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Civic Federation unveils annual state budget roadmap

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Illinois

Ahead of Gov. Bruce Rauner’s budget address next week, the Civic Federation is again calling for taxing some retirement income and extending the state sales tax to some services as part of its proposal to stabilize state finances. […]

The Civic Federation compiled a list of 11 steps it believes the state should follow to reestablish the state’s financial health. Number one on the list is limiting annual spending growth to 2.1 percent for the next five years at a minimum. The group recommended other cost control measures like cutting the interest rate the state pays on overdue bills, consolidating government units and creating a commission to explore consolidating governance of state universities.

Other recommendations will be more difficult, Msall acknowledged. The organization said the state should impose the income tax on the same retirement income that is taxed at the federal level. For example, there is a federal income tax on 401(k) distributions, but Illinois does not tax them. Imposing that tax has been a third rail in Illinois politics.

Also, the report calls for a constitutional amendment to be placed on the ballot “to clarify the pension protection clause.” That clause prevents lawmakers from enacting cuts to pensions of current public employees.

The report is here. Maybe one day the right people will start listening to some of this stuff.

* Greg Hinz…

All those are disliked by some, but potentially even more unpopular is the federation’s call to create a bipartisan commission “to rationalize the state’s higher education system.”

The federation notes that six of the state’s 12 university campuses have seen their enrollment drop since 2008, with only two up since 2015: The University of Illinois campuses at Urbana-Champaign and Chicago. With the population of high school students also dropping, the federation says, “The commission should consider the elimination of duplicative higher education programs, reallocation of resources across programs and campuses and the closure or consolidation of campuses.” Particularly weak have been Northeastern, Southern, Western and Eastern Illinois Universities, and Chicago State University.

As a first step, the Civic Fed adds, the state should concentrate management of the schools under fewer boards.

* Monique Garcia…

While the state’s finances have begun to stabilize in the months since lawmakers passed a major income tax hike over Rauner’s veto, the group says tough choices must be made to fully dig out of the hole. […]

Also on the group’s list is establishing a rainy day fund and approving a major infrastructure construction program. It would be paid for by an increase in the gasoline tax, as well as congestion taxes and levies based on how many miles a vehicle has traveled.

posted by Rich Miller
Friday, Feb 9, 18 @ 11:53 am

Comments

End the pension income tax exemption and put the revenue (just shy of $2B I think) into the pension funds.

Comment by Dan Johnson Friday, Feb 9, 18 @ 11:55 am
The Illinois Constitution prevents the closing of state universities. The language is here.
ARTICLE XIII, Section 6. Employment by a state college or university, particularly a union job, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired. Ever. And we do mean ever.

Comment by Essential Earl Friday, Feb 9, 18 @ 12:02 pm
Rauner starving Higher Education is how you get a credibke group to agree. Passively forcing closures leads to thus…

===“The commission should consider the elimination of duplicative higher education programs, reallocation of resources across programs and campuses and the closure or consolidation of campuses.” Particularly weak have been Northeastern, Southern, Western and Eastern Illinois Universities, and Chicago State University.===

Governors open universities, they don’t starve then passively in hopes credible leaders and groups get on board and ask that they finally just be closed.

Bruce and Diana Rauner love them some Dartmouth.

Bruce and Diana Rauner want Carbondale, Charleston, Macomb to be obliterated.

Now the RaunerS have their crutch.

All the GOP members who helped with the call to close the universities in their districts…

…

Good. On. You.

You ruined a chance to hopefully save them, by being owned by Rauner.

Pathetic.

Comment by Oswego Willy Friday, Feb 9, 18 @ 12:05 pm
==The federation notes that six of the state’s 12 university campuses have seen their enrollment drop since 2008, with only two up since 2015== and ==“The commission should consider the elimination of duplicative higher education programs, reallocation of resources across programs and campuses and the closure or consolidation of campuses.”==

At first blush, closures would appear to be a logical step; however, the declines in enrollment correlate with a long-term disinvestment in Higher Ed by the state. In addition, we are #2 in net outmigration of graduating seniors. If we cut the outmigration in half (or more), we would need those universities. (That’s why they were filled in the 90’s; the decline in HS seniors has been offset by the demand for higher ed degrees by employers.)

