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School money and higher taxes

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Illinois

When the Civic Committee of the Commercial Club of Chicago released its budget and tax hike blueprint several weeks ago, most mainstream media reporters and columnists never picked up on the fact that the group specifically recommended that the “tax swap” idea be dumped. I wrote about it, and the Southtown gave it a brief mention, but until John McCarron’s Tribune column during the holidays, none of the bigs had really broached the subject.

That muffled “thud” we civic wonks discerned a few weeks ago was neither a sonic boom nor rooftop landing of reindeer on a practice run.

It was another crash landing of the so-called “tax swap”–the complicated proposal for state fiscal reform that has been the centerpiece of the liberal-progressive agenda hereabouts for more than a decade.

Not that the swap is dead dead. Like Mr. Dumpty, it could be reassembled and offered once again this spring to the Illinois General Assembly. In fact, civic types already are busy with the glue. They are practiced at repair, having kept the swap idea alive since its initial tumble in 1997, when then-Senate President James “Pate” Philip shoved it off the wall.

The nudge this time came from the Civic Committee of the Commercial Club of Chicago. These are the corporate chieftains who, nearly a century ago, commissioned Daniel Burnham’s seminal Plan of Chicago. More recently they led the charge to expand O’Hare International Airport. They have clout.

McCarron supposes that the federal tax deduction for property taxes provides an incentive to keep the property tax system in place. I think there is also a legit worry for families who move to areas with good, expensive schools that if the state takes over primary funding the government will screw up their kids’ futures.

Meanwhile, a big push for a big tax hike is coming soon to a General Assembly near you.

Gov. Rod Blagojevich has pledged not to raise the state income tax and won’t back down, his staff said.

But a new, bipartisan caucus of lawmakers wants to bolster state aid for per-student spending by more than $1 billion, and it is expected to include a state-tax hike in its education proposals.[…]

The [legislative] education caucus’ goals include reducing reliance on local taxes for schools. That system creates inequities because wealthy districts can afford to spend more on schools than poor districts.

The caucus also wants to increase state aid guaranteed per student to a level recommended by the Illinois Education Funding Advisory Board. Currently, that recommended figure is $6,405 per child, but the advisers plan to update that in 2007. This school year, the per-pupil amount is $5,334. It would take an estimated $1.6 billion to move to the $6,405 figure.

But Jim Edgar and Dawn Clark Netsch, among others, are skeptical that anything will happen this year.

“I’ll be awfully surprised if something happens,” said former Gov. Jim Edgar, who believes a tax hike is necessary because of the state’s financial problems. “The governor has said he is adamantly opposed to any tax increases. It’s awfully difficult to get a major tax increase when the governor indicates he is opposed to it.” […]

“You’re going to have a lot of legislators say, ‘Why should I stick my neck out on a tax increase if the governor is going to veto it?’” Netsch said. “He (Blagojevich) has the bully pulpit more than anyone else. He has got to be willing to be involved.”

Ralph Martire, who has made a career of pushing for a tax swap plan that nets the government lots more money, is more optimistic, first noting that Senate President Emil Jones is already in favor of providing more cash for schools, then adding…

“If (House Speaker Michael) Madigan becomes engaged, it will become a priority to the state,” Martire said.

And in that event, Martire said, even Blagojevich might be convinced to go along, no-tax-hike pledge or not, because education also is one of his top priorities.

posted by Rich Miller
Tuesday, Jan 2, 07 @ 2:22 am

Comments

There’s still an education funding problem?

Didn’t Governor Blagojevich “pledge” to introduce legislation to sell the lottery and rake in $15 billion during veto session?

Oh, wait, he broke that pledge because it turned out to be publicly unpopular, as well as so fiscally unworkable that the Gov couldn’t sell his plan to anybody.

If advocates can gin up the public pressure on the Gov and put a bill actually on his desk, he’ll sign it. Either that or he can campaign for re-election as the guy who vetoed billions in new money for schools and billions in property tax relief. Good luck with that.

