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* Even the Civic Federation sees the need for a tax hike…
Underscoring Illinois’ bleak financial outlook, one of the state’s most prominent tax watchdog groups says it’s time to bite the bullet and raise the personal income tax rate by 66 percent.
“The Civic Federation does not enjoy advocating a significant tax increase in the middle of a difficult recession,” said President Laurence Msall. “However, continuing to do nothing would be, by far, a worse option.”
* In the process, though, they stepped on a third rail…
It also recommends the state tax retirees’ pension and Social Security checks be taxed for the first time at the same rate as workers’ paychecks.
Obviously, there’s real political danger in raising taxes in an election year - particularly this year. But to include retirement income in the new, higher tax base for the first time would be a guaranteed suicide mission.
* The Civic Federation wants to increase current employee pension contributions by $179.4 million, and reduce other state spending by $2.114 billion by rolling back spending to “actual expenditure” levels in Fiscal Year 2007. From the report, with emphasis added…
This spending rollback in FY2011 will amount to a 7.2% cut from the total General Fund expenditures in FY2010.
Although the difference between General Funds expenditures in FY2010 and FY2007 is only $682 million, the calculation of the cuts adjusts both the FY2010 and FY2007 expenditure numbers to account for State pension contributions that should have been—but were not—made from General Funds in both years.
Also adjusted were the FY2007 numbers to keep Medicaid state-source General Funds expenditures and General State Aid to elementary and secondary education at FY2010 levels. That brings the adjusted difference between FY2010 and FY2007 expenditures to $2.1 billion including making the full pension payment from the General Funds and protecting critical services.
* The Sun-Times makes an important point…
The cuts can be achieved, the federation contends, by rolling back the state’s General Fund spending to fiscal year 2007 levels, excluding spending for Medicaid and schools.
This, unfortunately, puts the burden for spending cuts squarely on important social services, such as care for seniors, abused and neglected children and the mentally and physically disabled.
If the federation really thinks that’s the way to go, it should spell out and stand behind each and every painful cut they’d like to see.
I agree. It’s easy to just say “roll back spending.” It’s far more difficult to say “cut this specific program.”
“Since this proposal to slash $2 billion exempts education and health care, it would mean reducing human services and public safety,” AFSCME spokesman Anders Lindall said. “We think that’s reckless, especially in a recession that’s driving demand for public services up, not down.”
Its proposal for a spending rollback and 7.2% spending cut approaches Mr. Brady’s call for a 10% across-the-board cut. But his also would apply to spending on schools, as well as tens of billions of dollars a year in capital expenditures, federally funded programs and other line items.
And even with the cuts and the tax hikes, the budget still wouldn’t be balanced…
The Civic Federation’s recommendations would enable the state to pay down the $12.8 billion deficit by more than $10 billion by June 2011, but $2.1 billion in red ink would carry over for at least another year under the group’s plan.
None of this works, of course, without the personal and corporate income tax hikes, the new income tax on seniors, corporate loophole closings and a buck a pack increase on cigarettes. And most of that is just highly unlikely to ever be approved by the end of May.
* Some context from the Sun-Times…
Illinois’ 3 percent rate is among the lowest in the country. In Iowa, it’s 8.98 percent. In Wisconsin, it’s 6.75 percent. As a percentage of personal income, the overall tax burden in Illinois — all state and local taxes and fees — is among the lowest in the country, 41st out of all the states.
* Read the Civic Federation plan by clicking here.
* Related…
* Lawmakers see program at risk of state cuts: On Friday, state Reps. Linda Chapa La Via, D-Aurora, and Tom Cross, R-Oswego, toured the center. Early education centers like Brokaw are among many institutions that could be at risk if the state continues to delay its payments to districts.
* Some Clarity Coming to Illinois Budget Hole?
* Civic Federation Calls For Major Income Tax Hike
* Only big tax increase can dig out Illinois
* Despite budget woes, lawmakers push tax breaks
* Illinois Owes Illinois School Districts $725 Million
* Schools being squeezed by late state payments
* Scholarship perk under fire in Illinois
* Lawmakers resolved to ease financial burden on students, families
* Frustrated schools advertising how much they’re owed
posted by Rich Miller
Monday, Feb 22, 10 @ 10:23 am
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Yeah - I saw the Civic’s call this morning and am not suprised.
They make Quinn’s tax proposal seem reasonable, and I believe that is one of it’s intentions.
Illinois political status quo recognizes that it is threatened, but doesn’t recognize that it is due to it’s own mismanagement. So they want us all to help bail them out without impacting them.
Mr. Brady will be painted by organizations such as these as extreme and out of touch. I hope he is ready to be so labeled.
