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* The bad economic and fiscal news continues to pile up…
* Chicago home sales drop 23 percent
* Sen. Durbin To Seek Mortgage Bankruptcy Change
* Police: Bad economy may breed crime
* State’s sale of Lincoln Hotel put off until ‘09
* State must act quickly to curb growth of unpaid bills
* Park closure plan still in limbo
* Daley aides, labor leaders reach deal on layoffs
* Union Members Encouraged to Take City Buyout
* GM Workers Prepare for Janesville Shutdown
* Local impact of Citigroup cuts not yet clear
* Rockford transit system could cease come December: State subsidies, which represent more than half the district’s budget, are behind by $4 million.
* Architects Say Poor Economy Having an Unusual Impact on Building Design
* So Illinois naturally has its hand outstretched all the way…
Late last week, the state asked Illinois universities to have a project or two in mind in case the federal government sends money to states in an effort to stimulate the economy. […]
“Everyone has projects ready to go,” said Southern Illinois University spokesman Dave Gross.
* The cash crunch is prompting another look at subsidies for racetracks…
When a 10th casino opens in the Chicago area in the next few years, its competitors in the local horse racing industry could hit the trifecta.
The horse racing industry, by state law, must be given 15 percent of whatever money the new casino rakes in — a windfall of as much as $70 million a year.
We might not care except for this: That money, according to a story by Sun-Times reporters Chris Fusco and Dave McKinney, will come out of the pockets of Illinois taxpayers. The state, not the new casino’s owners, will have to pay the horse tracks the 15 percent.
The track owners are backed to the hilt by the farmer lobby, which sees quite a bit of economic benefits from the facilities. Going up against those two lobbies ain’t easy, which is why the tracks keep getting the subsidies, even though they’re supposed to be revenue generators.
* And the Daily Herald frets about the impact of the 10th casino on neighboring riverboats…
Is it advisable to authorize a new gambling casino when revenue from the nine already in Illinois dropped nearly $164 million in October compared to the same single month in 2007?
The Grand Victoria in Elgin, just down the Jane Addams Tollway from Rosemont and Des Plaines, had the biggest revenue drop among Chicago-area casino sites, down 27 percent from the previous October.
There’s just no pleasing some people, I suppose.
* The SouthtownStar fumes over yet another snub to the south suburbs…
Call it selfish, but we find it hard to believe that the needs here aren’t greater than those in Waukegan. And call it cynical, but it’s hard not to believe the snub comes from folks who wouldn’t be caught dead on the wrong side of Interstate 55, regardless of whether gambling dollars are going right down the road into Indiana.
So as usual, we are left angry, frustrated and suspicious about the Gaming Board’s motives. Perhaps before members make their final choice, they will read their own Web site for a reminder of why we have gambling in this state in the first place.
Here’s a hint: It’s not so the rich can get richer.
* And the Daily Herald points the way to more revenues: Sin Taxes…
State records show that cigarette and liquor tax receipts, as well as sales figures for the Illinois Lottery, have either remained steady or gone up a bit since the new budget year began July 1, compared to the same period last year.
* There are those who say no taxes should be increased during bad economic times. But the state, unlike the federal government, can’t just print money or easily borrow long-term to pay operating expenses. We’re looking at a huge state budget deficit right now and revenues are tanking. This means gigantic, scary cuts are likely on the way.
I’m not sure how we’re going to deal with this, considering that our governor is not exactly the most unifying figure in Illinois history.
Thoughts?
posted by Rich Miller
Tuesday, Nov 18, 08 @ 9:27 am
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==This means gigantic, scary cuts are likely on the way.==
Bring ‘em on! Let’s see how gigantic and scary they can be before we start talking about taking more of our wages to feed this fiscal wildfire!
Comment by VanillaMan Tuesday, Nov 18, 08 @ 9:31 am
===Bring ‘em on!===
Yeah. And the last politician to utter that phrase is now the most unpopular president in polling history.