Comment by Yellow Dog Democrat Tuesday, Jan 2, 07 @ 7:55 am
The tax swap/tax increase/revenue gusher is not dead yet. An actual tax swap, without the revenue gusher can be done. The teachers unions and the school boards are concerned that the percent of the voters they control through the PTA as opposed to the total voting public continues to fall. They should settle for this, because the legislature is easier to control, being farther from the local scene but subject to the irrsistable lure of campaign contributions.

Not that the locals have used their money well, with all the hugger muggary of teacher pension maximizing salary hikes, the additional debt created by the use of ‘working cash bonds’ and the thre card monte going on in the ISBE — dumb down the standardized tests, norm up the results and lower teacher qualification standards. Not to mention the efforts outside Chicago to stop the charter school movement.

The brand new, just baked pie of additional revenues will be a cat fight, however. The Civic Committee wants it to be used for one reason, the Medical professionsal believe it can be used for health insuring all Illinoisans, and the schools want it too.

So you have three large and influential groups who want the revenue gusher passed so they can fight it out in the General Assembly.

That raises the odds for passage.

Comment by Truthful James Tuesday, Jan 2, 07 @ 8:13 am
YDD, Vladdy only made that “pledge” to get Meeks to drop out of the race against him. I mean, you don’t REALLY have to honor a promise make in response to extortion, do you?

Vladgo doesn’t care about fiscal reality. He wants to make everyone happy so that he is popular. Likewise, he wants no tax increases (at least hikes that LOOK like tax increases to the general public) so that he remains popular.

So, if Uncle Fed comes to visit Vladdy this year, he may just be the most popular guy in the bighouse, preventing him from being sold for two packs of cigs and a fifth of toilet bowl moonshine.

Comment by Snidely Whiplash Tuesday, Jan 2, 07 @ 8:18 am
The governor did not break any pledge. He cannot pass legislation, only make suggestions to the legislators, some of whom were less than supportive. I agree with the civic committee that a tax increase is necessary. Two points would do quite nicely. The “swap” part is an unworkable scam that even the Speaker can see through. Under the swap scam there would likely be no “relief” to homeowners after the first couple of years.
If nothing happens, the governor will campaign as the candidate who kept his pledge to not raise taxes. It has worked twice before.

Comment by Bill Tuesday, Jan 2, 07 @ 8:24 am
How about the schools in Illinois take a page from Major League Baseball?

MLB is faced with a similar dilemma: there are rich teams (think New York Yankees) and poor teams (think Kansas City Royals). Now if it payroll spending becomes too unbalanced, fans lose interest, due to lack of competition, and MLB as a whole takes a hit.

Their solution to this problem: luxury tax. They set a cap for payroll by team. If a team exceed s that cap, and the excess is taxed at xx%. This money is collect from the team by MLB and then distributed to the teams with the least revenues.

Why not do the same thing in Illinois? Set the minimum spending per student at $xxxx. Any district that spends more per student gets ‘taxed’ …say 60% the amount they are spending over $xxxx. That money is sent to Springfield, who can send it to the poorest districts to bring them up.

As a side effect, the rich school districts will be less inclined to raise taxes, if they know 60% of the excess is going to go to Springfield.

Advantages:
1. Local control over taxing/spending remains in the district.
2. Spending per student should start to even out across the state.
3. We can still play the ‘protect my pie while trying to get some of yours’ political games we need for election time by constantly changing how we count students and how we count revenue…we can start exempting things from spending so we can continue to kibitz over ‘mine’ vs ‘yours’…something ANY spending reform must maintain.

Comment by Leroy Tuesday, Jan 2, 07 @ 8:33 am
To cut to the heart of Leroy’s comment, it was tried in Wisconsin and found to be unconstitutional in that state.

In any event, the richer districts are being “taxed” already, by having their state moneys lowered in some cases close to zero. The State does not distribute that reduction in the form of additional foundation money to the poorer Districts. That might be more appropriate.

Comment by Truthful James Tuesday, Jan 2, 07 @ 8:56 am
Good grief - someone is still listening to Blagojevich? Instead, watch the grown ups. Daley is running for re-election - so he doesn’t want any surprises popping up during the campaign. So nothing will get done while that is going on.