Comment by VanillaMan Monday, Feb 22, 10 @ 10:41 am
I suppose it is time for my monthly agreement with you, VanillaFriend.
While there is plenty of blame to go around regarding our fiscal troubles, it is clear that the Democrats have had the opportunity to right the course and have not completely done so. This would be a perfect opportunity for the GOP Gov candidate if it was anyone other than Brady.
He will framed as the only candidate who is more unreasonable than the Democrats are incompetent.
Comment by Obamarama Monday, Feb 22, 10 @ 10:45 am
Isn’t it interestig that these Civic Federation clowns are so willing to throw a big burden of this tax bill on little guys (retirees) instead of themselves?
Comment by fedup dem Monday, Feb 22, 10 @ 10:51 am
Off topic, but. Tribune/WGN-Radio continue hypocracy with Jim Laski as host all this week. I guess some criminal pols are better than others.
Comment by babs Monday, Feb 22, 10 @ 10:53 am
make that “hypocrisy” sorry
Comment by babs Monday, Feb 22, 10 @ 10:54 am
ok. vanilla man. then brady comes back with stuff out of dan proft’s playbook about how citizens are being forced to pay a “corruption” tax and look at how the dems have exacerbated financial ruin at the federal, state and local levels (chicago and cook county). brady goes on to make the case that given the dems’ strong appetitite for corruption, because that is all they know, inreased taxes only serve to perpetuate the corruption and fiscal mismanagement that contributes significantly to $13 billion dollar deficits. all of this on top of the fact that quinn is no longer a reformer honest government type, but a card-carrying full-fledged member of the chicago dem machine, in good standing, as the sun-times points out today. can quinn be trusted? probably not. then what? in short brady’s argument is essentially that anything that is a chicago machine dem, or part of its culture, cannot be trusted.
go look at the comments to the sun-times editorial today. looks like the readers, or at least those who have bothered to comment, are the bright ones—certainly brighter than the sun times editorial board.
if you give money to a drug addict, why assume or trust that he will spend it (wisely) on something other than drugs to feed his addiction?
Comment by Will County Woman Monday, Feb 22, 10 @ 10:58 am
I don’t think the GOP will walk off a cliff for taxes until K-12 takes a big hit. That will get people’s attention.
Comment by wordslinger Monday, Feb 22, 10 @ 11:04 am
It’s all in the TIF.
When you can hide the increases in property tax revenue in a TIF it starves the State budget of those revenues.
TIFs are slush funds for local politicians. They can dole out this money in smoke filled backrooms like they do. You don’t see it happening until after it’s been approved by the City of Chicago Finance Committee.
I know there are TIFs up north and downstate as well. Are there any in DuPage County? How about Will?
If TIFs are some brokered deal between the Republicans and the Democrats so they can each have their own little piggy banks to draw from without State interference then it’s working. However, it is starving the State of all these additional revenues.
Comment by Brennan Monday, Feb 22, 10 @ 11:21 am
===When you can hide the increases in property tax revenue in a TIF it starves the State budget of those revenues.===
How?
Comment by Rich Miller Monday, Feb 22, 10 @ 11:31 am
WCW - Brady shouldn’t fall for that populist crap. He already has their votes. He has to pick up the votes of independants who are looking for a responsible level headed candidate who will not spout out Proft talking points.
Yeah - Illinois is corrupt. We all got that. Today, that isn’t the number one issue, believe it or not. NOW, it appears that Illinois is facing bankrupsy. Brady has to make our pending tax increases too costly for Illinoisans and at the same time tell voters why we will still face bankrupsy after we get hit harder with tax increases.
Organizations favoring the status quo want to leave themselves in charge. They will sell us on a tax increase in order to buy time through this crisis, and claim that this is a one time deal. Brady is going to have to tell Illinoisans what they have been feeling for years - this fiscal crisis goes back decades, Illinois is on the wrong track - and then explain what he has done over those years to address this. So, what’s ya got Billy?
NO conspiracy talk. No nutty GOP talking points. Brady already has these votes.
Comment by VanillaMan Monday, Feb 22, 10 @ 11:35 am
Brennan, there are TIFs all over the state. There are huge TIFs in DuPage and Will. Perhaps the non-Chicago TIFs are more transparent than the Chicago ones. Frankly, the TIFs I have knowledge more directly constitute corporate welfare than they do avenues for graft. The TIF increment helps the corporations with construction costs paid for by redistributed property tax proceeds. I am not crazy about TIFs either, for they usurp funds from the local governments and school districts much more than they usurp from the State.
