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Put up or shut up

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One of the most foolish things politicians can do to an economy suffering from a weak recovery and a shrinking tax base is to pass tax hikes. Hitting residents and businesses when they’re struggling risks sending a faltering economy into a tailspin.

And for an economy edging toward recession, tax hikes are even worse.

Unfortunately, a multibillion-dollar tax hike is exactly what Illinois politicians are proposing for a state economy that’s been remarkably weak and is now showing signs of recession-like shrinkage.

Illinois’ falling tax collections hint at looming recession

According to the December 2016 monthly briefing from the Commission on Government Forecasting and Accountability, or COGFA, Illinois’ corporate income tax collections are down $386 million in the first six months of fiscal year 2017, when compared with the same time last year.

Personal income tax revenues are off by $189 million. And sales tax collections are also weak, up only $45 million.

State revenues are down by nearly 5 percent year to date, and when all sources are taken into account, total revenues are down nearly 7 percent.

There’s no doubt that tax hikes right now aren’t optimal. But they never are.If the economy was going strong I assume the “Institute” would warn against harming the economy’s success.

But how would the “Institute” balance the budget? They don’t say. Drastic spending cuts will make things worse as well, after all. Much worse, considering how badly the budget is out of balance.

And it’s also quite possible that the impasse, with its reduced spending, is doing damage to the state’s economy.

So, let’s just get on with it, already. There’s nothing fiscally conservative about allowing unpaid bills to pile up by the billions year after year.

posted by Rich Miller
Wednesday, Jan 18, 17 @ 9:52 am

Comments

But the Illinois Policy Institute doesn’t actually want a balanced budget. That means nothing to them. The answer is and always will be keeping the individual income tax rate low.

Comment by OkComputer Wednesday, Jan 18, 17 @ 9:56 am
Not paying vendors doesn’t exactly help the Illinois economy.

Comment by Hamlet's Ghost Wednesday, Jan 18, 17 @ 9:57 am
Got some news for the folks at IPI, ask a human service provider (you know the private sector that you claim to support), what the impact of budget mess is then get back to us about your knowledge of how to fix this mess.

Comment by Give Me A Break Wednesday, Jan 18, 17 @ 9:59 am
I thought the IPI has lost any shred of credibility long ago. Their rants are no longer even amusing

Comment by oldman Wednesday, Jan 18, 17 @ 10:01 am
There is ‘nothing’ fiscally conservative about hiring 23 of your political allies.

Comment by Blue dog dem Wednesday, Jan 18, 17 @ 10:02 am
–Drastic spending cuts will make things worse as well, after all.–

Says who? A citation to authority, perhaps an economist or other financially astute and reputable source steeped in Illinois economic policies, would help. Otherwise, this is simply opinion … especially ironic given the attack on IPI which at least cites sources and uses data.

Comment by Deft Wing Wednesday, Jan 18, 17 @ 10:02 am
One thing we can be sure of is that numerous Illinois news organizations will run this jibe or quote it on their editorial pages.
When they cite their source as IPI, it seems only correct to qualify the institute as a Republican/Rauner front group.
That would help readers/viewers understand a lot.

Comment by Winnin' Wednesday, Jan 18, 17 @ 10:03 am
Actually, if you connect all the dots, people affiliated with IPI related organizations have indicated one budgetary and one economic growth item. Budgetary, repeal the Constitution’s pension guarantee, pay out whatever is there, and put existing state employees, including law enforcement and correctional officers, on a 401k scheme. Economic, go to an Indiana style worker’s comp program where benefits are limited to, say, 10 years and after that, if you still can’t work, you’re on welfare.

Comment by Smitty Irving Wednesday, Jan 18, 17 @ 10:03 am
This is why I wish the Rauner folks had listened more to Tim Nuding while he was on staff. Tim’s ideas may not have been “popular” but he had suggestions and knew the budget stuff better than anyone. At least that would have given Governor Rauner a template, and while there would have been pushback he would have had a solid, well thought out plan crafted by one of the best dudes in the business. What a wasted opportunity.

Comment by Team Sleep Wednesday, Jan 18, 17 @ 10:04 am
The challenge?

Balance the budget without a revenue increase IPI.

Now, to do that, IPI, you must show your work, and with a hole this big, you can’t say “waste, fraud and abuse”

What gets slashed? What gets completely unfunded?

