Latest Post | Last 10 Posts | Archives
Previous Post: SUBSCRIBERS ONLY - Today’s edition of Capitol Fax (use all CAPS in password)
Next Post: *** UPDATED x1 - Lisa Madigan boogies down *** Morning videos
Posted in:
* The tax hike bill in its current form can be read by clicking here.
* Let’s go to the coverage. Sun-Times…
Quinn, House Speaker Michael Madigan (D-Chicago) and Senate President John Cullerton (D-Chicago) floated a temporary, four-year increase in the 3-percent individual income tax to 5 percent instead of 5 ¼ percent as earlier proposed. They also pitched increasing the corporate income tax from 4.8 percent to 7 percent instead of 8.4 percent.
As part of the revised revenue package, spending increases would be capped at 1.7 percent per year over the four-year lifespan of the tax hike; any spending in excess would cause the tax rate to revert to its current level, legislative sources said.
That would be a 66 percent increase on the personal income tax and a 46 percent increase in the corporate tax.
* More on the expenditure cap from the LaSalle News-Tribune…
“Each year, since the pension obligations will eat up most of that [budget increase]… we will have to make additional cuts, and they will be program cuts,” Mautino said.
* SJ-R…
Trotter said the state would lose about out $775 million by cutting the personal income tax rate by a quarter point. Rep. Frank Mautino, D-Spring Valley, said the lower corporate rate wouldcost the state about $500 million of the $1 billion it originally projected to collect from that portion of the tax package.
Trotter confirmed that negotiators are looking at other ways of raising revenue from business. He described those ideas as closing loopholes. One idea reportedly under discussion would change the way businesses take certain expense deductions. In the end, the state could lose $250 million to $350 million in revenue.
* Tribune…
In addition, lawmakers are looking at a $1-a-pack increase in the state’s current 98-cent tax on cigarettes. Money from the cigarette tax hike had been geared toward pumping new money into schools. A House panel advanced the legislation Monday. […]
Still under discussion was a plan to replace the state’s current property tax credit for homeowners on their personal income taxes. An earlier proposal to drop the income tax credit in exchange for a direct $325 annual check was rejected by suburban Democrats who said it would shortchange some Cook County homeowners of a tax credit worth thousands of dollars.
* Daily Herald…
Most Republicans remain staunchly against the plan, though.
Rep. Bob Biggins, an Elmhurst Republican, said he wouldn’t commit to supporting or opposing a tax increase plan either way.
“I’m not going to take a position until I see it,” Biggins said.
* More on the cigarette tax…
Sponsoring Rep. Barbara Flynn Currie, D-Chicago, said the tax increase would generate $375 million a year while also saving billions in the long run by discouraging smokers and saving on health care costs.
The money would be used to “supplement, not supplant” education funding, said Currie.
Opponents included groups representing convenience stores who say the hike will hurt small businesses, particularly along the border where smokers could easily buy cheaper cigarettes out of state.
Currie said those stores should “sell more pop.”
And…
Rep. Barbara Flynn Currie, D-Chicago, said she didn’t know if the measure has enough support to pass the full House.
* None of this is a done deal until the actual votes are taken…
The prospect of voting for a huge tax increase has some legislators running scared. Rep. Joseph Lyons, D-Chicago, called it a “potential career-ending vote.”
“Are the political will and votes there to do it or not? At this stage, I don’t know the answer,” said Lyons.
* But…
Mautino said lawmakers reluctant to support a tax increase should remember that without an influx of new revenue, the state may not be able to pay its bills in the coming months.
In addition, he said the state’s bond rating is on extremely shaky ground, which will make borrowing any more money fiscally irresponsible.
“We’re one step above junk right now,” Mautino said.
And…
“[Today] is do or die,” said House Speaker Michael Madigan, D-Chicago, who has been reluctant to throw support behind a hike without Republican support. Monday night, he acknowledged working on a tax deal “because the state needs money to pay its bills.”
* The Tribune, as expected, lambasted the proposal…
To that end, we hope all of the holdover, lame-duck and rookie legislators all saw the Sunday Tribune story headlined, “Reduce spending, say bond investors.” Kathy Bergen’s report said the Democrats’ proposed fix, with its income tax increases and steep borrowing to pay bills and pension obligations, doesn’t go far enough to assuage many bond investors’ concerns about the risks of lending to a fiscally teetering Illinois. The story quoted bond specialist Brian Battle, director at Chicago-based investment firm Performance Trust Capital Partners, explaining that Illinois has to pay investors about 2 percentage points more on 10-year bonds than do states with top-rated credit. “What’s killing us are the long-term pension and health care payments, and nothing substantive has been done about that,” Battle said.
Amen to that, Mr. Battle. We fear that Tuesday will expose Illinois citizens to even more of the same old Springfield.
From that same article referenced in the editorial…
“The municipal bond market is unsettled, and the market for Illinois municipal bonds is fragile, so concrete steps, even if they aren’t 100 percent of what is needed for a balanced budget long term, will be looked at as favorable from where things are at now,” said John Miller, chief investment officer at Nuveen Asset Management, which has some Illinois bonds in its investment portfolios.
And Moody’s Investors Service has stated that legislation providing recurring revenues is among the changes that could lead to an upgrade in the state’s bond rating.
posted by Rich Miller
Tuesday, Jan 11, 11 @ 9:23 am
Sorry, comments are closed at this time.
Previous Post: SUBSCRIBERS ONLY - Today’s edition of Capitol Fax (use all CAPS in password)
Next Post: *** UPDATED x1 - Lisa Madigan boogies down *** Morning videos
WordPress Mobile Edition available at alexking.org.
powered by WordPress.
==Currie said those stores should “sell more pop.”==
Some should tell her the peasants don’t have any bread either?
