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Topinka: Phase out tax hike over two years

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Illinois

* AP…

Illinois Comptroller Judy Baar Topinka is warning of “a $2 billion collapse” next year when the state’s temporary income tax increase begins to roll back. […]

Topinka likens the decrease to a “heart attack” to state finances. She says she’d rather see it phased out over two years to give lawmakers time to cut spending.

* More from the Jacksonville Journal-Courier…

The state’s fiscal year ended June 30 with the state having 46,000 unpaid bills at the Comptroller’s Office and an estimated bill backlog of nearly $5 billion, Topinka said, “which doesn’t sound all that bad when you consider it often hovers around $8 [billion] or $9 billion. My goodness, only in Illinois would a $5 billion bill backlog qualify as good news.”

Still, Topinka cautioned, tax revenues are allowing the state to pay bills, and then reality will set in again.

“The backlog is at a low point right now, but we expect it to rise again throughout the summer and into the fall,” she said. “We’re in this position more than three years after the largest tax increase in Illinois history. That tax increase is set to sunset at the end of this year and there is no plan to address the lost revenue.”

Topinka warned that if no action is taken, Illinois will have a $2 billion revenue collapse this fiscal year and face a $6.8 billion budget hole next year.

Thoughts?

posted by Rich Miller
Thursday, Jul 10, 14 @ 10:08 am

Comments

“and there is no plan to address the lost revenue.”

Mr. Rauner, awaiting your response - respectfully, but with steadily increasing impatience and frustration.

Comment by Linus Thursday, Jul 10, 14 @ 10:20 am
Topinka is an adult in this whole discussion, while others refuse to see the real adult problems.

Dollars speak more than the rhetoric.

Comptroller Topinka’s voice has significant weight in this discussion and ignoring the reality of her words will put an even heavier burden on Illinois than the words ignoring the facts.

Comment by Oswego Willy Thursday, Jul 10, 14 @ 10:21 am
I like Topinka and she maybe just saying this because it’s better than the truth, the tax increase needs to stay at 5% long term. I hate how we got this increase Quinn lied to the whole state right before the election, but we are here now and need the revenue. Long term between pensions, unpaid bills and operating costs 5% is probably low for income tax.

Comment by Fed up Thursday, Jul 10, 14 @ 10:24 am
“Topinka is an adult in this whole discussion, while others refuse to see the real adult problems.”

I agree. Legislators didn’t offer a phase-out plan this time around. Would even that have passed in this anti-tax environment, with the tax unpopularity?

“give lawmakers time to cut spending”

What will they want to cut? That’s what I’d like to see. Those are some hot potatoes there.

Comment by Grandson of Man Thursday, Jul 10, 14 @ 10:25 am
You know what would turn this election around, and give me some real optimism? If Rauner, Topinka, and Cross came out with a joint approach to the budget, as a campaign team. Even without all the details, it would work if it roughly added up.

Backed up by generally supportive statements by Durkin and Radogno, it would be a slam dunk. We need some real hope, not regurgitated news reports, or national talking points.

Just dreamin.

Comment by walker Thursday, Jul 10, 14 @ 10:27 am
It takes a Republican leader to get a tax increase done in Illinois. Ever since Ogilvie, raising taxes has been seen as poison here. The Democrats are ham-strung politically on this issue because voters expect that party to raise taxes and don’t believe they spend it wisely. I am often struck at how often I hear casual political observers mention how they believe the Republicans hate taxes, so if they propose raising them, then it must mean it really needs to happen.

So for Topinka to make this call creates an opportunity to address the fiscal problems Illinois faces regarding taxes. What Madigan needs to do is drop his political fear and use her support as a shield, if so needed.

If Rauner is elected, expect taxes to go up and new taxes to be enacted within a year. He will have the credibility to do the anti-tax song and dance and the political ability to do what is needed to raise revenue and be covered politically. Expect this to happen during the first year so that any voter heat would be dispersed by 2016. If Rauner and the GOP want to remain in power, they will need to provide Illinoisans with a state government that appears to be solving its fiscal and economic problems by the time they run for reelection.

If you really believe Illinois needs more revenue and needs to get there in new or higher taxes - then you will need to hope for a bipartisan state government, preferably with a GOP governor to balance Mr. Speaker and Mr. Cullerton in the GA. A partisan solution is too toxic. It will need to be bipartisan from balanced positions of electoral strengths for both parties.