Show your work.

Where will higher ed get their monies? Or… are you slashing higher ed?

I’m not concerned, INN will cover this, Proft will have it in radio and in newspapers and “State House Chick” will double down while she won’t factor in disaster relief for her hurricane that she desires…

The trick of course is having budget narrative based in words… not numbers.

As “State House Chick” loves to tweet…

“Simple”

Comment by Oswego Willy Wednesday, Jan 18, 17 @ 10:04 am
Truth is, the fact that news organizations even cite IPI is a travesty in and of itself, given its true political agenda.
Unfortunately, the other party has nothing to counter the IPI propaganda machine.

Comment by Winnin' Wednesday, Jan 18, 17 @ 10:07 am
===Otherwise, this is simply opinion===

It’s not an opinion. Look how it worked out for Greece.

Comment by Rich Miller Wednesday, Jan 18, 17 @ 10:09 am
Curious, IPI was silent on the $235 million a year tax just levied on Exelon customers to “save” 1,500 nuke jobs.

That comes to $157K a year per job “saved.”

Apparently, they’re comfortable with that government interference in the marketplace, spending other people’s money on “economic development.”

They used to be against that sort of thing. Wha’ happen?

https://www.illinoispolicy.org/reports/spotlight-on-spending-4-illinois-state-energy-subsidies/

Comment by wordslinger Wednesday, Jan 18, 17 @ 10:14 am
I read their whole article finding it hard to believe they would criticize the only plan we have seen thus far to address the crisis without offering their own concrete suggestions. But they did - rhetoric only. It is absurd they pretend we can ignore bills already accrued and owed.

Comment by Patty T Wednesday, Jan 18, 17 @ 10:16 am
For Democrats, this will be seen as further evidence that Rauner cannot be trusted on the tax hike.

The IPI is seen as an extension of Rauner. He uses Tillman to vet legislators, for example.

Comment by Free Set of Steak Knives Wednesday, Jan 18, 17 @ 10:17 am
Word,
Excellent point.
However,IPI needs to have SOME guiding principles — even if those principles include refraining from criticism of those who support IPI.
Echelon figured that out long ago.

Comment by Winnin' Wednesday, Jan 18, 17 @ 10:21 am
The most foolish thing you can do is listen to the IPI.

Comment by Anonymous Wednesday, Jan 18, 17 @ 10:22 am
This is why I like shifting to the Jerry Brown option talked about here yesterday if the Senate compromise fails.

Show the public why a tax increase is necessary. Democrats, declare an impass and say we can’t go another year without a budget. Pass Rauner a lump-sum, balanced budget with $32 billion in GRF and wall-off pension funding. Let Rauner and the IPI defend the resulting carnage.

Comment by Telly Wednesday, Jan 18, 17 @ 10:27 am
===Pass Rauner a lump-sum, balanced budget with $32 billion in GRF and wall-off pension funding.===

That won’t happen.

1) Pat Quinn was literally saddled with lump sum and it was acknowledged by ALL that was a disaster.

2) No one can trust Rauner, given the Good Friday Massacre cuts and no conscious by Rauner, allowing Rauner a “budgeted starving plan” would destroy, not teach.

3) Getting 60 and 30 due to knowing “1 & 2″ above, that would be an almost impossible task, even for Raunerites to get past “1 & 2″

Comment by Oswego Willy Wednesday, Jan 18, 17 @ 10:32 am
- Telly -

Possibly the only way Rauner could even dream of a lump sum would be to attach 2,573 pages of MOUs for monies to go “here”.

Then again, that’s really what a budget is, so why even do that?

Comment by Oswego Willy Wednesday, Jan 18, 17 @ 10:36 am
IPI is moving towards a more for us and less for the philosophy when addressing how and why a state budget exists.

Comment by Citizen A Wednesday, Jan 18, 17 @ 10:38 am
This governor is a political chicken when it comes to a budget.

Comment by Blue dog dem Wednesday, Jan 18, 17 @ 10:39 am
Also, Deft, I don’t recall you ever sponsoring legislation to make billions and billions of dollars in cuts.

Put up or shutup.