Comment by Jake from Elwood Monday, Feb 22, 10 @ 11:43 am
yes, but vanillaman…
Brady needs to appeal to voters in the northern part of the state now, in particular he needs to appeal to independents and moderate dems. he has to go on an anti-chicago way populist message up here. even chicagoans are sick and tired of the chicago way and all the havoc it has caused and causes, and let’s not forget that cook county government is still whipping boy of sorts while stroger’s name is still on the door. mayor daley is very unpopular with the chicago electorate–you’ve seen his poll numbers. brady has to tap into the cynicism, mistrust, anger and displeasure to effectively court independents and moderate dems. brady can’t come up here only talking no taxes, illinois needs to business friendly and other stuff like that. unless he makes a case against the chicago way while making the case for himself, e.g. “clean break” as was the message of very good his primary commercial, i fail to see what he can really talk about to those of us who live in the northeastern part of the state.
Comment by Will County Woman Monday, Feb 22, 10 @ 11:51 am
All this talk about the problems that Illinois has. I have no faith that any of these problems will be solved.
Comment by Moving to Oklahoma Monday, Feb 22, 10 @ 11:52 am
I’m glad to see the CF finally call for the tax increase, but hiding behind this fuzzy political speak of “rolling back spending to 2007 levels” is like a politician’s talking point.
You expect a bullet point like that from a candidate for office, not from a so called policy think tank. CF can do better if they really want cuts.
Comment by siriusly Monday, Feb 22, 10 @ 12:40 pm
A double hit on senior citizens–elimination of the
pension exemption to the state income tax plus a 2 percent state income tax increase on all income.
Puhleez….is the CF into senior-bashing?
Comment by cassandra Monday, Feb 22, 10 @ 12:46 pm
OK WCW and Cassandra you financial geniuses, how should the state pay what it owes to U of I, our premier State University the close to half a billion it owes it? A sound post secondary education system is a bedrock for a preferred future. Fire away!
Comment by Loop Lady Monday, Feb 22, 10 @ 1:23 pm
LL-How about eliminating free senior rides?
Just kidding. But how’s that new bill coming by the way?
Comment by cassandra Monday, Feb 22, 10 @ 1:36 pm
LL, I stand by my position all along that Quinn must and needs to make serious cuts before he can justify a tax increase of any kind.
Comment by Will County Woman Monday, Feb 22, 10 @ 2:48 pm
Good for the Civic Federation, though I think their $2.1B in cuts may be too modest, and I don’t think we can ever get out of this mess without cuts to k-12.
Those of you who bemoan that this is going to require cuts in badly needed human services-DUH! Those of you who say that tax increases will be painful to this group or that-DUH! Doesn’t anybody understand the simple concept that we have been avoiding pain by spending money we don’t have and the bill is now due. Of course there is going to be pain, the only real question is how it’s going to be distributed.
The Civic Federation proposal is a good starting point for the process, one I wish had come from my Republican friends.
Comment by steve schnorf Monday, Feb 22, 10 @ 3:20 pm
The CF points out the alternative to the tax hike is even worse: bigger tax hikes down the raad. Republicans should explain why they favor higher taxes on our kids to pay bills for today’s operations.
Comment by respectful Monday, Feb 22, 10 @ 4:11 pm
The Civic Federation plan was developed after the organization considered actions taken by other
states and proposals from other civic organizations and lawmakers. Analysis of those proposals is
included in the full 100-plus page report. The Federation thanks the John D. and Catherine T.
MacArthur Foundation for its support of the Institute for Illinois’ Fiscal Sustainability and the Joyce
Foundation, McCormick Foundation, and the Chicago Community Trust for funding the research
and analysis for the report.
btw CAN SOMEONE DIRECT ME TO THE SITE THAT SEZ HOW MUCH CHEESE THESE GUYS DROPPED FOR THIS STUFF…iF THEY GOT CASH TO FUNDS THIS STUFF THEY CAN ALL CHIP IN A LITTLE FOR THE STATE DEFICIT
Comment by CircularFiringSquad Monday, Feb 22, 10 @ 4:11 pm
===CAN SOMEONE DIRECT ME TO THE SITE===
Yes. It is called teh google.
Non-profit entities thank all of their funders as often as possible within their work product, especially the ones funding a specific project. They weren’t necessarily funded to do exactly this. Grants can be either project specific or for general operating. Again, teh google.
As far as chipping in goes… let me get this straight: You want tax exempt organizations to pay taxes? That’s your budget solution?
Comment by Obamarama Monday, Feb 22, 10 @ 4:22 pm
I can’t believe that Civic Federation would suggest taxing our retirement, when after all, it had already been taxed once when we were earning it!
Comment by Oak Monday, Feb 22, 10 @ 6:27 pm
It probably would be fine to exempt the return of the dollars already taxed
Comment by steve schnorf Monday, Feb 22, 10 @ 10:48 pm