Comment by Bobby Hill Tuesday, Jan 11, 11 @ 9:37 am
No reference to SB 737 and gambling expansion as part of the overall revenue pie. Is there someone assigned to monitor Mr. D’s blood pressure for the next 36 hours? The guy is no spring chicken anymore, and I am not sure how he might handle being stood up and left standing by himself at with his tuxedo on at the altar again by the 96th General Assembly.
Comment by Quinn T. Sential Tuesday, Jan 11, 11 @ 9:41 am
There are many fiscally challenged states waiting to see if Illinois has the courage to address its fiscal disaster. Illinois is at the end of its metaphorical rope and needs revenues. It also needs very hard spending caps and the will and discipline to live within them.
Last night on Kudlow’s CNBC program they interviewed Blago and Arthur Laffer in a very strange love fest. Blago of course blamed everyone else and didn’t think a big tax hike is necessary. Laffer thinks what Illinois needs is more tax cuts to spur a tidal wave of tax revenues from all the profits and free spending cash everyone will have.
I hope our House and Senate do their jobs which is more than just to get reelected in 22 months.
Comment by Barry60035 Tuesday, Jan 11, 11 @ 9:42 am
Cuomo and Brown both Dems from the bluest of Blue states have announced massive spending cuts- were Stuck with Quinn et al who focus on revenue instead of expenses- why not a one percent increase and 5 billion in cost reductions
Comment by Sue Tuesday, Jan 11, 11 @ 9:45 am
Getting the gambling bill done would help on the revenue side. I would love to hear from the GOP and dems what programs they feel can be cut or agencys combined.
Comment by Fed up Tuesday, Jan 11, 11 @ 9:56 am
Sue - Where would you specifically make those cuts?
Comment by Irish Tuesday, Jan 11, 11 @ 9:56 am
Sue, you want $5 billion in spending reductions? Do you have any idea at all what that would mean?
That’s not a rhetorical question, by the way.
Comment by Rich Miller Tuesday, Jan 11, 11 @ 9:56 am
My statutory reading comprehension is non-existent, as is my knowledge of IL municipal revenue sharing of income and corporate taxes.
Can somebody tell me if pages 65-66 of the latest amendment increases, reduces, or maintains the status quo over the next 4 years for sharing income tax collections with local governments? Looks like they get more in 2015 if I’m not reading it totally wrong.
Thanks.
Comment by Chicago Bars Tuesday, Jan 11, 11 @ 9:57 am
“Trotter said the state would lose about out $775 million by cutting the personal income tax rate by a quarter point. Rep. Frank Mautino, D-Spring Valley, said the lower corporate rate would cost the state about $500 million of the $1 billion it originally projected to collect from that portion of the tax package.” What? The state won’t lose anything and it won’t cost them anything by pairing back the tax hike - it is money they never had! The new proposal will actually cost the taxpayers less that the prior proposal. If a 1/4% increase in personal income taxes equals $775 miliion the state will gain $6.2 billion in new revenue while its citizens will forfiet that same amount in income. The same logic holds true for the corporate rate. Let’s not paint this thing as something it is not.
Comment by Fed-Up Tuesday, Jan 11, 11 @ 10:00 am
CB, it maintains status quo.
Comment by Rich Miller Tuesday, Jan 11, 11 @ 10:02 am
Is there a position paper anywhere showing the math on the “property tax relief” bit? Assuming the rebate goes along with eliminating the deduction, the break point should be somewhere around $5000 per year property taxes will start costing money. If so, this is not property tax relief so much as income redistribution. Am I missing something?
Comment by Anonymous Tuesday, Jan 11, 11 @ 10:08 am
=== Currie said those stores should “sell more pop.’”
(…deep breath….don’t resort to name calling…)
Okay.
Can someone please explain to the right honorable Majority Leader that many of these stores rely on the ancillary sales generated by patrons whose primary reason for entering the establishment is to purchase cigarettes? In other words, if people aren’t buying cigarettes at those stores, they aren’t going to go in there period. So “selling more pop” isn’t a realistic option.
It’s disheartening when the people who clearly don’t understand how certain taxes affect certain businesses, and lack a basic understanding of how those business operate, propose increases to those taxes with such a dismissive, cavalier attitude. Does Ms. Currie simply not understand? Or does she not care?
(Besides, isn’t pop (or Cola, soda, etc) bad for you too? Aren’t there frequently floated proposals to tax/ban soda on the same rationale as cigarettes? )
Comment by Anonymous Tuesday, Jan 11, 11 @ 10:09 am
Are they wasting time on the present non-sensical debate in an effort to delude the people half-paying attention into thinking that they are actually doing something meaningful for their pay and per-diem today?
What a freaking time waster; WI-FI and AED’s as a mandate to METRA. Do you really want one of the METRA conductors responsible for trying to ressucitate you in the event of the big gripper? I would think you might fare better with the Boy Scout with the lifesaving merit badge sitting across the aisle from you than you might from one of those guys.
Comment by Quinn T. Sential Tuesday, Jan 11, 11 @ 10:17 am
Correct me if I’m wrong, but isn’t one of the major problems in Illinois that there isn’t a ton of spending to cut?
The problem in Illinois, as far as I have understood and understand it, is that in the 80s, 90s, and 00s the state did not properly fund the pension system. This is now what’s really coming back to bite us. And before this becomes political, let’s remember who was in power in the 80s, 90s, and 00s: the Democrats and Republicans.
I don’t get the Trib. I’m not sure how they think this can be fixed… magic free market economics can only get you so far in times like these. I’ve yet to read anything from those editorial pages that makes actual intellectual sense.
Comment by 'Dale to HPark Tuesday, Jan 11, 11 @ 10:20 am
Once again, the Trib edit board misrepresents its own reporter’s story. Rating agencies always want bond issuers to raise taxes (more bond security) and issue debt (more revenue for rating the issues).