Comment by Rich Miller Wednesday, Jan 18, 17 @ 10:40 am
Proft and IPI are just laying the groundwork for whacking any Dems who vote for a tax increase, if it ever comes to that. I suspect any Republican members on board will get a pass.

Comment by wordslinger Wednesday, Jan 18, 17 @ 10:45 am
Exactly Team Sleep exactly, the loss of Nuding was a really bad omen

I think I have guessed the relacement.

He’s an economic idealogue

Perfect for Rauner to spin the scents of perfidy and austerity

Comment by Honeybear Wednesday, Jan 18, 17 @ 10:46 am
Maybe IPI should figure out an “exit strategy” to explain Rauner signing the Rauner Tax and try to help both chambers, both caucuses by giving everyone cover so Rauner can get his wins and not be wacked on the tax increase.

The short sidedness is… rank amateur, if we’re being honest.

Comment by Oswego Willy Wednesday, Jan 18, 17 @ 10:49 am
@Deft Wing

First, a fun lil video about how a spreadsheet error gave legitimacy to austerity cuts as a means to improve the economy:
https://www.youtube.com/watch?v=dPbxYsWxp8A

Also, here’s a short primer on austerity after the errors were found: http://www.relooney.com/NS3040/000_New_922.pdf

Here’s a layman’s article based on economic research from business insider: http://www.businessinsider.com/data-government-spending-cuts-hurt-economic-growth-2014-11

And last, here’s a basic economic blog on the subject. It does a nice job of explaining complex theories on the subject: http://www.economicshelp.org/blog/2070/economics/cutting-government-spending/

I don’t think you want to get into keynesian economics than that last blog.

Comment by Chicago_Downstater Wednesday, Jan 18, 17 @ 10:52 am
=== There’s nothing fiscally conservative about allowing unpaid bills to pile up by the billions year after year.===

In fact, allowing such a thing would be the polar opposite of fiscal conservatism.

Comment by A guy Wednesday, Jan 18, 17 @ 10:53 am
OW

All fair points, but allow me to counter each one:

1) True. Doing it again would be a disaster, too. But it would prove a point.

2) Rauner scrambled back to the GA in the summer of ‘15 after the Autism Day cuts and reached a supplemental funding deal. Dems could play that scenario out repeatedly with the cuts that would come from a lump sum. Which will help show worthy programs need revenue.

3) Also true. But it might be easier than getting 60 and 30 on a budget like the one cooking in the Senate if Rauner is unwilling to say where he stands.

Look, I hope the Cullerton-Radogno effort works. A lump sum is a horrible idea for all the reasons you mention, but two more years of what we’re doing now might be worse.

Comment by Telly Wednesday, Jan 18, 17 @ 10:57 am
–The short sidedness is… rank amateur, if we’re being honest.–

Meh, “honest” is the key word.

It ain’t a heavy lift to selectively whack those who would go along with a tax increase. At worst, you can always say “the bad guys forced it on us, so let’s get rid of the bad guys.”

Comment by wordslinger Wednesday, Jan 18, 17 @ 10:57 am
- wordslinger -

I hear ya, and while it’s valid, #TaxHikeMike and Rauner and his Caucuses signing on, Rauner literally signing, that’s a tough pivot, allowing the rabid “Pro-Rauner, Anti-Madigan” folks to stand fully exposed with no real explanation. The #TaxHikeMike alone was a tough pivot, now you have IPI’s disingenuousness here. Tough sledding

- Telly -,

===True. Doing it again would be a disaster, too. But…===

It’s true, period. And with respect, you’re asking all involved to ignore their own assessments that doing it again should never happen.

===Dems could play that scenario out repeatedly with the cuts that would come from a lump sum. Which will help show worthy programs need revenue.===

Again, respectfully, you’re describing the entire budgetary process. Why not work out a budget, frontways, instead of dangerously allowing a lump sum “out there”, MOUs or not. It’s adding a process that in the budget process it’s a streamlining.

Plus, the fighting among the “worthy”… all sides would not want that, including the “worthy”

===But it might be easier than getting 60 and 30 on a budget like the one cooking in the Senate if Rauner is unwilling to say where he stands.===

Rauner wants a budget under those parameters. Why open himself up to criticism Quinn got with a lump sum, and why vote if you’re a Dem to allow Rauner the cash to gut programs without telling where the gutting will occur? You wouldn’t.

