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Capital plan funding options

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Illinois

* The Daily Herald has some comments by Senate GOP Leader Frank Watson about the various funding mechanisms for the capital construction bill being discussed by legislative leaders…

…legislative leaders emerged from closed doors to say they continue to have good discussions on piecing together a multibillion-dollar construction spending program, but how to finance it remains elusive.

Senate President Emil Jones Jr., a Chicago Democrat, emerged to tell reporters everything was on the table, including an income tax increase.

Next out of the governor’s office was Senate Republican leader Frank Watson of downstate Greenville, who promptly said an income tax was off the table.

Watson said lawmakers were discussing raising vehicle fees, selling off a portion of the state lottery and gambling expansion to come up with the needed billions.

“Nothing’s concrete,” he said.

[emphasis added]

As I told you yesterday, Jones said he doesn’t think that gaming expansion will fly because the Senate has passed it twice and Speaker Madigan has not let the proposals move.

I’m curious which of those above options do you prefer to fund the capital plan?

* Meanwhile, despite tons of rumors to the contrary, it doesn’t appear that IDOT completely shut down operations on May 1.

posted by Rich Miller
Friday, May 2, 08 @ 9:33 am

Comments

I prefer gambling expansion….at least I’ll get to choose whether or not to contribute to the state’s coffers.

Comment by Vote Quimby Friday, May 2, 08 @ 9:47 am
There needs to be an ongoing source of revenue for the capital fund, otherwise, we will continue to run into these impasses. It’s not like the state will reach a point where it stops building things (or rebuilding them). That’s not to say money cannot be borrowed for large projects, but, even then, there has to be ongoing revenue to pay off the debt.

Viewing capital projects as deserving of an annual revenue stream, they become part of the overall budget problem which will only be solved with an increase in income tax revenue (graduated tax and/or increase in the overall rate) and an expansion of sales tax to services.

Anything else is a temporary fix at best. Many of the proposed solutions take money from other programs or take money from projected future revenues. Those “solutions” simply put the problem off for another day or dump it in someone else’s corner.

Comment by Pot calling kettle Friday, May 2, 08 @ 9:47 am
VQ: If you decide not to gamble will you also stop using the roads?

Comment by Pot calling kettle Friday, May 2, 08 @ 9:49 am
gambling plan!

Comment by embarassed to be a democrat. Friday, May 2, 08 @ 9:50 am
Pot has it exactly correct. Extend sales taxes to services,gradually raise the income tax to 5%( 1/2 per cent per year for four years),and reform the way education and medicaid are funded. Capitol should be allocated to other taxing bodies only if there is a match.

Comment by Bill Friday, May 2, 08 @ 9:57 am
I’m with VQ, primarily because of the huge corruption tax that we know, this being Illinois,
will be placed on that money. Cronies and relatives of pols, “campaign chest” contributors, the porkers will be ravenous. I’d just as soon it’s not my money they are gobbling. And now, thanks to the Rezko trial, we get details on how it’s all done, removing any lingering doubt that it IS done.

Comment by Cassandra Friday, May 2, 08 @ 10:00 am
What appears to be concrete is the matter between the ears of the tax hungry legislators.

Especially the ones who ‘need’ a raise.

I like Atlanta’s solution. Start cutting the expenditures.

Comment by Plutocrat03 Friday, May 2, 08 @ 10:02 am
An ongoing revenue stream can be served best with a tax increase, BUT it’s hallucinatory to believe that a tax increase won’t go to at least partially fill the gaping maw of political greed and that any increase will be at least 30-40% wasted on executive and legislative projects (”initiatives”) that are meant only to pay off supporters and have nothing to do with the public interest. Of course any other revenue stream is subject to that same built in slag.

Comment by anon Friday, May 2, 08 @ 10:06 am
I don’t trust the Governor or the General Assembly enough to give them additional income tax revenues. I’m not familiar enough with the current budget to know whether the funds they already receive are being used most effectively. I believe we should be taking care of our obligations first (employee pensions, doctor reimbursements, education funding, etc.). There certainly is no consensus among members of the General Assembly how to get us out of this mess, but additional funding for capital projects (whether in the form of income taxes or expansion of gambling) should come after we have better accountability. The State required concessions and more accountability from the CTA recently before they got additional funding, so its not unprecedented.

