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Today’s wrong numbers

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Illinois

* Murphy is right, but he’s also not right…

The approved budget cuts discretionary spending by $700 million with reductions hitting areas like education, universities, healthcare for the poor, and corrections, while increasing overall spending by about $400 million due to mandatory increases.

“Two years in a row, spending is going up,” said Republican state Sen. Matt Murphy of Palatine. “We are not closer to the fiscal responsibility needed.” Senate Republicans believe that billions in cuts are needed to avoid making permanent the temporary income tax hike approved last year.

Democrats counter that the slight increase still keeps state within self-imposed annual spending increases and that skyrocketing pension payments are driving the hike. The state will pay $5.2 billion into the pension system in fiscal 2013, up from $4.1 billion in the current fiscal year.

Spending is going up not because lots of new liberal Democratic programs are being created, but mainly because the state is finally making its full pension payment.

But Murphy is right that this budget does not make all the cuts necessary to avoid making the income tax hike permanent. The pension payments are just eating up pretty much all the revenue growth, requiring further cuts elsewhere.

* Meanwhile, on the other side of the aisle…

Some Senate Democrats refused to vote for the House’s K-12 education budget the first time the legislation was called for a vote, and the measure failed. “We should be voting no on this bill because the House sent us a budget with further cuts to education. The House sent us a budget that only added back $50 million more in general state aid,” said Sen. Kimberly Lightford, a Democrat from Maywood. “We put a whole a lot of burden on the local school districts and at the same time continuously underfunded them.” (For more on the spending levels in the House budget, see yesterday’s blog.)

“Maybe some members did not get the memo that we don’t have any money,” said Sen. Dan Kotowski, a Democrat from Park Ridge “We are out of money.” But Senate President John Cullerton proposed some ways to find new revenue for education spending. House Bill 5440 would add a 5 percent tax to the gross profits of satellite television providers such as Dish Network and Direct TV. Cullerton said cable providers already pay the fee and that the legislation would bring in about $75 million. He also sponsored House Bill 5342, which would close some corporate tax loopholes for oil companies. He estimated that legislation could bring in $100 million. “Closing loopholes is definitely fair, and I think targeting certain tax credits is appropriate,” Cullerton said during a committee hearing on the legislation.

Senate Bill 2365 would dole out the new revenues According to an analysis from the Democrats:

$24.9 million would go toward early childhood education.
$134.7 million would go into general state aid for schools.
$15.4 million would go to the Monetary Assistance Program for college students.
$24 million would go into the Circuit Breaker program, which provides assistance for the elderly.

Cullerton’s bills passed without Republican votes. “It is just another tax increase. Pass it on to the people who have been nickeled and dimed to death,” said Sen. Dale Righter, Republican from Mattoon. But with the additional education spending, Democrats did not need the Republican votes to pass the bulk of the budget bills. The House’s education budget passed on a second floor vote.

Both of those tax hikes passed, but they went nowhere in the House. Democratic Senators allowed themselves to be convinced that they’d actually done something when they really didn’t. That was pretty unserious, if you ask me.

posted by Rich Miller
Friday, Jun 1, 12 @ 10:36 am

Comments

=== Democratic Senators allowed themselves to be convinced that they’d actually done something when they really didn’t. ===

It’s like deja vu all over again.

Just like last year. Senate Dems think they find a late night solution to a late night problem. Then sunrise brings clarity.

At least the House is still around this time.

Comment by Freeman Friday, Jun 1, 12 @ 10:47 am
–Senate Republicans believe that billions in cuts are needed to avoid making permanent the temporary income tax hike approved last year.–

Feel free to put pen to paper and throw a bill in the hopper any time now.

Comment by wordslinger Friday, Jun 1, 12 @ 10:53 am
I can’t help but notice MAP grants were part of this bill as well as the gaming trailer bill Terry Link introduced last night. If the $15.4M in this bill is going nowhere, would that not make the $75M in Link’s bill more desirable?