The Trib might be broke, but it is flush in chutzpah.
How many lectures in fiscal responsibility can be churned out by a company that hides from its creditors in bankruptcy, ruined its employees’ retirements by raiding their ESOP, and played ball with Blago in an effort to stick taxpayers with the liability of crumbling Wrigley Field?
Comment by wordslinger Tuesday, Jan 11, 11 @ 10:27 am
I agree with Fed-Up’s point about the rhetoric RE: “…losing tax revenue.” It wasn’t theirs in the first place. Heck, the legislation hasn’t even PASSED yet, and legislators are already using lexicon that indicates a psychological shift to an entitlement to the proposed new revenue. I know it’s a minor peeve, but it’s telling. It indicates that they’re already in spending mode before it even comes into the coffers.
Quinn T. Sential: Who’s line for the contract to service the Wi-Fi and AED devices on the Metra lines? Have they donated to anybody pushing for the bill, and/or are they connected to folks associated with the RTA?
And I do wish the GOP would tender at least some skeletal outline of their own alternative plan. I’m pretty fiscally conservative, and I think it’s apalling that there are token efforts to reign in spending. Not saying tha taxes are a never, but they should be the economic equivalent of declaring war: used only as a last resort. I’m deeply skeptical by the behavior of the legislature over the past 20 years that they’ll responsible handle any new incoming revenue. Demonstrate responsibility first, then we’ll see about a longer leash in the form of more revenue.
Comment by John Galt Tuesday, Jan 11, 11 @ 10:29 am
Looking at SB2505, I am surprised to read on page 43 that:
Spending Limits:
For 2012: $36,818,000,000
For 2013: $37,554,000,000
For 2014: $38,305,000,000
For 2015: $39,072,000,000
By my math that is an INCREASE of $2,254,000.00 Billion.
Am I right or wrong?
So not only are they asking for an increase in taxes but also in spending.
I think most people would find this repulsive.
But what do I know, I am just a taxpayer.
Comment by SLICK NICK Tuesday, Jan 11, 11 @ 10:31 am
I think we ordinary wage earners should look at this as a permanent tax increase. It is highly unlikely that in four years, the state’s Democratic legislators will magically find they can dispense with the extra billions. They’ll be hooked on it, even if for optional expenditures. If nothing else, they can reward themselves.
We should also ignore the spending cap rhetoric.
There will be so many holes in the law that the Dems will be able to spend whatever they want and misspend however they want. We will have no recourse. Patronage hiring, already strong under both Blago and Quinn, will increase dramatically. Lots of Democratic relatives needing high-paid lifetime jobs. Only the civil service provides those. A jobs program–but not for us ordinary citizens without Democratic clout.
AFSCME, which has already negotiated a 2 year hiring freeze will be first in line for many of those new billions. Quinn owes his election to AFSCME and this is Illinois. Look at really big raises for state employees in 2012-2016 contract. State employees could be among the biggest winners here.
The losers–the non-poor, working wage earner.
The corporates win too, Coporations, I would note, already have billions stockpiled that they haven’t invested, a problem the WH and the Prez have been trying to address. And now Mautino is trumpeting that he saved them $500 million more. Great work, Democrats.
The way I calculate this, a family of four with
$80,000 in income would get $1600 in savings this year from the payroll tax holiday. Quinn and the Dems are poised to grab about $1320 of that. This is a tax that greatly favors the wealthy. In other words, using Jan 1, 2011 as a baseline, as of Jan 1, 2012, when the payroll tax expires, the family’s take-home pay will show a total decrease of $2920. Whew. Our pols really do live in the bubble if they think that’s not going to cause pain. Pain that will not be felt by the wealthy, including many Democratic legislators.
And finally, health advocates should give Currie a public spanking. “Pop” as she calls it has been
cited as playing a major role in the development
of obesity and diabetes, especially for those
living in food deserts. But Currie also lives in the bubble, with no doubt a Whole Foods right around the corner.
We need a revolution.
Comment by cassandra Tuesday, Jan 11, 11 @ 10:47 am
===There will be so many holes in the law===
The bill is posted. What are the holes?
Comment by Rich Miller Tuesday, Jan 11, 11 @ 10:52 am
Rich- a reduction of spending in illinois of substantial magnitude would do no more harm then what Goveronors Brown and Cuomo are proposing in their states- for a start, charging state active employees to paRTICIPATE IN HEALTH CAre coverage on a similar basis as private sector employees contribute would save hundreds of millions of dollars- the pain recognized by tax payers to solve Illinois’ fiscal issues must also be recognized by the public sector employees who for the most part are escaping any contribution due to Quinn’s campaign promises on layoffs- Absent reductions in spending- what happens when the temp tax increases expire?
Comment by Sue Tuesday, Jan 11, 11 @ 10:54 am
I have found it entertaining the last couple of days the number of folks who think all of this is Afscme’s fault.
They are a union, they work to get their members the most and best they can. If they have been successful at that it’s not their fault.
Also at this pointing at any single entity is a waste.
Comment by Oneman Tuesday, Jan 11, 11 @ 10:56 am
The Trib’s solution is nothing more than sprinkling the legislative chamber with Bruce Dold fairy dust. Pure fantasy and, as mentioned, at odds with its own reporting on the same story. Intellectually bankrupt.
Comment by chiatty Tuesday, Jan 11, 11 @ 10:58 am
You answered my question, Sue. You really don’t have a clue what a $5 billion cut would do.
Comment by Rich Miller Tuesday, Jan 11, 11 @ 11:02 am
It’s not their fault. It is the fault of (mostly Democratic) legislators who are influenced in their(very costly) decisions about spending and taxation by AFSCME’s huge campaign chest and other campaign support. And of the political cluelessness of the ordinary citizen, of course.