Comment by tubbfan Friday, May 2, 08 @ 10:07 am
The most sensible seems to be some sort of user fee, which can’t realistically be put on such items as gasoline (which is already sky high right now) and vehicles and vehicle repair items and services, neither of which is going to fly with those businesses or the business groups in general.

What about raising fees for driver services, since you know those are the ones using the infrastructure. Maybe include some sort of discount for seniors or those on disability or otherwise unable to handle an increase.

The fees for drivers licenses/plates in other states are considerably higher. You might also be able to get that money earmarked solely for infrastructure (the guv would HATE that!), but you would guarantee at least it goes to infrastructure - maybe even tie it to some sort of plan for expenditures balanced statewide (more “yes” votes) that’s actually written into the legislation?

No way this will happen though. It’d make too much sense.

But NO WAY should we put more into GRF for this joke of an administration to play with. They’ve already spent enough. More GRF would just give them reason to spend more - not fix what needs fixing. I’d prefer to hang on to the deficits until he’s gone before giving him a new license to spend.

Comment by Amuzing Myself Friday, May 2, 08 @ 10:14 am
If I must have a tax increase, I would support a 1% across-the-board increase in state income tax that can be used solely for capital projects.

Comment by Fan of the Game Friday, May 2, 08 @ 10:16 am
No new taxes until we clean up our current mess. Somehow Illinois has survived without a capital bill for several years. Do we need it? Absolutely. You don’t continue to let crooks steal from you once they are caught. I would hate to continue on our path of no new jobs and a bad infastructure, but I can’t imagine giving this Governor one extra cent to steal.

Comment by Southern Right Friday, May 2, 08 @ 10:21 am
Amuzing Myself,

Everyone uses the infrastructure, even if they don’t drive. Producers and retailers of the goods and services you purchase use those roads and bridges.

Comment by Fan of the Game Friday, May 2, 08 @ 10:22 am
The legislature shouldn’t increase any tax rates or fees, since that might not increase revenue. I met a truck driver who said that, about four years ago, Illinois increased their fees for registration of large trucks. Many truck drivers registered their trucks in Indiana, Missouri, and Wisconsin, and Illinois’ revenue, from that source, decreased.

The state government could increase revenue if the state police enforced laws better. Usually, when I drive on I-94 and I-294, I see signs that state, “Construction Zone - Speed Limit 45 M.P.H.” The majority of the cars are being driven 55-60 m.p.h., but I see a police officer pull over drivers about once per month. If more law-breakers received tickets, the state would receive more money. All police depts. should assist the federal immigration officials, in finding illegal aliens. If more of them are deported, fewer of them would receive free education and healthcare, decreasing state spending.

Comment by PhilCollins Friday, May 2, 08 @ 10:23 am
Rich, you are wasting everybody’s time with this one. These meetings will come to a SCREACHING halt when they get past the funding issue, and start to discuss the spending. Madam Currie will say that on behalf of the Speaker and the House Democratic Caucus, they will NOT suppoet a capitol spending plan that is run through the 2nd floor. That will be the end of this charade, no gaming bill, no lottery lease, NO CAPITOL PLAN!!!!

Comment by ivoted4judy Friday, May 2, 08 @ 10:27 am
An increase in the sales tax would be a reasonable approach as would be cutting expenditures. I purchase most of my toys online now and do not pay sales tax and rarely pay shipping. Of course I’ll get hit for my new car purchases. Replace contributions by Union Members only to the Employees Retirement System and give them the option of contributing to a privately managed 401K type fund only. The state should continue to help fund the non-union employees in the Employees Retirement System. Reduce the pay of all legislators by any amount of a tax increase and by any amount we are over budget by the corresponding percentage. Since gambling is a choice, increase gambling and tax it heavily. Regardless of what we do, I simply do not trust our legislature, as a whole, with any increases. They are weak and rudderless.

Comment by Justice Friday, May 2, 08 @ 10:32 am
I like to pay my share by having a choice of going to a slot machine, roulette table or black jack table. Just the money that is flowing over to Indiana or Wisconsin from Chicagoans would pay for half of what is needed. Give the tracks their slots, put boats in Chicago, near O’Hare, north & south sides, let the existing boats expand. There will be an increase of what comes out the pockets of Illinois residents. But most of the money will be getting it back from the neighboring states and the out of town convention trade. You won’t hear any gripes from the gamblers as you will from wager earners or people on fixed incomes paying higher taxes.