A better approach might be to look at how to build those schools back up to where they were. The benefits would accrue to parents and students who should be able to spend less on higher ed by staying in state, to the regions that house those universities where they are (or should be) economic drivers, and to the state which needs an educated workforce to attract employers.

Closing universities might save some money in the short run, but it would further damage the state’s economy (especially down state) and fuel outmigration.

Comment by Pot calling kettle Friday, Feb 9, 18 @ 12:06 pm
They also recommended taxing retirement income.

Amazing how septuagenerian lawmakers who have been in Springfield for 4 decades running up the tab want to the next generation to pay for everything.

Comment by Lucky Pierre Friday, Feb 9, 18 @ 12:08 pm
Civic Feds answer to Hi Ed starve the patient then put it on a diet. These all look like big winners for downstate and a disinvestment of anything south of I-80

Comment by Obamas Puppy Friday, Feb 9, 18 @ 12:17 pm
Meanwhile, the wizard is on a different page.

“I will block that (progressive) and make sure that our income taxes stay flat and low and actually down lower from where they are today and bring ’em back down to 3 percent over the next two years.”

Comment by Langhorne Friday, Feb 9, 18 @ 12:20 pm
Oh, I think the Illinois Supreme Court and the Illinois Constitution “clarified” the pension issue pretty well already.

Comment by Anonymous Friday, Feb 9, 18 @ 12:21 pm
Taxes are going to go up one way or another. All this other stuff is picking at the margins.

Comment by Sonny Friday, Feb 9, 18 @ 12:22 pm
What happened to Bruce’s plan to tax some services?

Comment by City Zen Friday, Feb 9, 18 @ 12:28 pm
== as well as congestion taxes and levies based on how many miles a vehicle has traveled.==

Yeah not gonna happen. Didn’t pritzker get beaten about the head and neck just a few weeks ago for even broaching this subject? Civic fed just looking to fill space in their report with this passage, maybe, because this idea of mile-based vehicle taxes as a funding mechanism is a complete non-starter.

Comment by Lester Holt’s Mustache Friday, Feb 9, 18 @ 12:29 pm
“make reasonable and moderate changes to the
pension benefits of current employees and retirees” Oh come on now, if you are going to make a suggestion make the dang suggestion. Not the subjective fluff that is “reasonable and moderate”.

Comment by Perrid Friday, Feb 9, 18 @ 12:35 pm
I think there are some good ideas in there that merit consideration. There is no mention of a constitutional amendment to institute a progressive tax, which I think would be an improvement over our current flat tax.
Also there is mention of a constitutional amendment clarifying the pension clause. It sounds like they want to be able to “reasonably” reduce the benefits of current retirees. That sounds like passing a law which would reduce the obligation of contracts. As RNUG has mentioned on more than one occasion, retirees need to be given a choice when it comes to the pension benefit with one of their choices being to keep their current contractual benefit.

Comment by Dude Abides Friday, Feb 9, 18 @ 12:35 pm
Dan Johnson. You will not get 2 billion from taxing retirement income. The retirees who can will move out of state.

Comment by Anonymous Friday, Feb 9, 18 @ 12:38 pm
One thing that separates these guys from just about everyone else: they make concrete proposals, with real numbers. They make many other political actors look like fools.

Comment by walker Friday, Feb 9, 18 @ 12:43 pm
But we are supposed to believe if you raise taxes on successful small business they won’t leave as well

Comment by Lucky Pierre Friday, Feb 9, 18 @ 12:44 pm
Taxing retirement income makes financial sense, but it’s not within the realm of political possibility.

As far as all seniors fleeing if such a tax is ever imposed, only three states exempt all retirement income. Surely retirees still live in the many other states that do tax some retirement income.