If folks don’t pay attention to what their govt is doing and don’t vote, they can hardly cry foul.
Comment by cassandra Tuesday, Jan 11, 11 @ 11:07 am
Rich,
I read the bill but must admit I am not a policy wonk and don’t have long years of experience at reading such language. I could be looking at huge holes in the budget that would allow for spending shenanigans and wouldn’t know it. That doesn’t mean they aren’t in there.
Additionally, I note that spending increases are included in this bill as noted above. Increases of 2 1/4 billion dollars of 3 years. When will it stop? When will those in Springfield realize that we are in such dire straits that we must hold the line for the next 4-6 years rather than including built in increases in spending? What about the pensions? I didn’t see mention of pensions in this bill - is that in another bill? Did I miss it?
You took “Sue” to task when she suggested a $5bill reduction in spending and asked her if she know what that means. Do you know what it means if we don’t reduce spending? Can Illinois really sustain this kind of spending even with this tax increase? The tax increase doesn’t seem adequate to prevent Illinois from needing to borrow more even without any increase in spending. How long can Illinois keep doing that?
Comment by dupage dan Tuesday, Jan 11, 11 @ 11:08 am
As sure as I am that a serious tax increase like this is necessary, the comments I’m seeing on here and other sites show that the leaders haven’t convinced the public that they have cut as much as they can. I think they’re going to have to make some kind of symbolic cut in services to show that they’ve cut things to the bone already and now must resort to the tax increase - a move like reducing DMV service, closing a university campus, etc. that will actually affect lots of people. The cuts to date, while huge, just haven’t convinced the public that there aren’t more cuts to be made that don’t hurt them personally.
Comment by ChicagoR Tuesday, Jan 11, 11 @ 11:12 am
===I didn’t see mention of pensions in this bill===
No need to mention it because it’s included in the spending limit.
Comment by Rich Miller Tuesday, Jan 11, 11 @ 11:13 am
Is the “Amazon” tax still a part of this bill or is it separate? I didn’t see a mention here or in the comments. Thanks
Comment by jayhawk97 Tuesday, Jan 11, 11 @ 11:20 am
That’s a separate bill that has already passed.
Comment by Rich Miller Tuesday, Jan 11, 11 @ 11:21 am
This whole process is a sham. Massive tax increases with NO spending cuts, but actually substantial increases. Every republican and sane democrat should vote no.
Comment by downstate hack Tuesday, Jan 11, 11 @ 11:21 am
Currie’s flippant comment that stores near state lines should sell more pop to compensate for losses in cigarette sales shows just how much she and other leading Democratic legislators are completely out of touch with the New Economic realities and the Republican tidal wave in November’s elections.
Illinois will be alone among All major bankrupted states to raise taxes and not address spending cuts across the board. Even California’ new Dem governor has promised extensive cuts to get California back on track.
Barbara Currie’s own cushy position has not only left her out of touch with Mainstream Americans and ignorant of the importance of keeping businesses in Illinois healthy and
competitive but also with the average taxpayers plight to
keep his head above water.
Comment by Bob Johnston Tuesday, Jan 11, 11 @ 11:25 am
Rich:
Here’s what cutting that $5 billion would do, if we had a GA that cared more about the general welfare of the people of Illinois than their special interests:
1) It would require right sizing the Medicaid rolls to the current minimum Federal eligibility levels and require “All Kids” to be limted to those families that have no other employer access to group health insurance. I’ve seen estimates that this could save as much as 39% of the current Medicaid expenses.
2)It would require ending the bloated “prevailing wage” overcharges for non-federal public capital work at the state and local level.
3) It would require scrapping the “pay and chase” approach to Medicaid fraud an abuse and instituting a program similar for fraud protection used by creit card companies. It’s been estimated that 15 to 20% of Medicaid expenditures are due to fraud and abuse.
4)It would require ending public retiree health care and and the 3% annual raises in pensions that aren’t constitutionally protected.
5)It would require stopping or deferring all non-essential capital spending that isn’t required due to an immediate and profound safety need.
6) It would require charging those in a defined public pension system in Illinois the amount that would derive a similar rate of return as the resdt of receive from our Social Security “pensions”. Public employees could voluntarily reduce their pensions if they don’t want to pay the freight of this burden.
7)You’d require a suspension of the “right” of public employees to strike, and require an “escape clause” in all public collective bargaining agreements that would allow jurisdicational authorities the obligation to suspend raises and benefit contribution increases if revenues for the authorities don’t rise as quickly as the increased contract costs. This would be accompanied by a freeze (or reduction) in state general state aid to schools, counties, townships and municipalities.
We could get into more numbers crunching, but I believe these reforms would result in MORE than the %5 billion we’re talking about.
Of course, leaving the decisions to Madigan and Quinn, they’d cut services to those needing home health care, cheat the lowest spending, most prudent schools, and fire law enforcement officers.
Those union raises and unsustainable pensions, of course, would just keep on rising……
Comment by strengthandhonor Tuesday, Jan 11, 11 @ 11:28 am
===but I believe these reforms would result in MORE than the %5 billion we’re talking about.===
LOL
You’re not even close, man.
You do realize, right, that payroll is about $3 billion?
Comment by Rich Miller Tuesday, Jan 11, 11 @ 11:30 am
==You do realize, right, that payroll is about $3 billion?===
Does the $3B include public school teachers?
Comment by Bobby Hill Tuesday, Jan 11, 11 @ 11:37 am
School teachers are paid by their local districts, so, no, it doesn’t. Sheesh.