Comment by Been There Friday, May 2, 08 @ 10:35 am
To: Pot….no, I’ll continue to use the public roads (paid for by license, gasoline, sales and many other taxes) and silently thank the lemmings who swarm into casinos. As C. Montgomery Burns said about his casino, ‘I’ve found the perfect business–people clamor in, empty their pockets and scurry away.’

Comment by Vote Quimby Friday, May 2, 08 @ 10:36 am
I heard that they are considering a tax on political blogs.

Comment by Balance Friday, May 2, 08 @ 10:37 am
I support an income tax increase. The lootery sale will cost the State 10 of billions of dollars in lost money down the road. It is selling off future state revenue for a quick fix by elected officials who plan to be gone when the pain of the deicsion hits the State. Selling the lottery refelects the problem with elected officials, they only care about today when they are in office and not tomorrow when it will be somone elses headache.

We need a constitutional amendment that prohibits transactions such as a lease that are more then 4 years in lenght. It can be renewed every 4, but no sitting govt should be allowed to enter contracts/leases binding future elected officials for decades.

Comment by Ghost Friday, May 2, 08 @ 10:38 am
===I heard that they are considering a tax on political blogs.===

LOL. Let ‘em try.

Comment by Rich Miller Friday, May 2, 08 @ 10:39 am
The state is taking in billions of tax $. The powers that be need to start from scratch with a 0 budget. Here’s the income, budget and PROVE what you want to spend is legal and legitimate.

Comment by Dan S, a Voter & Cubs Fan Friday, May 2, 08 @ 10:50 am
Justice will be getting a call from IDOR agents… you must one of the FEW people who don’t file their Illinos ‘use tax’ Form (ST-44) on items (except cigarettes) brought into the state with no tax paid. Of course, I file my RC-44 cigarette tax form with every carton I save $15 in Missouri!

Comment by Vote Quimby Friday, May 2, 08 @ 10:51 am
I’d like to see gambling expansion simply because the state loses money by not having it available in people’s backyards. Also, I’d like to see the poker machines brought out into the light of the day, legalized and the proceeds taxed, though that preference has less to do with revenues and more to do with reducing the influence of organized crime.

I don’t think an income tax increase in an era of economic slow down is a good idea. People are already being squeezed by the high price of fuel and food. I like the idea of police being more vigilant, particularly in construction zones, in stopping speeders. That could raise some $$. Also, a state vehicle sticker that is based on the value of the car could be a money raiser.

Comment by cermak_rd Friday, May 2, 08 @ 11:04 am
I see on sjr.com breaking news Bomke is starting impeachment proceedings today?!?

Comment by Vote Quimby Friday, May 2, 08 @ 11:06 am
Seriously, the only viable option is an income tax increase coupled with rebates to everyone in the amount of the taxes they pay on the first 30k? It’s not a graduated tax, it requires no Constitutional Amendment, and it doesn’t hurt those living paycheck to paycheck. If we could have given out economic stimulus rebates for only those beneath a threshold, why can’t we do this

Comment by Ken, Highland Friday, May 2, 08 @ 11:20 am
Don’t tax me bro!!! Let me drop my money off at a casino. At least there is a chance I might end up with more in my pocket.

Comment by Anon Friday, May 2, 08 @ 11:28 am
Vehicle Reg fees would be a great place to start. Ours are currently what, $48/year for renewal? That’s not particularly high compared to many states, many of which have additional fees for annual inspections, etc.

Quick-n-dirty back-of-the-envelope calcs:
Add on an average $20/year for what, maybe 10 million registered vehicles? That’s $200 million in annual revenue, which should comfortably cover the debt service for $25 billion in bonds (with interest rates where they are).

And if you can’t afford an extra $20/year to own your car and use Illinois roads, then you really can’t afford to own a car anyway.

Comment by VivaLFuego Friday, May 2, 08 @ 11:36 am
Viva,

Car registration went from $48 to $78 several years ago to fund the last capital road plan. Truck registration fees went up as well.

Sooner or later, the US and its states will switch from a per gallon fuel tax to a combination of higher MV registration fees and a mileage-based tax. With more fuel-efficient vehicles mandated by Congress, and alternatives such as electric vehicles on the horizon, we are looking at a seriously declining transportation funding scenario even as prices rise. This will hurt public transit, too, as 3c of every federal fas tax dollar goes into the federal transit account.