===A lump sum is a horrible idea for all the reasons you mention, but two more years of what we’re doing now might be worse.===

Giving Rauner the checkbook, unattached to at least MOUs.

A case can be made, like I outlined, that would indeed be worse.

With respect.

Comment by Oswego Willy Wednesday, Jan 18, 17 @ 11:09 am
The “Institute” just keeps phoning in the same tired story. Taxes: bad. Cuts: good.

No details. No data to back up their claims.

Predictable.

Comment by Sir Reel Wednesday, Jan 18, 17 @ 11:10 am
IPI is paid to have an opinion and to promote its agenda at all costs, regardless of facts or conflicting evidence. Just like many commenters here.

Comment by 47th Ward Wednesday, Jan 18, 17 @ 11:23 am
OW

Again, all fair points. I hate to say it, but I suppose I’ve moved into the “we-had-to-burn-the-village-in-order-to-save-it” camp. I want a quick burn as opposed to the slow, smoldering disaster we’re living through now. That’s what this nonsense has done to me.

Comment by Telly Wednesday, Jan 18, 17 @ 11:55 am
I think it’s a legitimate argument. People and tax dollars are fleeing the state. Raising taxes on those who remain, rather than cost saving reforms, will drive many more to leave (hence the spiral). We live in this wonderful country that is a laboratory of democracy and people can and will move. The income tax was 3 percent for a long time. Why would it need to go up? This isn’t a set dollar value that needs adjustments based on inflation. It is a percentage. Live within it’s means. obviously the IL people do not want higher taxes, so cut the services, along with waste/fraud. If the people go longing for said services they will be given an option to vote for people that want higher taxes. Right now you have policies IL citizens are unwilling to pay for. So eliminate them. Everyone acts like it’s the end of the world if anything gets cut. Let’s act like grown ups and truly look at the value that is being paid for. Cut the least valuable.

Comment by NaperThrill Wednesday, Jan 18, 17 @ 12:09 pm
- Telly -

These are indeed trying times.

The best plan is to try to work for a budget and be responsible while doing it.

I understand your thoughts, I appreciate them too. For me, I’m just not willing to try things proven to lead to disasters to ease what is currently a disaster by design.

With respect, and with understanding to your point.

OW

Comment by Oswego Willy Wednesday, Jan 18, 17 @ 12:10 pm
===…so cut the services, along with waste/fraud.===

No, no, no…

It’s “waste, fraud, and abuse”

If you feel the need to use unmeasurable words to measure real dollars, please, don’t forget “abuse” so I can get the full effect of the white washing talking point.

Comment by Oswego Willy Wednesday, Jan 18, 17 @ 12:13 pm
These numbers just can’t be right. Obama has been telling us for years how great the economy is.

You tell ‘em Barack, tell them those numbers are not correct.

Comment by Piece of Work Wednesday, Jan 18, 17 @ 12:22 pm
“Cut waste, fraud, and abuse”. Cute buzz words, but where are the numbers? Please explain exactly what you plan to cut and how much? Show your work.

Comment by Mama Wednesday, Jan 18, 17 @ 12:27 pm
NaperThrill:

We have a 10 billion dollar backlog of bills, and growing. Please lay out which programs you would cut that amount to several billion in savings without any additional revenue.

Comment by Anonymous Wednesday, Jan 18, 17 @ 12:32 pm
–These numbers just can’t be right. Obama has been telling us for years how great the economy is.–

You’re going to have a tough time filling that drool bucket in a few days.

Better check with Mr. Pavlov for a new word.

Comment by wordslinger Wednesday, Jan 18, 17 @ 12:38 pm
Rauner let a 6 bilkion a year go away with the inc tax decrease. if it was back in place there would be no budget hole.

Meanwhile there has been no trickle down growth from the decrease that IPI and Rauner lauded as the support to reduce taxes.

How about the IPI demand we go back to the tax rate that covered the spending.

Comment by Ghost Wednesday, Jan 18, 17 @ 1:00 pm
That is really cute Word.

Comment by Piece of Work Wednesday, Jan 18, 17 @ 1:08 pm
The unpaid bills are yet another unfunded mandate. This time the burden of the mandate is being placed the business community. Rauner is not helping make Illinois business friendly by allowing the bills for goods and services provided to go unpaid. If this keeps up much longer it may force some vendors to go out of business or at least out of state.