Comment by Rich Miller Tuesday, Nov 18, 08 @ 9:34 am
It is interesting to note that taxes have been raised so often around here, that the fact that there are no riots in the streets seems to be some kind of sign that taxes can keep on being raised.
Cuts, on the other hand, are somehow implied that those we shovel handouts to will march in the streets and shut down our world if we deny them handouts.
So cuts are scary, but raising taxes isn’t?
We have allowed the current administration, and even the previous administrations to build more wasteful government programs than we need. Just as we are dumping SUVs and vehicles that are too large to keep feeding, we need to start dumping this SUV of a state government!
Comment by VanillaMan Tuesday, Nov 18, 08 @ 9:35 am
License should go to Waukegan. It is the only one of the three “final” bids that comes close to meeting the original criteria for gaming in Illinois. Also, cigarette and alcohol “sin” taxes should go up now. Blago’s stupid no tax pledge is as idiotic as he is. Finally, let’s cut away at the fat already. You walk into any state office, and a neutral observer can see plenty to cut. Let’s get on with it.
Comment by Niles Township Tuesday, Nov 18, 08 @ 9:46 am
===You walk into any state office, and a neutral observer can see plenty to cut.===
Are you willing, as a “neutral observer,” to tell those “unnecessary” people that they no longer have a job in this economy? Do you also recognize the harm to the economy of laying off decently paid workers at this moment of peril?
If so, have at it.
Comment by Rich Miller Tuesday, Nov 18, 08 @ 9:48 am
Illinois can’t afford the government it is paying for.It will have to cut back.There is no need for all these government workers.Remember,government workers don’t produce tax revenue.The state of Illinois could start selling some of its’ land holdings to raise cash.Can the taxpayers continue to afford to pay for government workers to retire in their 50’s?
Comment by Steve Tuesday, Nov 18, 08 @ 9:49 am
===Remember,government workers don’t produce tax revenue.===
What planet are you from?
Sales taxes, property taxes, income taxes, lottery sales, riverboat gaming receipts, user fees, etc., etc., etc.
Comment by Rich Miller Tuesday, Nov 18, 08 @ 9:53 am
We have expanded the budget every year since Blago and the Dem’s have taken over, have we ever thought of cutting the size and scope of government????
Did we have to cover illegal immigrants with free health care, or people up to 4 times the poverty level? We raised taxes on tens of thousands of small businesses and chased them out of the state and we wonder why we are in the dumper. Want to have the state grow again? Cut taxes and bring industry back here.
Comment by GOPlanner Tuesday, Nov 18, 08 @ 9:58 am
1. Make modest across-the-board state government cuts, mostly in management, perhaps accompanied by some financial incentives for elderly lifers already eligible for at least early retirement. Every agency knows where they can cut and consolidate. without affecting services and there is always something. They just don’t tell the taxpayers. Government bureaucracies are all about saving themselves, no matter what it costs or how unnecessary the expenditure.
2. Take out short term loans to pay the most urgent unpaid bills until we find out what the federal bailout will be. It could be considerable and there is no reason to hit the panic button until we see what it is. Money is fungible. If the feds give a huge chunk to, say, Medicaid or public works, shift money around to address othe needs.
3. A hiring freeze. How many friends and relatives of Blago/Emil and so on can there be left who want an easy lifetime jobs with the state but don’t have one. If you need more frontline staff, allow management lifers to bid into the vacancies. More work than they are doing now, but that’s a good thing.
4. Under no circumstances increase taxes on the middle class. Our economic recovery is what is going to keep the government trough in feed. If we
keep losing money, even the most aggressive Dem porkers will have to to on a major diet. They won’t like it. Much as the powerful hate it, it’s the middle class that is going to buy us out of this mess. And right now, we ain’t buying.