Comment by Rich Miller Tuesday, Jan 11, 11 @ 11:37 am
=No need to mention it because it’s included in the spending limit=
That doesn’t really address the issue, does it? If you are trying to deal with such a massive structural defect (pension imbalance) in the state budget the increases in spending needed to balance out the pension deficit won’t deal with the massive increases needed to put the pension on the right track without increasing spending over the limit. At lease that’s how my rudimentary math has got it figured.
Stan Laurel said it best, “Well, here’s another nice mess you’ve gotten me into”
Comment by dupage dan Tuesday, Jan 11, 11 @ 11:43 am
==School teachers are paid by their local districts, so, no, it doesn’t. Sheesh. ==
So School teacher pay is not funded by state aid. My point is you can cut state aide and cuts like public school payrolls get adjuseted to affordable levels beyond the line items in the “state budget.”
Comment by Bobby Hill Tuesday, Jan 11, 11 @ 11:47 am
Almost all of those teachers have union contracts. So, no, it’s not that simple. Also, cutting school funding is about the most unpopular thing in any legislature, including this one.
Comment by Rich Miller Tuesday, Jan 11, 11 @ 11:48 am
Cassandra - Do you SERIOUSLY believe that AFSCME will negotiate “big raises”??? We have already given up %2 last year and another %2 this year. I don’t look for any raise in this next contract.
Sue - FYI - Rich is right - you don’t know what you are talking about. Right now, this very moment, state employee’s pay part of their health care costs. For me and 2 dependents, I pay close to $300 a month. My son works for State Farm - he pays nothing!
Comment by lincoln lover Tuesday, Jan 11, 11 @ 12:14 pm
==all of those teachers have union contracts==
Yes I know. Contract holders can either share in being part of the solution to the new reality or remian tied to their contract. Hard choices are being made everywhere. I also know the pension anchor is tied to this isssue?
==Also, cutting school funding is about the most unpopular thing in any legislature, including this one.==
If I now can only pick popular things to adjust in the debate then I guess I’ll need to sell more “pop”.
Comment by Bobby Hill Tuesday, Jan 11, 11 @ 12:14 pm
-”Almost all of those teachers have union contracts.”-
And there lies the problem. Who is the adversarial party to the teachers on the other side of the table? The legislature who wants to give them more money?
No, it’s the taxpayers. It’s there money going to subsidize these contracts.
Comment by Logical Thinker Tuesday, Jan 11, 11 @ 12:15 pm
===If I now can only pick popular things to adjust in the debate===
No, you just have to live in the real world, not your little fantasy land.
Comment by Rich Miller Tuesday, Jan 11, 11 @ 12:16 pm
Lincoln Lover-
In a word, yes. Also, I believe those raises were not lost but merely postponed.
And Quinn owes AFSCME big.
Comment by cassandra Tuesday, Jan 11, 11 @ 12:22 pm
“Who is the adversarial party to the teachers on the other side of the table?”
I refer to them as the school board. In my part of Illinois they are elected by the citizens of the school district.
Comment by MikeMacD Tuesday, Jan 11, 11 @ 12:23 pm
Strength - You have some flaws in your points. Specifically, #6: AFSCME members already pay social security. We pay 4 to 6% into our own pensions and THEN we also pay 6 1/5% to social security. WHen you were employed, did you pay 10 to 11% of each pay check into a retirement fund of some sort - even when you were very young and broke??? Point #7: State employees already have a “no strike” clause in their contract. Plus, you are messin’ in federal law area - be careful what you wish for.
Comment by lincoln lover Tuesday, Jan 11, 11 @ 12:25 pm
“Not saying that taxes are a never, but they should be the economic equivalent of declaring war: used only as a last resort.”
If that’s the case, then is what we are seeing today the fiscal equivalent of the Gulf of Tonkin Resolution (which opened the door to massive escalation of the Vietnam War)?
Comment by Secret Square Tuesday, Jan 11, 11 @ 12:27 pm
Cassandra - AFSCME is already telling its members to brace for status quo on the wage front. Of course they will try for an increase - that’s their job! I think they will probably go for other areas that can be traded off instead. Like the no closure/no layoff or possibly making retirees pay part of their own health care (which, by the way, I believe they should!)If there is any raise, it will come at the end of the contract and will be tied to something else like inflation.
Comment by lincoln lover Tuesday, Jan 11, 11 @ 12:30 pm
I got a “sheesh” and a “fantasy land”? What’d do it deserve this?
I was starting to think i was crazy unitl i googled “teacher pay raises” After realizing most the results were from New Jersey, I changed it to “Illinois teacher pay raises” I found a bunch including:
http://www.sj-r.com/top-stories/x427970474/Rochester-school-employees-OK-pay-freeze-to-protect-programs
That isn’t home but it is close?
Comment by Bobby Hill Tuesday, Jan 11, 11 @ 12:51 pm
Hats off to you Rich for being the defender of reality on this thread. The lack of a realistic solution from those who don’t want any tax increase just highlights how neccessary the increase is. All these proposed cuts and solutions are either non-starters or just plain lies and fantasy. No one likes increasing taxes, but these arguments drive home why we must.
Comment by L.S. Tuesday, Jan 11, 11 @ 1:04 pm
Rich:
Any comprehensive budget fix needs to include full subsidized services, not just direct state employees.
In Illinois, our K-12 public school OPERATING EXPENSES are about $22 billion per year, with an additional several billion per year in non-operating expenses. Public education is subsidized by the state at over $8 billion per year, so freezing or reducing school wasteful and patronage driven increases is essential to allowing the state to reduce state aid.
Between the 2000 and 2010 school report data, average K-12 operating expenses have been about 4.5% per year. Pass legislation that allows districts to freeze the spending at current levels, and the state could eliminate about $1 billion in state aid.