As for Madigan, he decides. He will wait until the campaigners have been re-elected first. Then he will take a gander at the smoldering mess that is our fiscal situation.

Just because Rod-ent was elected again, doesn’t mean he has any fans. He didn’t win a mandate, his opponent was defamed into losing instead. To listen to him does nothing but encourage him to continue denying reality.

In baseball, it is stike three - you’re out. In Illinois politics, Blagojevich proves you can keep on swinging strikes as long as no Democrat wants to get into the batter’s circle.

This is a blue state. Solidly blue. We’re screwed.

Comment by VanillaMan Tuesday, Jan 2, 07 @ 9:10 am
It’s a blue state with a Democratic governor who embraces a Republican principle of opposition to higher taxes. Here are the the key questions: Will Madigan put his targets on a big tax hike? Will Madigan and Cross promise not to use a Yes-vote in future campaigns?

Comment by Anonymous Tuesday, Jan 2, 07 @ 9:57 am
The other interesting factor is that A+ Illinois is said to be airing several million dollars worth of television commercials around the issue.

It seems to me that you can get the swap or you can get the increase but a swap and an increase together becomes too heavy of a bill to push at once and it dies under it’s own weight. My guess is that the bill will originate in the Senate where the Dems have a veto proof majority. The Senate did not show the discipline in past years with this bill when they did not have a veto proof majority, so it is unlikely that they can show the discipline this time.

I think a revenue neutral swap bill could, not will but could, get out of the Senate out of the House and potentially signed. A large revenue enhanced swap bill is unlikely to be passed and signed.

Comment by Snark Tuesday, Jan 2, 07 @ 10:55 am
I can understand the Speaker sitting on his hands until after the February Chicago mayoral election. After that, it’s time for him to lead as only he can. His daughter is going to be challenging G-Rod in 2010 - unless the Guv’s removed via indictment before then - and the last thing she needs is this triple albatross (schools still screwed, budget structurally unbalanced, plus no revenue increase yet) weighing down her easy slide into the big chair.

He’s going get his appropriately grand namesake building in Springfield (by then), facing the Capitol from the NW corner of 12st and Monroe, and between that and getting AG Madigan safely ensconced - what better legacy could he hope for?

A let’s-float-all-boats bill is the only way. He has to say no District loses money, that as a given. Not revenue-neutral; revenue-plus. Beyond that, forcing G-Rod to look weak on a tax increase that even Republicans say is needed, to lock up better funding for generations of Illinois children, is the kind of courage only Speaker Madigan can, should and must do as his last major effort. Prove them all wrong and waltz into the history books as the guy who saved Illinois’ schools.

The Speaker is smart, on that all agree. Methinks he has his eye on the ball on this one.

Comment by Mr. Luxury Yacht Tuesday, Jan 2, 07 @ 11:09 am
How about this: Sell the tollway. Deposit all $15 billion or so into the the pension fund to cover the skipped payments and generally get the system up to a pay-as-you go manageable level. That frees up a couple billion in general revenue fund dollars that could be used for education with no tax hike whatsoever.
The political price? Commuters hate the ensuing toll hikes. Guess what? They hate the tollway already and nothing’s going to change that.

Comment by anon Tuesday, Jan 2, 07 @ 11:52 am
Anon - Actually market value someone I know who should know says more like 30 v. large but what’s a few billion between political friends.

WAY too simple and logical though. A non-starter therefore, one would have to suppose. Then again it still doesn’t solve the structural ed funding problem. It just kicks the can down the road.

Comment by Mr. Luxury Yacht Tuesday, Jan 2, 07 @ 12:21 pm
The tollway scenario presented by “anon. 1152″ won’t happen. It essentially asks suburban lawmakers of both parties to hurt their constituents (via higher tolls in perpetuity) in exchange for improved school funding in Chicago and Downstate. Looks like a lose-lose proposition to me.