Comment by Cassandra Tuesday, Nov 18, 08 @ 9:58 am
So much for the unions…I remember when they went around back in the 80’s and signed up all the truck drivers at the IDOT yards. When they got 70 per cent of them, everyone had to either join the union or pay fair share dues. Before that the union got employees to join by giving them a free ticket to a Chicago Bears game. I just paid fair share all those years…I didn’t want a label and never voted in primaries.. In May of 2004 when the gov and his cronies took my job, the union did nothing to help us. I did see their articles in the papers wanting the state to pass a capitol improvement plan so that workers fortunate to keep their jobs could stay busy. In the end, it did not matter if I was in the union or not.. I still ended up out of a state job after 19 years because I was not part of the gov’s special group…I just did my job all those years which did not matter to them. Union or not, people still lose their jobs.. It is surprising that the party in control of things, the Democrats who are supposed to protect labor interests are dumping workers…But as I remember when I worked at the state, the gov always had a job for one of his cronies and paid them more than the person that they replaced who actually knew how to do the job.
Comment by John Ghrist Tuesday, Nov 18, 08 @ 10:00 am
===We raised taxes on tens of thousands of small businesses and chased them out of the state===
What state taxes were those?
Comment by Rich Miller Tuesday, Nov 18, 08 @ 10:01 am
===Money is fungible. If the feds give a huge chunk to, say, Medicaid or public works, shift money around to address othe needs.===
Those alway require matches, so money isn’t exactly fungible. Plus, we can’t afford to capture the $9 billion in capital project money that’s already on the table.
Comment by Rich Miller Tuesday, Nov 18, 08 @ 10:03 am
Trucker fees! Each one of those trucks were a small business
Comment by GOPlanner Tuesday, Nov 18, 08 @ 10:04 am
===Take out short term loans to pay the most urgent unpaid bills ===
By law, the state has to immediately begin setting aside cash to repay those loans, which have to be settled up by the end of June.
There is a loophole, but I don’t see that happening at the moment, mainly because of the Statehouse war.
Comment by Rich Miller Tuesday, Nov 18, 08 @ 10:05 am
===Each one of those trucks were a small business ===
Not quite, but that’s all you’ve got?
Comment by Rich Miller Tuesday, Nov 18, 08 @ 10:06 am
Expanded spending on its face is not the problem alone. When revenue streams are not created to cover the expanded spending, that is the problem.
This administration, as was its campaign promise, expanded spending without increasing taxes. It worked as long as moneys were transferred and there was natural revenue growth from the economy. The people are getting what they elected.
There is simply no easy fix. To say, “cut this or cut that” is easy to say, but hard to do. It will take an exteme amount of political fortitude and cooperation to do what needs to be done to fix what has taken 5 or 6 years to create. Neither of which is in great abundance in our capitol today.
Comment by Crystal Clear Tuesday, Nov 18, 08 @ 10:11 am
Rich, what is your opinion on taxing all internet sales plus all out of state phone orders made to companies located out of state that do not collect IL sales taxes? Is Illinois really losing a potential revenue of one Billion dollars a year by not taxing on line purchases by IL citizens? I don’t mean to beat a dead horse here, but this seems like such an obvious low hanging fruit that is rotting on the tree.
Comment by vole Tuesday, Nov 18, 08 @ 10:15 am
Vole,
Good luck tracking and enforcing that.
Comment by Crystal Clear Tuesday, Nov 18, 08 @ 10:20 am
I don’t like tax increases any more than anyone else. But, given the depth of the financial hole we find ourselves in and the prospect of state services EVERYONE benefits from (higher education, roads, schools, parks, public safety, etc.) being severely cut or decimated beyond future repair, what would be so awful about a SMALL, broad-based increase of a fraction of a percentage point in income or sales taxes, combined with an across-the-board expense cut of 2 to 5 percent for ALL agencies (instead of huge cuts to only some agencies and huge tax increases to small groups of people)?