Comment by VanillaMan Thursday, Jul 10, 14 @ 10:27 am
What Topinka is saying is obvious.

Comment by VanillaMan Thursday, Jul 10, 14 @ 10:29 am
=== Topinka is an adult in this whole discussion, while others refuse to see the real adult problems. ===

Well said Willy!

Comment by Norseman Thursday, Jul 10, 14 @ 10:29 am
== Mr. Rauner, awaiting your response ==

Serious question: Why does Rauner always get brought up in these types of responses? Quinn and the supermajority could have done something (anything) about it - but didn’t.

Also, isn’t Rauner on record saying he would like to see a gradual phase out of the “temporary” tax increase?

Comment by Birdseed Thursday, Jul 10, 14 @ 10:30 am
Judy may be the only real person in Illinois politics. Someone who’s not afraid to tell voters the truth. I wonder what the people of Illinois will do on Election day to a pol that tells the truth?

Comment by DuPage Bard Thursday, Jul 10, 14 @ 10:33 am
==Quinn lied to the whole state right before the election==

Is it lying if nobody believed him at the time?

Comment by Carlos S. Thursday, Jul 10, 14 @ 10:40 am
If Rauner is elected, expect taxes to go up and new taxes to be enacted within a year. He will have the credibility to do the anti-tax song and dance and the political ability to do what is needed to raise revenue and be covered politically. Expect this to happen during the first year so that any voter heat would be dispersed by 2016. If Rauner and the GOP want to remain in power, they will need to provide Illinoisans with a state government that appears to be solving its fiscal and economic problems by the time they run for reelection.

Think you are right on with this VM
As the old saying goes on Vulcan “Only Nixon could have gone to China”.

Also Rauner doesn’t need to be loved as governor nor does he need to be loved when he leaves so he can get some sweet job.

As my dad used to complain about Thompson, seemed like they always had budget issues right after the election.

Comment by OneMan Thursday, Jul 10, 14 @ 10:40 am
===Why does Rauner always get brought up in these types of responses?===

These problems aren’t going away. The next governor sworn in will face these issues. Bruce Rauner talks about plans and rolls out chickens, and the reality is campaigning and governing are two different animals. If your rhetoric still doesn’t have an answer to these problems, how can Rauner be an alternative?

===Also, isn’t Rauner on record saying he would like to see a gradual phase out of the “temporary” tax increase?===

Rauner is on record adamantly, adamantly against raising the minimum wage. My point? What day is it? What did Bruce say today, because Rauner has shown nothing on the record is in stone.

What is Rauner’s plan? Fair question. He wants to be governor.

Don’t expect am answer, however, that is the political play that flies in the face of the governing.

(Tips cap to - Norseman -)

Comment by Oswego Willy Thursday, Jul 10, 14 @ 10:45 am
“She says she’d rather see it phased out over two years to give lawmakers time to cut spending.”

The decrease in revenue has been known since the day the “temporary” tax increase was approved by the GA. The “sunset” provision was built in. The GA has had four years to cut spending match revenue but has decided not to. I do not see that another two years will provide any advantage.

Comment by Hit or Miss Thursday, Jul 10, 14 @ 10:53 am
truth. how refreshing. even if the reality is grim, its nice to hear someone tell the truth, AND suggest how to deal with it.

if quinn wins, madigan will try again for a structured roll call to do some sort of revenue enhancement. if rauner wins, madigan will make him squirm, and pass the budget he wants to. madigan will decide where any revenue enhancements will be allocated, rauner be damned. but that will give rauner an excuse to tear into the flesh of state government.

Comment by Langhorne Thursday, Jul 10, 14 @ 11:02 am
===I do not see that another two years will provide any advantage.===

Ok.

You read the fiscal realities we are facing, Comptroller Topinka has made a case to solve a 2015 fiscal problem.

What do you suggest?

I couldn’t agree more with Comptroller Topinka. I strongly felt, and still feel that keeping the rate for 2015, and reducing by half the increase for fiscal 2016, and phasing out the the other half in 2017 is loads better than going from all to nothing.

All to nothing leads to fiscal problems in this climate, and given the hand the Illinois government has given itself.