The scenario presented by Mr Luxury Yacht, however …. I can see a way through to that. Don’t forget that Daley will want a revenue-plus tax package to pass, too - it will lower property taxes in the city while giving the schools much-needed cash. Add significant support from House GOPers and you have Madigan, Jones, Daley and Cross on one side of the ledger, Milorad on the other. Plus the editorial pages statewide will be for the school money. Does anyone here - apart from Bill - like the goober’s chances on winning that one?

Comment by Reality Check Tuesday, Jan 2, 07 @ 12:22 pm
Looks like a loser for most taxpayers, especially Chicago suburban taxpayers. They should have voted for Judy, as they will soon see.

The winners–legislators, greedy school administrators and teachers, and state employees, of course.

Legislators already have their raises. And the guv’s office is planning to reward the increasingly politicized merit comp state employees, few of whom produce anything, with up to 7 percent raises based on “tougher” performance standardes. In other words, trough time for the cronies, relatives, and political hires in Illinois’ state civil service.

Meanwhile, instead of property tax relief in exchange for an income tax hike, it looks like we’ll just be getting the tax increase. This will fall particularly hard on the Chicago suburbs with their skyrocketing property taxes. Guess all those folks who said they couldn’t afford to live there any more are really going to have to move, but after all, most of them did vote for Blago.

Comment by Cassandra Tuesday, Jan 2, 07 @ 12:41 pm
Bill - I can’t believe that someone who seems to have as many opinions about what goes on in Springfield as you would argue that the Governor’s only legislative power is to merely “make suggestions to legislators.”

The Governor has a bully pulpit which he’s happy to use to ban violent video games. He has a legislative staff that can craft and draft legislation. He has a merry band of syncophants in the legislature who can introduce legislation for him. And he has all kinds of legislative negotiating leverage that he can use to try to put votes on a bill.

IF the Governor wanted to lead on education funding reform, pension funding reform, budget reform, or property tax relief, he could do it. That is, if he had the “testicular virility.”

Is the Governor:

A) Too dumb to recognize Illinois faces a crisis?
B) Too incompentent to come up with a plan to address the crisis?
C) Too weak or cowardly to push that plan through?
D) All of the Above

I can’t say for sure what the answer is, although I’m guessing it’s C. But no one can argue with a straight face that it’s beyond any Governor’s control.

That said, given the total lack of leadership this Governor has demonstrated on the big issues facing this state to date, I agree that it’s probably up to Madigan, Jones, Watson and Cross to lead on this one. Then watch for NimRod to stroll in after they’ve done all the heavy lifting, sign the bill and take all the credit, just as he has in the past.

Comment by Yellow Dog Democrat Tuesday, Jan 2, 07 @ 1:16 pm
This stacks up as a ‘Burbs vs Chicago and Dowstate issue.

Daley doesn’t want to rock the boat and bring back a “reform” mentality to CPS.

He wants to avoid reform, but he’ll need suburban revenues to balance the books while keeping the CPS patronage army happy.

If he wanted to really improve efficiency and quality at CPS, he would’ve appointed more of a “Vallas type” at CPS instead of Rufus Williams.

They want suburban income tax dollars Downstate so that they don’t have to get their fair share from farm income to keep half filled (or less) schools open and avoid consolidation.

For those who aren’t aware, Illinois has more school districts, proportionately to its population, than the vast majority of states.

They have their own little “patronage havens” in underpopulated schools downstate,and they want to team with Chicago to take the bucks from the Burbs to keep the gravy train going.

I’ve seen some early “scoring” of HB750, and it seems that it is no more than a transfer of wealth from suburban communities, even those with far less property wealth than most areas of the city and rich farmlands.

Suburban Dem legislators are very gun shy on this bill, so I think that “veto proof majority” in the Senate may disappear very quickly when push comes to shove, and Madigan doesn’t want to create an “anti-Dem” sentiment in the Burbs because Amy will need solid support there to get elected as Guv.

Comment by PalosParkBob Tuesday, Jan 2, 07 @ 1:42 pm
Cassandra wrote, “instead of property tax relief in exchange for an income tax hike, it looks like weâ€™ll just be getting the tax increase.”

I can only assume this is based on the Commercial Club of Chicago report that endorsed such a plan, aka big-city bazillionaires telling the rest of us to eat it.