Comment by Dirty Red Friday, Jun 1, 12 @ 10:55 am
==But Murphy is right that this budget does not make all the cuts necessary to avoid making the income tax hike permanent.==

That’s because the voters (and their legislators) do not want those things cut. It would be interesting to see the list of cuts Murphy would make in order for the state to get along without the extra income tax revenue.

Comment by Pot calling kettle Friday, Jun 1, 12 @ 11:03 am
With elections looming I doubt if anything gets done.Maybe we need a really long summer session.
We should just throw the lot of them out and start
all over.

Comment by mokenavince Friday, Jun 1, 12 @ 11:05 am
=== this budget does not make all the cuts necessary to avoid making the income tax hike permanent. ===

I doubt the income tax will be “made permanent.”

That said, anyone who doubts that the state will need to come up with major revenue reforms is living in an alternate reality.

Republicans couldn’t support a budget that required a relatively modest shift in pension expenses from state government to local school districts.

Does anyone really believe they are ready to slash education spending by $2 billion or so, which is the proportion of cuts that K-12 will see without new revenue?

Or closing $600 million in corporate tax expenditures?

Comment by Yellow Dog Democrat Friday, Jun 1, 12 @ 11:07 am
Talk, talk, talk, talk. No action.

And never the whole truth, as Rich has pointed out.

Comment by mark walker Friday, Jun 1, 12 @ 11:13 am
YDD,

I suspect that anyone that ever believed that the income tax hike was actually intended as anything but permanent is living in an altereed state of reality, but only time will tell.

The intrinsic value of the Sword of Damacles us in the anticipation rather than the execution itself.

Comment by Quinn T. Sential Friday, Jun 1, 12 @ 11:25 am
I just love how one minute Matt Murphy has the crocodile tears flowing about IL government spending too much, and then late last night he goes on the floor and leads the charge for massive gambling expansion, something that will give government millions more to spend and it’s all done on the basis of government encouraging people to gamble and lose.

But hey, Republicans decide to put a trial lawyer in charge of being “the budget guy” in the senate. Gee what could go wrong?

I wonder if Matt Murphy ever even took a basic accounting class.

Comment by too obvious Friday, Jun 1, 12 @ 11:30 am
@Quinn -

I seriously doubt that the current tax increase will be extended permanently, without some serious restructuring.

At the very least, Democrats will reduce the personal income tax rate and take credit for doing so.

Some corporate tax expenditures are likely to go, and linked to a reduction in the corporate tax rate.

Those cuts will probably be offset by an expansion of the sales tax base to include services (and a redux in the overall sales tax rate), and possibly other changes like taxing retirements over $75,000 per year.

Comment by Yellow Dog Democrat Friday, Jun 1, 12 @ 12:27 pm
@Quinn and @Dog - I’d bet that the current tax increase will be extended not “permanently” but “temporarily” again for another couple years.

Comment by Robert Friday, Jun 1, 12 @ 2:54 pm
At least we won’t have to listen to Sen. Murphy running statewide in 2014. He pulled a two-year term.

Comment by reformer Friday, Jun 1, 12 @ 3:28 pm
“…this budget does not make all the cuts necessary to avoid making the income tax hike permanent.”

The increase is permanent. Get over it.

Comment by wishbone Friday, Jun 1, 12 @ 3:44 pm
Closing the tax loopholes on oil companies is a sham. It was proposed under Blagojevich and include both the “continental shelf” and territories (Guam, Puert Rico, etc.). Adding the territories brings in the pharmaceutical companies. Revenue estimated the impact at $35 million.

In recent years, as it’s been proposed again and again, the estimate has grown to $75 million.

Flash forward to this week The Cullerton bill ONLY includes the “continental shelf” which means that pharmaceuticals are not included and yet the revenue estimate is now $100 million.

Most of the oil companies set up partnerships to share the risk meaning that income flows through to shareholders and won’t be apportioned to Illinois. The best estimate is that this language will impact 3 companies and raise less than $10 million.

Revenue and the Senate Democrats know this but couldn’t use this figure because it included the new education tax credit costing $50 million.

Comment by 1776 Friday, Jun 1, 12 @ 4:05 pm