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Another false red herring

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Illinois

* Not long ago, some IL politicians were saying, “If we don’t pass a capital bill right now, all the federal money will go away.” That breathless warning was bunk, but the propaganda keeps on coming.

* For instance, the governor had this to say last week…

“If (the General Assembly) can get a capital bill done sooner rather than later, then the shovels will be in the ground before the Fourth of July,” Blagojevich told the Lee Springfield Bureau. “But it’s up to the legislature to do this and do it quickly.”

* Not.

Blagojevich’s own transportation department says some new construction could get under way in the latter part of the summer construction season, but that would require on-going planning and preparations from this point forward.

“It is possible that some projects could be started in late summer or fall, but it depends on issues like how much engineering has previously been done on specific projects and how much right of way needs to be acquired,” Illinois Department of Transportation spokesman Mike Claffey said. “A more significant number would begin in 2009 and I believe the funding would be spent over three to four years.”

* And that “pass it now or the money will go away” line? Well, it’s still out there…

Recently, several of us Illinois mayors were in Sen. Dick Durbin’s office, and he shared with us that there is federal money in Washington — up to $10 billion — to be used as matching funds if Illinois passes a capital bill. However, there’s a time limit to how long those funds will be available, so that’s why we need to get moving on this.

Durbin told the mayors that whopper despite informing the Pantagraph earlier this month that the claim was false…

But that federal money and those matching grants will not disappear or be doled out to other states unless Congress takes drastic measures to do so. Illinois’ congressional delegation says that will not happen.

“That money will be available, it will just be worth less,” Durbin said, adding that last year, hundreds of millions of dollars were left behind when Illinois was unable to move on a construction plan.

* There’s no doubt that Illinois is in great need of a capital bill. Not only is our infrastructure crumbling, but the jobs would be a welcomed cushion against continued economic decline.

But do the proponents have to rely on so many untruths to get it passed?

* Side note to whomever is publishing the pro capital bill Illinois Works Coalition website: Reprinting newspaper stories in their entirety is a violation of federal copyright laws.

posted by Rich Miller
Monday, Apr 21, 08 @ 8:46 am

Comments

The problem with a capital bill is we need State dollars to match those fed ones, and the State is out of money. What we need is an income tax increase and a capital bill. They could make the increase temporary to deal with the econimic donwturn and coming recession. Instead of removing taxes, and State Reveune, which is a plan that looks to provide little real help, we need actual long term solution. Pass a temp income tax hike for say 3 years, pass a capital plan, and get us out of dependence on sin taxes from gameing and smoking to run the State.

Comment by Ghost Monday, Apr 21, 08 @ 8:52 am
I’m still not straight on this. Kirk, Hastert, Durbin and others have made clear statements that the money will be lost — except later, they say that it won’t be, maybe. What does this statement mean, for example?

It’s worth less because of inflation? What does left behind mean — something to do with the Rapture?

Comment by wordslinger Monday, Apr 21, 08 @ 9:19 am
Word my very limited understanding is that funds are tied somehow to either our or the feds fiscal year. So if we do not come up with our match, or start the projects or whatever the trigger is, then we are unable to gain access to the prior fiscal year funds. Our fiscal year ends in June, to my best guess is if we do not trigger the federal match by the end of our fiscal year, then we no longer have access to the prior year fiscal year matching funds. However there is nothing that stops us from seeking to have the fed matching funds, or a portion thereof, rolled over into the next fiscal year. Not sure how easy or hard that process would be.

Comment by Ghost Monday, Apr 21, 08 @ 9:24 am
The federal government should eliminate spending to state and local governments. Now, some federal tax money that is earned in Illinois is sent to Washington, DC, and someone in the Dept. of the Treasury sends the money back to the governments of Illinois and some IL counties and cities. It would be more efficient if Congress eliminated all spending to state and local governments, saving about $350 billion, per year. Since they would decrease spending by 15%, they would also pass an across-the-board 15% tax rate cut. When each taxpayer has a lower federal income tax rate, each state and local government would change their tax rates, to ensure that they receive enough revenue.