If we can reduce Medicaid eligibility to the current Federal required levels and save 39%, it could reduce the Medicaid rolls by about 1,000,000 for a savings of about $2.6 billion per year from the state contributions.
Based upon $5 to $6 billion per year in non federal governmental capital spending per year, its been estimated that the 25% savings from ending “prevailing wage” could save state and local governments $1.25 to $1.5 billion per year.
Removing an unfunded mandate and its associated costs is as good as a grant, so much of the 35 to 50% the state pays for school and municipal construction could be reduced.
Finally, we need to decide what fair share of the $4 billion per year pension contributions by the state every year should be shared by employees getting higher rate of returns than SSC “pensioners”. Perhaps $500 to $750 million would “level the playing field” with private employees.
I estimate that these actions could save the state about $5 to $6 billion per year when reduced grants for eliminating mandates are included.
Of course saving $5 billion per year would result in the Springfield pols losing about $20 million per election cycle in those profiting from this largesse, so it’s likely the GA and Quinn will take food off of most families tables in Illinois to spare the special interests.
Rich, when it comes to cutting fairly and taking off the blue blinders, you’re not even close to seeing what can be accomplished!LOL
Comment by strengthandhonor Tuesday, Jan 11, 11 @ 1:04 pm
Yeah, OK, you can come up with fairytale numbers all day.
Comment by Rich Miller Tuesday, Jan 11, 11 @ 1:09 pm
As to health care cost, the Kaiser Family Foundation give employee health care cost at $330 per month.
http://blogs.federaltimes.com/federal-times-blog/2010/09/02/kaiser-employees-share-of-health-care-costs-rising/
CMS seems to list State employee Health care cost at around #300 per month. Do not know about the other systems but this does not look out of line with the private sector.,
Comment by Bigtwich Tuesday, Jan 11, 11 @ 1:22 pm
S&H,
===Based upon $5 to $6 billion per year in non federal governmental capital spending per year, its been estimated that the 25% savings from ending “prevailing wage” could save state and local governments $1.25 to $1.5 billion per year.===
Whoever told you that the prevailing wage requirement increases the cost of construction projects by 25% is lying to you. If you think construction company owners won’t pocket the extra money, then your gullibility combined with your misunderstanding of this issue is too much for me to counter with facts and logic.
Labor is a big cost of construction, but it isn’t the the only cost. Materials and design/engineering are significant costs that won’t be affected by how much (or how little) these company owners pay their employees.
In other words, if you toss the prevailing wage requirements from the capital bill, and bus in nonunion labor from Indiana, the state won’t save much money but the company owner’s profit will see a healthy bump.
And that’s really what you’re advocating for, isn’t it?
Comment by 47th Ward Tuesday, Jan 11, 11 @ 1:27 pm
Rich, I see a few new pseudonyms being added to the passenger manifest on the ship of fools. You do bring them out
Comment by steve schnorf Tuesday, Jan 11, 11 @ 1:58 pm
These tax rate hikes will not produce the revenue being projected. Individual taxpayers, particularly high earners and wealthier retirees, WILL leave the state for lower tax states (whether to neighboring Indiana or to Florida). Businesses WILL move personnel, operations and headquarters, over time, to lower tax states, and new businesses will not locate here. As a result, the revenues being projected will not be realized.
Comment by Mark G Tuesday, Jan 11, 11 @ 2:07 pm
The point is that the state cannot tax its way out of this problem - it will not work. Not enough revenue can be raised. To hurl insults and clever names at those who want spending cuts (not just caps on increases, which are just about the inflation rate anyway) and who want the public employee pension system completely revamped misses the point.
We have no choice but to cut spending as much as possible. This means we will be cutting a lot more than “waste, fruade and abuse” - we will be cutting through the fat and well into the muscle. All of the cuts will be painful, particularly to recipients of state services. But we have the financial strength of a third world country, and all we can afford is that level of government service.
Comment by Mark G Tuesday, Jan 11, 11 @ 2:18 pm
Mark G,
Who said there would be no cuts? Do you live in a cave? We’ve been cutting for two years now. And there is a completely new retirement plan for new state employees. You’ve gotten much of what you wanted and guess what? We can’t cut our way out of the problem either.
Illinois requires cuts, continued spending discipline and more revenue. And that’s exactly what we’re about to get. And no one is going to leave Illinois because of this. Wake up, pay attention and stop with the hysterics like “But we have the financial strength of a third world country.”
Comments like that are ridiculous and undermine some of the valid points you try to make.
Comment by 47th Ward Tuesday, Jan 11, 11 @ 2:30 pm
Strength - In what world does anyone compare Social Security to an actual pension? First, it is a supplement, not meant to be your main cash cow. Second, its a federal system that almost all but federal employees give and receive to and from. State employees’ pension system is privately held and invested. Employees pay into it from each and every paycheck - so what if our investors are better at it than the Social Security people??? You are simply not talking apples to apples here.
Comment by lincoln lover Tuesday, Jan 11, 11 @ 2:37 pm
“And no one is going to leave Illinois because of this.” Are you kidding? I know of a number of retirees and semi-retirees who now live half the nights plus one of the year in Florida and pay no income tax in Illinois. I know of a number of people who have taken jobs in Texas because they will cut their state income tax to zero (and in the process pay lower sales and property taxes). And a friend of mine told me last night that he will move his company, which has been in Illinois for over 100 years, out of state if the corporate rate goes to near 10%. He will not be able to afford not to.
Rational people change their behaviour in reaction to incentives, and as the facts in New York and California show, higher taxes leads to individuals and businesses moving.
The new retirement plan for new employees has saved exactly zero dollars so far. I guess 40 years from now it will be viewed as a huge saver, but to rely of that one small change (which does not affect any existing state employee) ignores that continuing to accrue benefits under an out of date defined benefit plan is unsustainable.