I mean something like 1/4 of 1 percent sales tax — about 25 cents on a $100 purchase — or an income tax increase of no more than 1/2 of 1 percentage point. Something small enough that it wouldn’t make or break individuals — just a few cents more on a $50 or $100 purchase, or a couple of bucks more withheld from the biweekly paycheck — but would make a difference on a state level.
Comment by Secret Square Tuesday, Nov 18, 08 @ 10:29 am
I see that the massive layoffs in the City of Chicago that Da Mare bleated about comes down to 950 workers — under discussion with the unions.
You want to know the state of the economy and property taxes? Drive around the neighborhoods and look at the empty stores in the neighborhood strip centers. It was always bad on the south and west side, but now look at the suburbs.
Comment by Truthful James Tuesday, Nov 18, 08 @ 10:35 am
Taxes have already been raised. It’s just not formalized, but when you put off bills until the next year and then the next year and so on–sooner or later you have to raise taxes.
Ultimately, the size of the cuts have to be very deep after you take into account the money to receive matching funds from the Feds and other obligationss like pensions and health care for retirees and current employees. You can’t make across the board cuts, you can only make them on areas of the budget that are adjustable. Then you have to make even deeper cuts in those areas–areas like education, corrections, road construction and maintenances….
Comment by archpundit Tuesday, Nov 18, 08 @ 10:41 am
Making the salex tax applicable to a variety of services needs to be put on the table right now. It’s perhaps the least painful of the so-called solutions being passed around, and could be coupled with a reduction in the sales tax rate and still result in significantly increased revenues. Trusting the governor, and to a lesser extent the GA, to make meaningful and appropriate cuts is a truly bad idea.
Comment by The Doc Tuesday, Nov 18, 08 @ 10:45 am
We don’t know what form the federal bailout will take although we know for almost certain that there will be one, based on Obama’s statement in his first presser as well as statements from others in the know. Presumably, since states differ in their needs. Illinois will have some say over the way the money is allocated based on Illinois’ needs.
I keep pushing this federal bailout issue because I think it is crazy to talk about hitting us tapayers up for more money until we see what it is. Of course, we also have to watch the process because if there is any dysfunctional state government, both executive and legislative, in this country that could mess up its bailout, and divert a lot of the money to the wrong pockets, it’s Illinois.
Comment by Cassandra Tuesday, Nov 18, 08 @ 10:45 am
Rich
Who was the one who pointed out the taxes and fees government workers pay? Tens of thousands of trucks do not pay the fees or pay for fuel in Illinois or hire the people to work on their trucks. The trucks are just an example for the rest of the businesses that have to go to the government to get their registration or business permits.
Comment by GOPlanner Tuesday, Nov 18, 08 @ 10:46 am
SS,
A 2% across the board cut equals about $550 million in the GRF. That doesn’t cover the estimated decline in revenues predicted by the Dept. of Revenue.
A 1/2% increase in the income tax is a substatial amount of money (16.5% increase over current rates). Remember that our income tax is a flat tax, so everybody, including low income would be paying more.
Is there the political courage to do this, probably not. But, exactly the kind of thinking that has to occur.
Comment by Crystal Clear Tuesday, Nov 18, 08 @ 10:50 am
Rich,
As an advocate of smaller government and very skeptical of tax increases, I must say that you are (unfortunately) probably correct that some form of revenue increase for the state is necessary.
The last time I commented on this issue, you took exception to two ideas that I floated. One is that we cut taxes at one level to ameliorate any increases at another level.
You responded with something along the lines of “that’s a local issue.”
It is and it isn’t. Take the FAKE tax swap of HB750. Many legislators have owned up to the fact that they could zero out the education portion of the property tax tomorrow.
It isn’t a “local tax.” It is a state tax “collected locally” for a “state purpose” (education) This is why that “48th in state aid” line is such a load of crap.
A fake tax swap would be a disaster in terms of policy, politics, and economics.
An honest tax swap (permanent, substantial property tax relief in exchange for higher income taxes and a broader sales tax base) would be one solution that might fix state fiscal problems while simultaneously assisting struggling property owners and the real estate industry.