So, what is the plan if Comptroller Topinka has to face these list revenues as possibly real?

Comment by Oswego Willy Thursday, Jul 10, 14 @ 11:04 am
It’s a decent idea and she should be applauded for suggesting it. I think the legislature will need more than 2 years and thinking reducing it 1/4% a year until 3.75% would be more realistic since natural revenue growth would help blunt the impact of the cuts.

Comment by Ahoy! Thursday, Jul 10, 14 @ 11:05 am
Especially in the light of the recent court ruling, the five percent tax needs to stay. Additionally, if we wish to avoid an argument about whether to raise it to six or to seven percent, the state had better move quickly to maximize the number of Tier 2 employees who are net supporters of the pension system. That means phasing out Illinois’ long habit of outsourcing many government functions, especially social service functions, and replacing them with people on the payroll.

Comment by Angry Chicagoan Thursday, Jul 10, 14 @ 11:19 am
I don’t think more time to prepare will work. They haven’t prepared for the decrease in the years leading up to the sunset. Why would you think they will prepare over the next 2 years?

Comment by anon Thursday, Jul 10, 14 @ 11:23 am
While Topinka is being the adult in the room, she doesn’t go quite far enough. The phase out needs to be a bit longer, say cut back to 4.5% in calander 2015, the 4.1% in 2016 and the original 3.75% target in 2017. That would give enough time for a combination of cuts, cost shifts, loophole closing, and revenue growth to more or less fill the void.

If additional revenue is needed (and I believe it is), it would also provide a buffer period where things wouldn’t get worse to try to enact a graduated income tax. Or time to pass a new tax with the revenue from it specifically earmarked (I know, money is fungible) for the purposes that need the extra money.

Comment by RNUG Thursday, Jul 10, 14 @ 11:23 am
===They haven’t prepared for the decrease in the years leading up to the sunset. Why would you think they will prepare over the next 2 years?===

A phasing out versus a drop off is preparing. In this climate, dropping is politically “smart” and governmentally ignorant to fiscal realities.

Once again - RNUG -, you remind me that having more ideas discussed can lead to better decisions. You did want that drink “tall” right? I will be pulling you out of retirement.

Comment by Oswego Willy Thursday, Jul 10, 14 @ 11:27 am
The political peril of voting for a phase out is only marginally less than the other options that couldn’t get enough votes, it’s still a vote for a type of extension and it still shows up on mail pieces as a vote for an extension.

Even though this proposal is probably the best of a bad lot it might actually get fewer votes than the other options. The members who are opposed to any extension or any type of extension are unlikely to come on board and you could lose the members who favor an extension at current tax rates.

Comment by The Captain Thursday, Jul 10, 14 @ 11:30 am
I would consider raising money off of retirement income with a phase out after 30 years after the last Boomers are buried. Including retirement income into our regular state income tax would be fair in many ways.

We shouldn’t continue to penalize younger workers raising our families by forcing us to pay for the problems caused by Boomer retirements. The generational transfer that used to go from dying generation to the next, isn’t much applicable to a Boomer generation full of broken families of divorce and studies showed, didn’t often plan for retirement anyway, relying on everyone else’s taxes.

We have a Boomer problem. Have the Boomers pay for it.

Comment by VanillaMan Thursday, Jul 10, 14 @ 11:30 am
==They haven’t prepared for the decrease in the years leading up to the sunset. Why would you think they will prepare over the next 2 years?==

“They” may not be all the same actors that have been playing out the script the last few years.

Comment by Anonymous Thursday, Jul 10, 14 @ 11:34 am
The question I then pose to you - RNUG -, can you get that phase out as you described through both chambers, and try to get any GOP votes on it?

I would argue that your fiscal is beyond prudent and it checks all the boxes, but what Comptroller Topinka states, and to break it down very simply to your idea, doesn’t a shorter phase-out window have a greater chance of legislative success than the longer phase-out?

Gonna need the GA on board, and be adults, and look for political cover too. Heavy lift, then add the looming Pension ruling by the courts…

Comment by Oswego Willy Thursday, Jul 10, 14 @ 11:35 am
I know that we cannot cut our way out of this mess. I get it. However, the legislature and Governor simply have to get serious about reining in spending. Need the uptown theatre revitalized? Great idea, but the taxpayers cannot afford it. Use your talents and clout to raise those funds privately, President Cullerton.