Comment by Mark G Tuesday, Jan 11, 11 @ 2:51 pm
===I know of a number of retirees and semi-retirees who now live half the nights plus one of the year in Florida and pay no income tax in Illinois.===
Really? Because there is no Illinois tax on retirement income.
===The new retirement plan for new employees has saved exactly zero dollars so far===
It has if the state has hired anyone since January 1st.
Comment by Rich Miller Tuesday, Jan 11, 11 @ 2:55 pm
–”Not saying that taxes are a never, but they should be the economic equivalent of declaring war: used only as a last resort.”–
There goes my blood pressure through the roof. Except, of course, this same crowd insists on tax cuts while fighting two wars, something that had never been done in recorded history, for obvious reasons.
Schnorf, love the Ship of Fools reference, more so for the Lee Marvin/Vivien Leigh flick rather than the rather tedious Dead tune.
Comment by wordslinger Tuesday, Jan 11, 11 @ 2:56 pm
===I know of a number of retirees and semi-retirees who now live half the nights plus one of the year in Florida and pay no income tax in Illinois.===
Yes, and if the retirees are getting pension income, they’re not paying income tax in Illinois either. You realize that pension income is NOT taxed in Illinois, don’t you?
And corporations generally do not pay huge amounts of income tax. I get the point you are trying to make, but I think your business owner friend is probably weighing a host of factors in deciding where to locate his business. If the increase in the corporate income tax is the nail in the coffin, then I wish him well in finding a new home.
Finally, the plural of anecdote is not data. For each company that flees Illinois over the corporate tax increase, I’d wager an equal number move in to take advantage of our diverse and talented work force, transit systems and infrastructure and our great communities. There are a lot of reasons that Illinois is a great state for business, and a great state to live in. Those reasons have to weighed against the cost of living here, and in my estimation, the scale tips in Illinois’ favor on almost every count.
I’m sorry you hate it here Mark. Enjoy Florida or Texas or wherever.
Comment by 47th Ward Tuesday, Jan 11, 11 @ 3:01 pm
In recent days, there seems to have been a weak orchestration on the blog on the whole “U-Haul out of Illinois” theme flogged by Kass and Baise.
Some of the efforts have been weaker than others (”Down here in Texas watching all the U-Hauls with Illinois plates…”). The yokel who just talked about retirees bailing is obviously clueless.
But none of them sound like anyone who actually owns or runs a business. More like young partisan staffers on the public payroll trying to score points with their elected bosses.
We’ve seen this really impotent PR/marketing game time and again in recent years, and it goes a long way in explaining why the Illinois state GOP came up short last year when they had everything in the world lined up in their favor.
Comment by wordslinger Tuesday, Jan 11, 11 @ 3:15 pm
To clarify about the pension reforms–the new benefit structures do not reduce cash benefits paid out for at least 10 years, when the first persons hired under the new provisions get to the point where they could have retired under the old law but can’t under the new. But it DOES save money right away by reducing the discounted actuarial liability, which drives the required State contribution.
Comment by Marty Tuesday, Jan 11, 11 @ 3:30 pm
=which drives the required State contribution=
Required? That’s too much. I can’t stand it. Oooops, I think I soiled myself.
Comment by dupage dan Tuesday, Jan 11, 11 @ 4:23 pm
47th Ward:
The number I’m quoting was estimated from Heartland in Washington a couple of years ago. The numbers were determined by comparing prevailing wage vs average wages regionally from the Department of Labor.
I believe the labor/material breakdown was about 45-55 with prevailing wages and benefits about 40% higher than average. Of course, if you just looked at non-prevailing wage workers, the number would be much less.
The ridiculous thing about the prevailing wage laws is that non-union contractors already have an advantage over union workers because of less restrictive work rules. For example, a welder on a non-union job can weld electrical materials as well as piping. The end result is that the non-union contractor still gets the work, they just jack up their price and profits unjustifiably.
HONEST competitive bidding should reduce the scamming, but I’ve been in public construction too long to overlook bid rigging effects.
Lincolnlover:Both the public pensions and Social Security are “forced pensions”. It’s fair to consider the return on what is contributed by those who get a “free lunch” by being exempt from SSC and the burden of the poor, disabled, widows and orphans also supported by SSC, and the “guaranteed” ridiculous returns funded by non-exempt taxpayers through public pensions.
It doesn’t MATTER how the public pensions invest, you get your return even when their investment decisions fail miserably.
Rich, =Yeah, OK, you can come up with fairytale numbers all day.= Isn’t that what Quinn,Madigan and Cullerton have been doing the last two years?LOL
Maybe we should all get together and share our numbers in Disneyworld (Fantasyland) from where pretty much ALL the fabricated numbers by the “leaders” (and press) come!
Seriously, if you have better numbers concerning the cost of prevailing wage, the amount of the capital budget that can be cut or deferred, and the potential savings from instituting a “credit card” like fraud protection in Medicaid, as well what could be saved from making Medicaid eligibility comparable to adjacent states, I’d love to see them.
Comment by strengthandhonor Tuesday, Jan 11, 11 @ 4:44 pm
Green stamp, we live in a real world. If we were starting a state from scratch, today, all your suggestions should be considered. But we’re not. We live in a state that already has a constitutional prohibition on impairment of contracts, collective bargaining, receives federal construction funds, receives federal reimbursement for Medicaid, etc.
Solutions that aren’t doable in the real world aren’t solutions at all, they are nothing more than talking points and distractions. You could just as well add wishing on the evening star and spinning straw into gold to your list. They are about as likely to contribute to solving the problems we face.
Comment by steve schnorf Tuesday, Jan 11, 11 @ 5:08 pm
Strengthandhonor,
The Heartland Institute is the source you’re quoting? That actually explains a lot, but unfortunately doesn’t help your argument about prevailing wages.
