rose to 80.83 cents on the dollar Thursday from a meager 76 cents two days before.
The state’s credit risk factors into bond prices, bond traders say. When bond prices rise, it reflects that traders believe risk has decreased. Ultimately this is good news for the state’s finances, indicating Illinois can offer new bonds with lower interest rates to entice investors.
* Related…
* Quinn signs tax, Democrats point to spending caps
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.