Well, that proposal won’t go anywhere. Not Mike Madigan or anybody else could muster five votes for a tax bill that doesn’t provide real property tax relief, bazillionaires or no. The winning package will look a lot like what we’ve known as 750: money for schools, fix the structural deficit, ease the property tax burden, hold 60% of all taxpayers harmless or better.

Comment by Reality Check Tuesday, Jan 2, 07 @ 1:58 pm
Reality Check

I wouldn’t be too sure about the tax swap, but either way (tax swap or just the income tax increase) the Cook and outlying suburbs lose.
They get no more money for their schools and their property taxes go up, albeit a tiny bit more slowly under 750.

I guess they didn’t realize that not voting for Judy was going to take untold thousands right out of their already worn out suburban wallets, Blago’s no tax pledge notwithstanding.

Comment by Cassandra Tuesday, Jan 2, 07 @ 2:32 pm
I think Judy would have signed a 750-like package with a lot less foofaraw than Milorad. So I guess, here again, I can’t agree with ya Cassandra.

Comment by Reality Check Tuesday, Jan 2, 07 @ 3:17 pm
Given that the Senate has a Democratic supermajority thanks to suburban Democrats, I don’t see how any of this swap talk happens.

Comment by anon Tuesday, Jan 2, 07 @ 3:30 pm
PPB - you wrote:

“For those who arenâ€™t aware, Illinois has more school districts, proportionately to its population, than the vast majority of states.”

Interesting (no irony intended). Source? Is this based upon comparison with the states like Iowa and the Dakotas or also with Michigan and Ohio? Please post a link to at least one source. Thanks!

(and by the way, the moniker should be familiar to you Monty Python fans out there…)

Comment by Mr. Luxury Yacht Tuesday, Jan 2, 07 @ 3:38 pm
YDR,
I guess it is easier for you to blame the governor than to face the truth which is that if the speaker wanted ed funding reform we would have had it already. Here is what I remember about some innovative proposals and the little guy’s response.
Sell or lease the tollway? Mike:”NO!”
Sell or lease the lottery? Mike:”NO!”
Keno?………………….Mike:”NO!”
Sell or lease Thompson Center?Mike(and Lisa):”NO!”
Raid the pension funds to increase state debt and perpetuate the fraud until Im out of office and my daughter is governor?Mike:”YES!YES!YES!”
If Madigan and Jones want a tax increase then let them both pass one over the governor’s veto.
So far, they both have been scared to call one to the floor for a vote.
That would take some TV on the part of the speaker….fat chance.

Comment by Bill Tuesday, Jan 2, 07 @ 3:50 pm
Mr. LV,
Ignore Bob. He just makes that stuff up.

Comment by Bill Tuesday, Jan 2, 07 @ 3:54 pm
The fate of any tax increase is going to hinge on whether it can be billed as â€œeducation reform.â€ Martire and Co. tried feverously to do that with HB 750 (which Mike Van Winkle and I discussed in yesterdayâ€™s SJR). Come Spring, heâ€™ll try the same thing.

Something that Martire, the General Assembly and the press have thus far ignored is that many supposed conservatives would be willing to support a tax hike, as long as it was coupled with an expansion of school choice (see my October op-ed, or consider this statement, from the Civic Committee report: â€œAny additional funding for schools should be conditioned on greater accountability and transparency, and on eliminating the cap on the number of Chicagoâ€™s charter schoolsâ€¦

â€œChicagoâ€™s schools may need more money â€“ but they need even more the incentives to improve performance that will come with more and better choices. Although the effects of generations of poverty and discrimination on academic achievement are formidable, Chicagoâ€™s charter schools have proven that these effects need not be irreversible.

â€œWithout the improved incentives that come with competition and choice, spending more money on the existing schools â€“ organized and managed as they now are â€“ would produce little if any lasting benefit.â€).

Comment by Collin Hitt Tuesday, Jan 2, 07 @ 5:17 pm
Time to override the governor’s veto.

Comment by Squideshi Tuesday, Jan 2, 07 @ 5:31 pm