If that was enacted, the need for immediate cuts in local government feather-bedding, particularly in the education monopoly, would be one result.
If people are to be serious about “fixing” the fiscal disaster that is Illinois, going after both state and local solutions simultaneously is good politics and good policy.
Another solution I proposed was a freeze on spending increases. Your reply was that there are so many built in mandated increases (1.e. pensions and Medicaid), that to freeze spending would require dramatic cuts in other programs.
Again, you are correct, up to a point. Your analysis is spot on, save for the idea that there is nothing to cut.
If we are to be serious about fixing Illinois budget woes with out taxing every remaining business or entrepreneur out of the state, why shouldn’t all the players (Dems, Reps, advocacy groups, public employees, etc.) have some skin in the game?
Let’s open up every budget item. Every Chicago School district dime, every state dime, every state and local salary, every increase in pension liability, every contract, and really see if there is “nothing to cut.”
The idea that a spending freeze (including a LEVY FREEZE on EVERY LOCAL ENTITY) is impossible doesn’t pass the common sense test. Negotiating a temporary tax increase in exchange for a temporary freeze (2 year) and permanent 100% transparency for every future dime in every gov. entity is a deal that the citizens of Illinois might swallow.
If every business has had to lay off (or forgo hiring) employees, and every citizen has had to cut back on personal spending, then the government can do the same.
If there was a party in Illinois actually running on such a platform in this environment, it might actually get some votes.
Too bad there is no such party.
Comment by Bruno Behrend Tuesday, Nov 18, 08 @ 10:52 am
CC, all true. However, if someone making only $20,000 a year has their income tax raised by 1/2 of 1 percent, you’re talking $100 per year, or about $2 more out of every biweekly paycheck. I lived on a salary that low not too long ago, but even then, I don’t think I would have “missed” $2 per paycheck.
Also, to call our income tax a “flat tax” is a bit of a misnomer. A true flat tax requires everyone to pay the same dollar amount regardless of income. Fixed-rate fees for license plate stickers, professional licenses, etc., are, in effect, flat taxes, which are the most regressive taxes of all.
Income tax, on the other hand, is a flat RATE tax, which is proportional to income so that the less you make, the less you pay.
Comment by Secret Square Tuesday, Nov 18, 08 @ 11:05 am
As a “lifer” at the state of illinois, there are a few things we could do right now that would help get the bills paid and not hurt too many workers. If all employees took two weeks unpaid, INCLUDING the gov and his staff, we might not have to layoff anyone. I would be more than happy to give up two weeks of pay so that all of us can keep our jobs. The taxpayers would be surprised at how few employees there actually are. When I started in 1989, there were @ 60,000 AFSCME members working at the state of illinois. Today, there are @ 37,000. Almost half - however the state’s population has continued to incres and demand for services follow. To lay off people permanently is not good for any of us - workers or taxpayers.
The second thing to do is put a total moratorium on any new initiatives or projects. Jogging trails and swimming pools are wonderful projects, but they are not essential. Lets fund what we have and not do anything else for two years.
These are simple changes, but they won’t happen because of the leadership we have in charge.
Comment by lincolnlover Tuesday, Nov 18, 08 @ 11:06 am
# of FT equivalent state employees in 2003
133916
# of FT equivalent state employees in 2007
124558
Source: US Census
Comment by Six Degrees of Separation Tuesday, Nov 18, 08 @ 11:14 am
=====Are you willing, as a “neutral observer,” to tell those “unnecessary” people that they no longer have a job in this economy? =====
So when the economy gets tough, we have to make choices.
Why is it that the State’s needs are considered to be superior to those who pay the bills?
We are expected to have sympathy for potentially displaced state workers, but what about the displaced private sector employees? Do I need to enumerate the non public workers who we should have sympathy for?