The Heartland would be opposed to a minimum wage let alone a prevailing wage. “Let the market decide who to pay and how much to pay them.”
That’s a fine philosophy, except when it comes to representative government. We the people get to have some input in public decisions here. We don’t abdicate that to the cold-blooded market place.
Comment by 47th Ward Tuesday, Jan 11, 11 @ 5:20 pm
STEVE Schnorf–Colorado also has impairment provisions it its constitution but the state(AND ONE OR TWO OTHER STATES) is litigating its right to eliminate pension cost of living increases- it will never happen here since Quinn is not willing to antagonize his base but whether Illinois can modify pension benefits of existing participants can only be determined by making the attempt and having the issue adjudicated- at the end of the day(possibly in less then 15 years), with or without this tax increase, there will be insufficient funds to honor the existing commitments to state retirees(present and future) absent the markets achieving above normal returns or having every other state funded program significantly diminished-For years whenever the State wanted to achieve reductions in personnel- the State came up with early retirement programs and failed to adequately fund the future benefit costs- between the retirement gimmicks and last year spiking provisions(even with the recently enacted caps)everyone viewed the pension funds as convenient piggy banks and now the proverbial —- has hit the fan
Comment by Sue Tuesday, Jan 11, 11 @ 5:55 pm
strengthandhonor @11:28 am says:
“right sizing the Medicaid rolls to the current minimum Federal eligibility levels and require “All Kids” to be limted to those families that have no other employer access to group health insurance. I’ve seen estimates that this could save as much as 39% of the current Medicaid expenses.”
The federal Medicaid minimums are now the eligibility standards that the state had in place as of March 2010, courtesy of federal health care reform. Cut those, and Illinois risks losing ALL of its federal Medicaid matching funds - Arizona had to backpedal on an eligibility cut for the same reason.
Even if the 39% savings estimate you noted, which as far as I can tell someone grabbed out of thin air, were accurate, the loss of 50% federal funding would leave Illinois’ budget worse off than if we don’t cut Medicaid!
Comment by cover Tuesday, Jan 11, 11 @ 5:55 pm
Sue, so you’re answer to the problem is to spend the next 5-10 years litigating, to find out whether we have saved anything or not?
Comment by steve schnorf Tuesday, Jan 11, 11 @ 6:03 pm
I just saw on TV that the cigarette tax was defeated. The tax increase can go either way.
Comment by Grandson of Man Tuesday, Jan 11, 11 @ 6:20 pm
No- my answer is to change the COLA to reflect the actual CPI not to exceed three percent and have the Supreme Court determine whether it is doable- it won’t take more then 18 months- The CPI has been flat for the last few years nevertheless we keep giving annitants 3 percent raises- just think what the change might do to the actuarial funding
Comment by Sue Tuesday, Jan 11, 11 @ 6:27 pm
Yes COLA should be changed. A guaranteed 3% a year is unfair and not affordable.
United Van Lines moves more people out of Illinois than into Illinois.
Indiana and Missouri ended collective bargaining in 2005 per executive orders.
Ohio and Wisconsin are targeting collective bargaining now.
Property tax cap should be reduced.
State salaries should be frozen.
End-of-retirement salary increases for teachers should end - currently they can get 6% per year for up to 4 years (varies by collective bargraining agreement per district) which causes unfunded pension spike. Teacher Retirement System pension fund rules can be changed to accomodate that. ‘
Some districts collective bargaining agreements give more thatn 6%, which trs allows if extra money is contributed to cover the offset in pension spiking.
In some school district teachers pay little to nothing for healthcare. The schools could make the teachers pay more for healthcare, then the schools would have money to pay for other things, instead of complaining they need more money from the state.
There are so many reforms the state should do before raising taxes.
The taxpayer is getting squeezed! Too many jercy perks and programs doled out in 1990’s and 2000’s.
Comment by Mark Tuesday, Jan 11, 11 @ 6:50 pm
I meant end-of-career salary increases for teachers should end. Too many collective bargaining agreements are giving teachers 6% end-of-career salary increases, while laying off non-tenured teachers. It’s absurd, selfish, and greedy on the part of tenured teachers.
Comment by Mark Tuesday, Jan 11, 11 @ 6:52 pm
The claim that eliminating prevailing wages for public works projects will save money is a recurrent lie that has no basis in fact. It has been debunked so many times that its continued existence suggests that it is a zombie that refuses to die. Unfortunately some people, including ignorant public officials spout such fact free nonsense in the face of overwhelming evidence to the contrary.
The fact of the matter is that the overwhelming body of research shows that rather than raising construction costs, prevailing wages actually promote local economic growth, support workforce development, improve project quality, and increase on the job safety.
The reasons are many but it really all comes down to the improved productivity of the higher skilled workers who tend to work prevailing wage jobs and the labor/capital mix of the contractors that tend to bid that type of work. As workers are paid more, contractors ensure that their workers produce at a much higher level than the low-wage low-skill worker. That productivity boost is key to keeping costs down. And in case anyone is wondering - labor and fringes comprise less than a quarter of the costs of the typical public works job.
We’ve been fighting this fight in California and have set up a nifty little website laying it all out. To learn more go to www.smartcitiesprevail.org.
Check it out and learn the real facts about prevailing wages and the role that they play in supporting a stable middle class, quality construction, and local economic development
Comment by SmartCitiesPrevail Tuesday, Jan 11, 11 @ 11:17 pm
smartcities, Ichceked out your website. Alot of claims, no independent research vaildating those claims. No links to valid, independent data.
How much are the unions paying you to shill for them?
Comment by strengthandhonor Wednesday, Jan 12, 11 @ 4:09 pm