It’s too bad there cannot be some sort of sequestration on the state level where no additional spending can be made without corresponding cuts.

The only way I could possibly consider voting for Rauner is if he wielded a mighty axe with his use of the line-item veto. I still don’t think I’ll be able to do it, however.

Comment by LincolnLounger Thursday, Jul 10, 14 @ 11:38 am
Can we jump back in the time machine and elect Judy Governor in 2006? We would not be about to be run off the fiscal cliff if she was in charge.

Comment by OLK 73 Thursday, Jul 10, 14 @ 11:43 am
It’s all talk until December anyway.

Comment by a drop in Thursday, Jul 10, 14 @ 11:47 am
Last time I checked, dramatic pension cuts were considered preparation for decreased revenues when the income tax sunsets. I know a lot of the savings wouldn’t appear until the out years, but you cannot say that it was not a huge spending cut. Also, anyone who says that a supermajority gives leaders carte blanche to enact any legislation they want needs to look at history. Bipartisan control of the legislature creates a larger pool of yes votes for any particular piece of legislation.

Comment by SAP Thursday, Jul 10, 14 @ 11:52 am
OW,

I do math. Politics is your forte.

Comment by RNUG Thursday, Jul 10, 14 @ 11:55 am
===OW,

I do math. Politics is your forte.===

I am still laughing, out loud! Great retort.

You do the math, I’ll have to get the Crew to find the votes.

Very well played.

Comment by Oswego Willy Thursday, Jul 10, 14 @ 12:00 pm
It’s good to finally hear from a GOP elected official who recognizes what a disaster the revenue collapse would be. Will any legislators in her party heed her words? Only three did on marriage equality.

Comment by Anon Thursday, Jul 10, 14 @ 12:04 pm
Just so you know, - RNUG -, I will take your plan to the 4 Tops.

To the Post,

===”We’re in this position more than three years after the largest tax increase in Illinois history. That tax increase is set to sunset at the end of this year and there is no plan to address the lost revenue.”===

The loss of revenue is the mitigating factor. What seems list upon those looking at this from the purely political of “Sunset is sunset, deal with it!”, is, as Comptroller Topinka points out, the backlog and the bills remain, while the revenue is now shrinking.

So all the “they had time to figure this out” crowd, ok, a revenue stream is not cut short, give us where we can find the monies to cover the backlog, and the pensions, and the budget. I will listen, give me a plan that makes it all work.

Comment by Oswego Willy Thursday, Jul 10, 14 @ 12:12 pm
== If Rauner is elected, expect taxes to go up ==

Do most Republicans understand this? Are tax hikes OK with them so long as a Republican is in the mansion? They don’t really think there would be no wasteful spending under a Rauner administration, do they?

== Quinn lied to the state before the election (2010). ==
Quinn campaigned on a 1% permanent tax hike. He signed a 2% hike that mostly expires in January. Where is this big lie?

== the legislature needs to get serious about reining in spending. ==

According to CTBA, in FY 2015, spending on the core services of education, healthcare, human services and public safety will be 28% less than in FY 2000 after adjusting for inflation.
(Cap Fax 16 June, 2014) In addition, IL ranks 50th in state employees per capita, having cut nearly 25% of the state workforce since 2002. IL ranks as the fourth lowest spending state per capita…

Comment by Anon Thursday, Jul 10, 14 @ 12:21 pm
I wonder how many democrats who post here who laud the capabilities and efforts of JBT voted for her rather than the crook RB that most everyone knew was in deep doo foo.

To the post - I can easily see Rauner, after winning the election, saying: “now that I am in office I have access to info I didn’t have before which makes clear that a gradual reduction in the tax hike would be better for Illinois in the short and long term”. Not because he is the ideal candidate for governor or that he is a true statesman. Just because he can appear to be one.

Comment by dupage dan Thursday, Jul 10, 14 @ 12:27 pm
Look how liberating a 30 point lead on the Banjo player can be?
Does it occur to anyone that JBT may just be carrying some water for Rauner on this one. She’s all the terrific things people say about her…PLUS, she’s a dedicated party gal; a GOP party gal. Don’t be a bit surprised to hear some agreement to consider JBT’s idea. She’s the only one far enough ahead and not wearing a partisan collar to get away with this kind of an idea. She’s softening the target.