Comment by anon2 Friday, Feb 9, 18 @ 12:53 pm
I am constantly surprised by how few retirees are aware that the state doesn’t tax their pension income.

Comment by Dan Johnson Friday, Feb 9, 18 @ 12:56 pm
–Also on the group’s list is establishing a rainy day fund–

Here’s some cognitive dissonance:

It’s silly to talk about a rainy-day fund when you’re still have an $8B backlog of bills. That’s like having $500 in a “savings account” when you owe $5K on your credit card.

Yet, in reality, Illinois already has a number of “rainy-day funds” and they raid them all the time, AKA dedicated funds.

Comment by wordslinger Friday, Feb 9, 18 @ 1:13 pm
Dubbed Swifts Modest Proposal on Senior Citzens.
1. Tax retirement income, which will send more seniors out of state, thus reducing Illinois medicare burden.
2. Young people will flock to or stay in Illinois for affordable housing freed up by departing seniors. The handy man market will explode.
3. Jobs vacancies will be created by those double dipping seniors.
4. Hospitals won’t be jammed up with sick oldsters.
5. Hospice care demand will diminish.
6. Drivers won’t be irritated by old folks driving to slow.
7. Death rates will drop, heath care and auto insurance rates will go down. Think of the excess money folks will pour into the economy.
The list is endless and is a huge win for the once great state. Cost savings and economic opportunity abounds.

Comment by NorthsideNoMore Friday, Feb 9, 18 @ 1:14 pm
Illinois needs a comprehensive grand bargain like this desperately. Unfortunately, there’s no political will for this in the legislature much like Congress was unwilling to take on Simpson-Bowles.

Comment by Chicagoan Friday, Feb 9, 18 @ 1:19 pm
==the Civic Federation recommends that the Illinois General Assembly vote to place a
proposed Constitutional amendment on the ballot no later than the 2020 general election that
would clarify the pension protection clause of the Illinois Constitution such that the Illinois General Assembly would be allowed to statutorily make reasonable and moderate changes to the pension benefits of current employees and retirees=

That still wouldn’t matter. You can’t change the Constitution and make it apply to the past. Pensions are what they are and no amount of twisting will get the state off the hook. Some people seem to be wasting an awful lot of energy trying to get a result that cannot legally happen.

Comment by Demoralized Friday, Feb 9, 18 @ 1:21 pm
Before we broaden the base subject to our regressive flat tax, the amendment that ought to be put on the ballot is to allow a progressive income tax. Then, and only than, should we consider broadening our tax base.

Comment by PublcServant Friday, Feb 9, 18 @ 1:21 pm
==Amazing how septuagenerian lawmakers who have been in Springfield for 4 decades running up the tab want to the next generation to pay for everything.==

This is the Civic Federation’s recommendation. You continue to make dishonest statements that are so easily refuted.

Comment by Demoralized Friday, Feb 9, 18 @ 1:24 pm
Illinois definitely need to close EIU or WIU. Don’t care which one.

Comment by Anonymous Friday, Feb 9, 18 @ 1:25 pm
===Illinois definitely need to close EIU or WIU. Don’t care which one.===

Charleston and Macomb might care.

How callous.

Diana or Bruce?

Comment by Oswego Willy Friday, Feb 9, 18 @ 1:28 pm
==Illinois definitely need to close EIU or WIU. Don’t care which one.==

I’m sure the powers that be will take note of that brilliant policy analysis.

Comment by Demoralized Friday, Feb 9, 18 @ 1:29 pm
“Amazing how septuagenerian lawmakers who have been in Springfield ” Got news for you, Lawrence Msall is only 55.

Comment by Skeptic Friday, Feb 9, 18 @ 1:37 pm
Easily refuted? When did Mike Madigan or John Cullerton ever issue a mea culpa for the debt run up during their time in Springfield and introduce legislation to tax wealthy retirees?