Comment by PhilCollins Monday, Apr 21, 08 @ 9:46 am
I’ve heard members of the Illinois congressional delegation say that when the funds go unused, it becomes more difficult to acquire new funding in the future. The feds view it as, if your state can’t get their act togehter, why should be allocate funds to them again.

Comment by anon Monday, Apr 21, 08 @ 9:51 am
According to the website, the contact person for the Illinois Works Coalition website is Marisa.Kollias@Illinois.gov in Chicago

Comment by Anonymous Monday, Apr 21, 08 @ 9:53 am
However, the copyright violations were “inadvertent”, so it’s okay.

Comment by Balance Monday, Apr 21, 08 @ 9:57 am
Not if they continue.

Comment by Rich Miller Monday, Apr 21, 08 @ 9:58 am
Isn’t she an IDOT spokeswoman??

Comment by Anonymous Monday, Apr 21, 08 @ 10:01 am
Ghost: your statement is essentially correct. Each year Fed funds are obligated by the federal government, but they are not “spent” until the state seeks reimbursement of those dollars. The Fed $ is usually rolled over until it is spent; however, lingering unused federal funds with several years’ inactivity are a tempting target to balance the budget, to be used for other purposes, etc. And the funds do lose their value to construction inflation over time. Construction inflation was very low until the last few years. It accelerated during the Katrina aftermath, and is majorly heating up due to India and China’s recent appetite for asphalt, cement and steel among other things.

Anon 9:51: you are correct that inaction on today’s available federal funding sets up IL very poorly for the next federal Transportation infrastructure bill, which is due in October 2009. PA, TX and CA legislators will all point to their use of the available federal funds from the current bill, their still-unmet transportation needs, and point a finger at IL and say something like, “why should we give them another $9 billion when they haven’t even spent the last $9 billion they got?” IL will get something, but it is unlikely to be as sweet as the last federal bill.

Comment by Six Degrees of Separation Monday, Apr 21, 08 @ 10:24 am
I would say its a partial truth.

If you don’t pass a Capital bill, you can’t get the federal funds.

That’s a fact.

And that’s important, because it seems to me that at this point it really is a matter of “if”, not “when”.

I have no reason to believe that legislators will be more likely to pass a capital bill next year vs. this year. Or two years down the road.

They haven’t passed one for the past 4 or 5 years, even though it has been discussed…

Comment by JohnR Monday, Apr 21, 08 @ 10:28 am
Can the governor strip money from capital bill funds to pay for items on his own wish list?

Comment by Anon Monday, Apr 21, 08 @ 11:00 am
JohnR,

The state could access the Federal funds without passing a capital bill if the state’s spending priorities changed. That’s a fact, however unlikely.

Comment by Six Degrees of Separation Monday, Apr 21, 08 @ 11:34 am
Phil Collins makes a good point, when it comes to getting money back from the Federal Governments state like Illinois are net losers and would be better off if it was done away with entirely.
The problem with temporary taxes, particularly temporary income taxes, is that government entities have a nasty habit of coming to expect that money year after year and the taxes often end up permanent. Not to mention that a recession is a usually a poor time to raise tax rates, as it can reduce economic activity even father, but then again if the state government would have followed a controlled spending plan that was with in the state budget during economic up periods, we would not be this bad off now.

Comment by RMW Stanford Monday, Apr 21, 08 @ 12:59 pm
Nuts to a capital bill, how about enough money to run IDOT for the rest of the fiscal year. From what I hear, IDOT has enough money to pay bill through the end of the month. After that, it is shut the doors and turn out the lights. Everybody will be on unemployment.

PhilCollins -
The FHWA pays 80% of the eligible costs of a project. The States or local agencies must make up the 20 percent plus any other costs.