Comment by Hit or Miss Wednesday, Jan 18, 17 @ 1:09 pm
Why do I have to cite specific cuts but no one has to justify the value of programs in place? We’re just assuming 35 billion in spending is justified. Have you looked at the DCEO spending? Have you analyzed the value brought by 1 billion in contracted services through DCFS? Tell you what… why don’t we just start with a job audit of state employees… You know, a Bob and Bob Office Space type scenario. What do you actually DO here. Garantee 20 percent of jobs/headcount could be eliminated or moved to fill more valued positions.

Comment by NaperThrill Wednesday, Jan 18, 17 @ 1:10 pm
OW

Just when you pretty much had me convinced that a lump sum would be a mistake, I read NaperThrill’s post. Now I’m back in!

“Right now you have policies IL citizens are unwilling to pay for. So eliminate them.”

Ok. Let’s call the NaperThrill/IPI/Raunerite bluff. Here’s your $32 billion, now go to work giving the people what they want.

Comment by Telly Wednesday, Jan 18, 17 @ 1:15 pm
===Why do I have to cite specific cuts but no one has to justify the value of programs in place?===

The title of this Post is… “Put Up or Shut Up”

You want cuts? Fine. Where? ===waste/fraud=== is remarkably clueless.

“Why?”

===Have you looked at the DCEO spending?===

If you have, show your work.

===Have you analyzed the value brought by 1 billion in contracted services through DCFS?===

If you have, show your work.

You cite these things, yet nothing.

===Garantee 20 percent of jobs/headcount could be eliminated or moved to fill more valued positions.===

“Guarantee”?

Very well, show the 20%

This blog is the deep end of the pool. You want to cite two specifics and point to a 20% head count reduction, show your work, no one is stopping you, but for me, I won’t let ===waste/fraud=== slide as thoughtfulness to the understanding of government.

So, show your work.

Comment by Oswego Willy Wednesday, Jan 18, 17 @ 1:19 pm
IPI is so far out of touch with reality that their ramblings should no longer rate comment. If there is a huge flaw in the Senate plan, it is in its timidity. The income tax plan proposed won’t begin to dig us out of the hole and once again dumps the load on the people who can afford it least, the younger underpaid workers with families. Once more they give a pass to retirement income, and it is us old folks who are sitting on the money. Somehow, that has to get into the mix.

Comment by Skirmisher Wednesday, Jan 18, 17 @ 1:28 pm
We’ve had this discussion over cuts many, many times. Some appear to feel that not one penny should be cut in Illinois state government-every penny is beyond justified. I’m skeptical, and I think there are cuts that will have to be made as we transit into a world where millions of mid-level jobs are disappearing because of robotics, AI and, to a lesser extent, outsourcing into the global economy. I don’t think government can be a complete exception to this trend, unless it is to become the employer of last resort.

In the meantime, I;m curious as to how much the state is saving, if anything, through its current labor impasse. Slow-walking the negotiations could, I suppose, be a fiscal maneuver to help get us through the fiscal year.

Comment by Cassandra Wednesday, Jan 18, 17 @ 1:31 pm
==Right now you have policies IL citizens are unwilling to pay for.==

What’s the evidence for that? They haven’t elected anyone willing to cut those programs.

Comment by Arsenal Wednesday, Jan 18, 17 @ 1:32 pm
NaperThrill,

The reason is that the spending was put in place after serious analysis by a General Assembly which HATES raising taxes. That’s true for both Republicans and Democrats. If there were a bunch of programs we didn’t need, they would have already been cut. There may be a bunch of programs YOU think we don’t need, but the State has to serve all citizens.

In regards to your job audit idea, I have two comments:

1) Even if you could get rid of 20% of the state workforce without disrupting anything, that’s still not enough money to fix the problem. The state workforce has been on the decline throughout our budget problems.

2) If you get rid of all the state employees who don’t provide value, the Governor’s office and a good portion of the management offices in the agencies are going to be pretty bare. /s

Comment by Pelonski Wednesday, Jan 18, 17 @ 1:33 pm
The IPI, a few years ago, put out their version of a balanced budget. They claimed they met all the pension payments, funded higher ed and did it with 3% tax. It looks like they haven’t done that in a while. I would be interested in seein’ them do it again. And if they are serious about their message, they should have it this session.