Comment by A guy... Thursday, Jul 10, 14 @ 1:07 pm
Forget the learned discourse on the merits. If enough taxpayers and conservatives skip the Comptrollers race, Sheila will be rocking the office for the next four years. Optics matter. Sheila would be no different, hence her attacks on Rauner and her earlier, somewhat dubious attacks on Judy, which seemed to have ceased.

Comment by The Prince Thursday, Jul 10, 14 @ 1:10 pm
=== If enough taxpayers and conservatives skip the Comptrollers race,===

Nice code word there, bub. Move along.

Comment by Rich Miller Thursday, Jul 10, 14 @ 1:12 pm
Be interesting to see what the House and Senate Rs say about Judy’s proposal.

Comment by steve schnorf Thursday, Jul 10, 14 @ 1:13 pm
- A Guy … -,

Which Rauner is that?

Robo-Call Rauner who dialed into Cullerton’s district to stop the tax rate from becoming permanent…

Or Phase-Out Rauner who thought dropping the tax cold turkey wasn’t the best way?

If Rauner had a plan, your Dopey assessment might have legs, but where there maybe some truth, “your guy”, - A Guy … - seems confused (not surprised) as to where he stands.

When either Rauner picks a lane, your comment will have more weight and merit.

Comment by Oswego Willy Thursday, Jul 10, 14 @ 1:15 pm
guy, I’ve never known Judy to need liberating by anything or anyone. She says and does what she thinks is right, devil take the naysayers. Good for her!

Comment by steve schnorf Thursday, Jul 10, 14 @ 1:15 pm
Single-issue voter “taxpayers.” Sorry for any misunderstanding.

Comment by The Prince Thursday, Jul 10, 14 @ 1:16 pm
== Quinn campaigned on a 1% permanent tax hike. He signed a 2% hike that mostly expires in January.==

Is a change in tax increase from 1% (100 basis points) to 2% (200 basis points) a difference of 100%? If so, that’s quite a bit. Or am I not doing the math correctly?

Comment by Rharaz Thursday, Jul 10, 14 @ 1:34 pm
–We have a Boomer problem. Have the Boomers pay for it. –

Comment by Anonymous Thursday, Jul 10, 14 @ 3:37 pm
–We have a Boomer problem. Have the Boomers pay for it. –

Like they paid for everything when you were a kid?

I noticed your “boomer” tax would expire after 30 years.

I’m going to take a wild guess and figure that’s about time you’ll hit retirement age? Always looking for a free ride.

Comment by wordslinger Thursday, Jul 10, 14 @ 3:41 pm
R, so’s a dime 200% of a nickel, but it still ain’t much

Comment by steve schnorf Thursday, Jul 10, 14 @ 3:46 pm
Rharaz -

A 2 percent tax hike for four years is much less for anyone planning on paying taxes in Illinois beyond 2018.

So, unless you are planning on dying or moving soon, be happy.

Duped is how folks are probably gonna feel about Bruce Rauner if he wins.

Someone mentioned earlier they thought Madigan was gonna jam a tax hike down Rauner’s throat? Nope.

Comment by Yellow Dog Democrat Thursday, Jul 10, 14 @ 8:24 pm
Was it a secret that the income tax increase was going to partially end?

Why is this suddenly a problem now?

We move from one made-up crisis to the next.

Comment by Late to the Party Friday, Jul 11, 14 @ 7:56 am
== So, unless you are planning on dying or moving soon, be happy. ==

BLS productivity data (see http://www.bls.gov/data/#productivity) shows that the output per hour has increased >70% since 1980. Costs/taxes should be going down not up. Where did the benefits of the increase in productivity go? Some contend that it has been taken from the common citizen via monopolistic behaviors in banking/finance, healthcare/insurance, education, public unions, etc. I think we should be angry about this, and that we may need to focus more on these areas in order to help remedy the financial issues ahead of us. There are already laws against monopolistic behaviors (e.g. Sherman-Clayton), but we need to make sure they are enforced.

Comment by Rharaz Friday, Jul 11, 14 @ 9:42 am