The FHWA says that for every $1 billion spent on highway construction, 42,000 direct and indirect jobs are created. In addition to the increased employment, the FHWA says that every dollar invested in the highway system yields $5.60 in economic benefits.

Any proposal to “save” the American tax payers will result in the loss of jobs and have a determental impact to the economy. It will postpone needed repairs to our roads and bridges. The negative effects of this type of proposal will be felt for years. It is money that is urgently needed and will never be recovered.

Comment by Huh? Monday, Apr 21, 08 @ 1:06 pm
Unless a district has a project on the shelf, the typical bridge replacement or road widening project takes 18-24 months to go through the Phase 1 planning process. An add lanes project can take even longer. Depending on the project, it takes another 18-24 months to go through the Phase 2 design process to develop a set of plans for construction. Right of way acquisition usually parallels the Phase 2 design.

Comment by Huh? Monday, Apr 21, 08 @ 1:15 pm
RMW I dont disagree. Ideally we would have a rainy day fund where during times of economic well being we would sock away funds for down times like this. Unfortunetly we the voters failed to elect a legislature that would follow such a course. We find ourselves now in desperate times and need some sort of solution. Its an odd catch 22, if we raise taxes during a recession and put the money into a capital program we may create jobs, and increase the flow of money in the economy, and help shorten the recession. On the other hand, as you mention, you can also make a recession worse with higher taxes. This then devolves into who can best absorb this negative impact, which then brings up a graduated tax. its not an easy problem but its one whoe time has come. We need money now, and just saying get by with whats there looks like it may extend a recession and hurt the state. Cutting back and laying off more people to make ends meet will not help our economy. Not to mention the loss of services etc.

Comment by Ghost Monday, Apr 21, 08 @ 2:03 pm
The answer to Rich’s question is, no. The proponents shouldn’t have to rely on so many untruths to push a capital bill. However, this goes to the heart of the issue. No trust or belief in what people say. The federal funds argument means little. Answer this question and you’ll know if there will be a capital bill.

Can a capital bill be structured in a way that makes the legislature comfortable that this Governor will follow through on his promises?

If the answer is yes, you might get a capital bill.

If, as I suspect, the answer is no, then you won’t.

Comment by Truth Monday, Apr 21, 08 @ 2:08 pm
Phil Collins 9:46;

Sounds like a good idea on the face of it. Two issues:

1. There are some donee states like Alaska and Mississippi who will do everything in their power to keep things the way they are. Not that it’s right, but it’s a political force to be reckoned with. Alaska will argue all the other states got federal help when it was just being established as the 50th state, and its infrastructure needs are great since it was one of the last states to develop. Mississippi will argue that it has a small population with lots of pass through traffic, and that other state’s truckers are tearing up its roads. Of course, there are solutions to those problems that could be implemented without federal $.

2. If there were no transportation funding set aside by the Feds, the states would be free to invest as much…or as little as they wanted in transportation. With the current climate in IL, we might be looking at a 50c/gallon state gas tax with 50% of the proceeds going to expanded health care. The Federal gas tax serves as somewhat of a lockbox to ensure the money is spent on roads and transit, although some people complain about all the “frills” projects like trails, roadside art, etc. that has been recently funded with federal transportation $.

Comment by Six Degrees of Separation Monday, Apr 21, 08 @ 3:32 pm
This myth of the money running out is perpetuated regularly by the Illinois Congressional Delegation - I’ve heard Bean, Kirk, and others make similar claims. IDOT spokespeople regularly debunk this myth, but others perpetuate it.

Comment by FlackerBacker Monday, Apr 21, 08 @ 3:34 pm
A Bird in the hand?

Comment by undecided Monday, Apr 21, 08 @ 4:58 pm
Obama’s got it right on this one…invest in broadband capacity for all (before wasting taxes supporting our old fossil addiction…it’s not like we’ve got money to burn).

Comment by Anonymous Wednesday, Apr 23, 08 @ 7:34 am