The argument of yet another tax increase of any kind would be reasonable if there was confidence that it would be used for a reasonable purpose. All another tax increase would do is to maintain the river of money the politicians first use for their own benefit with no reason to expect a government we can afford.
Comment by plutocrat03 Tuesday, Nov 18, 08 @ 11:15 am
SS,
Not going to argue semantics on a flat tax, and I agree that $100 wouldn’t be missed by me either. But, once again, do the leaders and mushrooms in Springfield have the courage or the ability to cooperate to actually fix this problem created over the years? We’ll see, but I won’t bet even the $100 that I wouldn’t miss.
Comment by Crystal Clear Tuesday, Nov 18, 08 @ 11:18 am
[…] The comment below is my response to Rich Miller’s latest post on fiscal matters. Rich, […]
Pingback by Extreme Wisdom » Blog Archive » Capitol Fax debate on Illinois tax increases Tuesday, Nov 18, 08 @ 11:19 am
What about all of the jobs that were doled out for 25K a pop? Could any of those be trimmed?
Comment by Dan S, a Voter and Cubs Fan Tuesday, Nov 18, 08 @ 11:20 am
Here’s how other states fare, as extracted from latest available US Census data:
IL - 1 state employee for every 103 residents (lowest ratio in US)
CA - 1 state employee for every 94 residents (our nearest “competitor”)
AK - 1 state employee for every 27 residents (Sarah Palin’s “conservative” state government)
IN - 1 state employee for every 71 residents (a neighbor with a higher ratio than IL)
WI - 1 state employee for every 81 residents (another neighbor)
Comment by Six Degrees of Separation Tuesday, Nov 18, 08 @ 11:33 am
As a tax payer, I am so offended with anyone who thinks raising taxes is the answer. If the government were to cut out unnecessary programs, give “the people” back there money, and don’t keep giving people raises. Than maybe the state of Illinois can get out of the stupid mess we are in. I would love to see a group of legislators say “I will take a pay-cut to help fix this mess”. But I am not holding my breath.
In my house when money gets tight we cut back. We look at what we are spending on and do some adjusting. We were talking about getting a new car but because of the economy we decided that our 1996 Dodge caravan with 135,000 miles on it is working just fine.
We “the people” of Illinois are making sacrifices in our own lives to make money stretch a little bit more, and the government is just spending spending and spending. You should all be ashamed.
Comment by Boscobud Tuesday, Nov 18, 08 @ 11:42 am
Small item in todays WSJ p.A6: “Struggling States Let Retailers keep $1B in Sales Taxes”.
Laws in 26 states, largely dating to the era before computerized cash registers, let retailers keep a slice of sales tax to offset the cost of collection. 13 states have no ceiling on the total amount kept by retailers. Illinois is #1 and the largest at $126.1M. Texas is #2 at $89.6M. Indiana is at $45M. Thought there was going to be a fix for all those corporate tax loopholes. We’re #1! We’re #1!
Comment by zatoichi Tuesday, Nov 18, 08 @ 11:48 am
Zat-
Also, only 5.5% of the state sales tax goes back into state coffers. The local community gets to keep 1%, unless they waive it under a state law provision to let developers recapture it.
Comment by Six Degrees of Separation Tuesday, Nov 18, 08 @ 11:58 am
===The argument of yet another tax increase of any kind would be reasonable if there was confidence that it would be used for a reasonable purpose. All another tax increase would do is to maintain the river of money the politicians first use for their own benefit with no reason to expect a government we can afford.===
It would be advisable to increase the state income tax by 1%-2%. The state needs the income to adequately fund its obligations. However, plutocrat3 is correct. Such an increase should only be made if we can have some assurance that spending would be moderated. Politicians easily make such assurances, but they rarely insure such assurances.
Comment by Fan of the Game Tuesday, Nov 18, 08 @ 12:23 pm
And Alaska is one of the biggest, perhaps the biggest moocher of federal funds. No wonder they have so many state employees and no wonder their residents get a check from the state treasury every year. If Illinois could get Alaska’s per capital level of federal funding as part of the upcoming federal bailout, we wouldn’t have a fiscal crisis.