The capital bill, if it passes, is a few years’ stopgap measure that will not solve the impending issue which is much, much larger.

Comment by Six Degrees of Separation Friday, May 2, 08 @ 12:01 pm
We still confuse Capital expenditures and Operations and Maintenance Expenditures. A Capital Plan should fund long lived assets with debt issued to be equal or shorter in term to the economic life of the asset. Revenue to pay the bonds can come from a Debt Service Levy, but I would prefer it to come from a tax on those that benefit with a general tax back up.

That would cover new projects, improvements and extensions.

Now repairs and maintenance, would be paid from taxes and or revenues generated by the benefiting taxpayer/user. A Reserve Fund would be filled from the same source.

It is not a hard to do Accounting. The Capital Plan itself would extend five years with scheduled work in each year. Every fiscal year it would be reviewed, modified and an additional out year added.

There, that was easy.

Comment by Truthful James Friday, May 2, 08 @ 12:04 pm
^ 6 degrees,
My mistake on the $48/78 fee, good catch; call it a memory lapse

Comment by VivaLFuego Friday, May 2, 08 @ 12:19 pm
I think we have to lay off the sales tax. That 10% in the city stings.

Chicago gambling, I’m fine with that. The money’s being spent in Indiana now. Maybe they could roll a casino into the existing McPier Authority.

Lottery lease? Not convinced it’s a good deal.

Comment by wordslinger Friday, May 2, 08 @ 12:29 pm
Pot calling kettle and (I can’t believe I’m going to say this) Bill are spot on. The income tax and an expansion of the sales tax base are the most responsible way to go. And that’s probably the top reason why they won’t happen.

Comment by Springfield Alum Friday, May 2, 08 @ 12:52 pm
Sales and income tax? That’s just income redistribution and will hurt the economy. Fuel taxes, while painful to deal with when the cost of gasoline is high, are the most fair and the most directly related to the use of the infrastructure. Why should the Prius owner subsidize anyone who is driving a giant heavy SUV that wastes gas? And for all the complaints of truckers, why should light passenger traffic (operated by the people who would pay the income and sales taxes) subsidize the heavy trucks that actually damage the roadways?
And above all else, fuel taxes encourage conservation. Global warming is a crock but we waste billions of gallons of valuable petroleum products each year. Waste is always bad.

Comment by Abe Friday, May 2, 08 @ 1:12 pm
Slight correction to 12:01 post

Federal gas tax is 18.4c a gallon, 2.9c a gallon of this goes into the mass transit account. About 16% of total federal gas tax revenue collected in the US is the primary source for fed funding of capital transit projects. As gasoline consumption levels off and starts to decline, and prices still rise, the squeeze will be on in full force, for transit as well as roads.

Comment by Six Degrees of Separation Friday, May 2, 08 @ 1:22 pm
Abe-

I agree with your concept, if we have a steady and increasing usage of fuel to draw the capital funding from. However, at this point and with the current state of oil production and prices, we are faced with a looming decline in the funding source. Jacking up the gas price even higher through taxation will indeed encourage conservation, but will also have short and long term consequences, intended and unintended. As soon as 3 years, we will see plug-in hybrid electric vehicles capable of 100+ mpg appear on the market. As the fleet keeps turning over, the US fleet mpg will keep getting better, Congressional mandate or not. Higher gas prices will accomplish one goal (conserving oil) at the expense of another (funding transportation infrastructure) unless other measures are taken.

Comment by Six Degrees of Separation Friday, May 2, 08 @ 1:33 pm
Despite everyone’s best effort’s Madigan is intent on ruining any chance of a capital bill. his own members have admitted that he doesn’t want the gov cutting ribbons. (So, he’s going to drive the state into the ground.) I, personally, like the lottery lease idea but also think gaming is ok but we will not see the money as quickly.

Comment by T-Rex Friday, May 2, 08 @ 1:44 pm
T-Rex. Gaming will produce almost immediate money. They will charge a bundle for upfront license fees. The tracks and existing boats would be paying up within a few months. Chicago and the new licenses would not be for a few years but they could still issue bonds based on those expectations.

Comment by Been There Friday, May 2, 08 @ 2:20 pm