Comment by Lucky Pierre Friday, Feb 9, 18 @ 1:38 pm
==Got news for you, Lawrence Msall is only 55.==

He’s also not a lawmaker.

Comment by Demoralized Friday, Feb 9, 18 @ 1:38 pm
He is 55 and also not a lawmaker

Comment by Lucky Pierre Friday, Feb 9, 18 @ 1:40 pm
anon2 at 12:53pm, I may be wrong (happens a lot) but I believe Illinois is one of 13 states not taxing pensions and social security.

Comment by The Magnificent Purple Walnut Friday, Feb 9, 18 @ 1:45 pm
==but I believe Illinois is one of 13 states not taxing pensions and social security.==

You’re including states with no state income tax. The only states tax with a state income tax but exempt all retirement income are IL, PA, and MS.

Comment by City Zen Friday, Feb 9, 18 @ 1:52 pm
Nice summary table on taxing retirement income in the states in recent SERS newsletter
https://www.srs.illinois.gov/PDFILES/newsletters/inf18jan.pdf

Comment by very old soil Friday, Feb 9, 18 @ 2:05 pm
Heres a start . Cut 2.1% for the next five years. Then we can talk about additional revenue.

Comment by Blue dog dem Friday, Feb 9, 18 @ 2:08 pm
=Heres a start . Cut 2.1% for the next five years. Then we can talk about additional revenue.=

And yet Rauner’s agency heads can’t identify any specific cuts. And the agencies themselves state that they are significantly undermanned due to previous budget cuts.

Maybe they should hire you as a consultant since you’ve got it figured out.

Comment by Pundent Friday, Feb 9, 18 @ 2:31 pm
@VOS - The SERS document is only relevant for Illinois retirees and not indicative on how those state tax retirement income in general. For example, Kansas exempts in-state public pensions from taxation but not those from other states.

Comment by City Zen Friday, Feb 9, 18 @ 2:41 pm
=What happened to Bruce’s plan to tax some services?=

Most other states already do it, not slick enough for IL. All the rich people will move away if we tax their Yacht maintencance and valet service. /s

Comment by Anonymous Friday, Feb 9, 18 @ 2:46 pm
Thank you City Zen. I only meant there are 11 options to move to that do not tax pensions.

Comment by The Magnificent Purple Walnut Friday, Feb 9, 18 @ 2:47 pm
Lets close EIU, WIU and SIU. That would only leave a couple of billion in real estate value to rot into the ground much like the state institutions that have been closed. Civic Fed surely has several large organizations ready to buy the properties as corporate headquarters or research facilities at bargin prices. Closing EIU could not possibly have any effect on the Reggie Phillips apartment complexes in Charleston.

Comment by zatoichi Friday, Feb 9, 18 @ 2:50 pm
==Cut 2.1% for the next five years==

Fine. Identify the cuts. And don’t be lazy about it either with some across the board suggestion. That’s poor policy making.

Comment by Demoralized Friday, Feb 9, 18 @ 3:01 pm
Chicago biz group calls for closing Carbondale.

That’ll go over well.
You can just hear the lawmaker rushing to push their green buttons.

Comment by Leigh John-Ella Friday, Feb 9, 18 @ 3:26 pm
Dem. I have listed those last year. But I woulD start with LGDF,DCEO K-12, higher ed. Obviously we cant touch court mandated spending. Nobody wants to make cuts. Nobody wants to raise taxes. Somethings gotta give.

Comment by Blue dog dem Friday, Feb 9, 18 @ 3:34 pm
The obsession with merging the teacher pension funds continues. Now they want the City to take back the annual CTPF normal cost payment in exchange for the State assuming the CTPF unfunded liability. Yeah, right.

Perhaps they should look at why the City has separate pensions for Employees, Laborers, Park District, etc. and consolidate those before we interfere with the teacher funds that are doing just fine without each other?

Comment by Arthur Andersen Friday, Feb 9, 18 @ 3:42 pm