Comment by Dr X Wednesday, Jan 18, 17 @ 1:47 pm
Pelonski. Need you to research that Chicago film industry budget. Pay particular attention to that award winning blockbuster ‘Killer Pinata’. So, everything that needs to be cut has?

Comment by blue dog dem Wednesday, Jan 18, 17 @ 1:48 pm
Naperthrill, so Illinois had the smallest workforce per capita before Rauner. We have since lost 30% of that over the last two years. You want to cut an additional 20%.

Wow,

You guys really have no idea of the current collapse.

Guys we’re collapsing now. I’ve moved halfway up the seniority list already. I’ll probably get to take the week thanksgiving off in a few years. You get what I’m saying?
Dude we are so going down and won’t be able to restart.

Comment by Honeybear Wednesday, Jan 18, 17 @ 1:57 pm
Blue Dog,

I’m not sure I get your point. The state film credit is designed to get production companies to do their filming and production work in Illinois. It has nothing to do with the critical or financial outcome of the produced project.

I’m personally not a fan of tax credits that benefit one specific industry because it increases the tax burden on other industries. That’s my opinion, though, and I’m sure you will find many people in Chicago who see the film credit as a vital economic incentive which increases the economic output of the State and which is paid for by that increased economic output.

Comment by Pelonski Wednesday, Jan 18, 17 @ 2:21 pm
OkComputer - Wednesday, Jan 18, 17 @ 9:56 am:

But the Illinois Policy Institute doesn’t actually want a balanced budget. That means nothing to them. The answer is and always will be keeping the individual income tax rate low.
=================================================
To the IPI the answer is whatever Rauner tells them it is.

Comment by btowntruth from forgottonia Wednesday, Jan 18, 17 @ 2:30 pm
- wordslinger - Wednesday, Jan 18, 17 @ 10:14 am:

Curious, IPI was silent on the $235 million a year tax just levied on Exelon customers to “save” 1,500 nuke jobs.

That comes to $157K a year per job “saved.”

Apparently, they’re comfortable with that government interference in the marketplace, spending other people’s money on “economic development.”

They used to be against that sort of thing. Wha’ happen?
================================================
wordslinger, wha’ happened was Rauner signed off on it.That makes it ok.
They are (again) merely giving Rauner some of his return on his IPI investment.

They used to be against that sort of thing. Wha’ happen?

Comment by btowntruth from forgottonia Wednesday, Jan 18, 17 @ 2:37 pm
Here is my take on all this:
Illinois can’t raise taxes enough to cover its current revenue gap, pay unpaid bills and fund the unfunded pension liabilities. Raise taxes and you just lose more taxpayers and businesses.
Work it out in a kind of BK proceeding and try to create a governmental structure taxpayers and businesses can have confidence will be stable and growing over the long haul.

Comment by Bowels of the Capitol Wednesday, Jan 18, 17 @ 2:50 pm
Pelonski. Obviously these incentives are wanted. So are vital social services. Do you want porno pinata parties or abused women shelters for our finite tax dollars.

Comment by Blue dog dem Wednesday, Jan 18, 17 @ 2:55 pm
Why is a flat sales tax not an option? The income tax doesn’t bring in enough money as less then 50% of residents pay income tax. Why not eliminate it and place a flat 5% sales tax on goods? That way we catch tax from everyone, even if they earn their money outside of traditional, taxable means. It would bring a lot more money into Springfield. Tax all sales except the ones already with special tax, i.e. tobacco, gas, alcohol, etc. Tax homes over $250,000 and cars over $50,000. Then we catch out of state people who shop over the boarders and tourists as well.

Comment by CDC Wednesday, Jan 18, 17 @ 3:22 pm
===Why not eliminate it and place a flat 5% sales tax on goods?===

We already have a sales tax of 6.25 percent. It brings in about half of the personal income tax. Try reading occasionally. http://cgfa.ilga.gov/Upload/CGFAFY2017EconomicForecast&RevenueEstimate.pdf

Comment by Rich Miller Wednesday, Jan 18, 17 @ 3:28 pm
I vote for a different taxing system. Our flat tax system doesn’t work.

Comment by Mama Wednesday, Jan 18, 17 @ 4:21 pm