For some reason, Illinois’ clueless leaders of both parties haven’t done much over the years to rectify these astounding disparities in federal funding. Because we don’t hold them accountable for doing much except stuff their pockets, I guess.
Comment by Cassandra Tuesday, Nov 18, 08 @ 12:25 pm
It’s a national issue, so let’s not pretend that all of our problems are due to our state’s unique culture. In addition, last I looked we had a AA from both Moody’s, S&P and Fitch, so it’s not like we’re a banana republic.
As a partial solution, I suggest a gasoline tax bump to fund a capital works program and capture the fed money on the table. Capital works is a long-term investment that puts people to work and stimulates the economy.
If you want to cut, the big money’s in Health, DHS and K-12 Ed. If you’re not doing anything there, you’re just nibbling at the margins, like the ridiculous parks and historic sites closings.
Comment by wordslinger Tuesday, Nov 18, 08 @ 12:39 pm
Six Degrees,
Re: all your stats re: state employees… Great data, and it deserves review and understanding.
Now take all Local (county, school, municipal) employment and add it together. (of course, do the same for all the other states)
Next, add up all of those employees pension liabilities. Averaged over ALL pension payments, it looks reasonable. Divide out the liabilities of retirees from 1, 5, 10, and 20 years. For fun and excitement, add in the pension explosion coming down the pike in the next few years.
I would argue that any and every state should unify their total (state and local) cost of government before looking at tax and spending solutions. By pretending they are separate, you are playing a shell game with taxpayers.
Many can point to the fact that Rod hasn’t raised “taxes”, and that, on paper, IL is a low-to-moderate-tax state.
I just found this cool site…
http://www.usgovernmentspending.com/illinois_state_spending.html
to play around with.
Other data shows that LOCAL school taxes alone in IL went from $6.5 billion in 1995 to over $12 billion in 2005.
If the state needs more revenue, let them get it from the people who have been bankrupting state and local governments (as well as home owners).
The time has come to give the education bureaucracy the haircut they so richly deserve.
$200,000 Superintendents and their $6,000 car allowances don’t educate a single child.
Since the local voters don’t have the clout to compete with both the lobbyist-written School Code AND the purchased school boards (too cowardly to take on the administrators or the unions), just get your legislator to hack the property tax at the state level.
The education industry has had its ride on the gravy train. It’s time to give them some gastric bypass.
Comment by Bruno Behrend Tuesday, Nov 18, 08 @ 1:21 pm
Bruno-
US Census shows non-state, non-federal local public sector employment in IL grew slightly from 507332 in 2003 to 519124 in 2007. This represents a small increase in proportion of local public sector employment over the period, from 1 per 24.88 residents to 1 per 24.75 residents (using those year’s estimates of the IL population). The March 2003 local govt payroll was $1.768 billion which grew to $2.034 billion by March 2007 (a 15.0% increase).
FWIW, the state payrolls for March 2003 and March 2007 were $485.7 million and $556.2 million (a 14.5% increase).
Comment by Six Degrees of Separation Tuesday, Nov 18, 08 @ 1:55 pm
Sheesh, Bruno, did you get sent to the principal’s office one time too many when you were in school or what?
I understand your frustration with the public school system, especially since I have no other choice for my child (homeschooling is not a viable option for us and due to her special needs, private schools will not enroll her). I could think of plenty of ways to reduce waste. But still, I dunno that local education bureaucracy is necessarily the prime scapegoat for our fiscal problems.
In addition, federal education laws like IDEA (which my daughter directly benefits from as a special ed student) and No Child Left Behind (which nobody benefits from, as far as I can tell) have a lot to do with the situation.
Comment by Secret Square Tuesday, Nov 18, 08 @ 1:59 pm
Another interesting thing…
In March 2002 the state’s payroll was $525.5 million. It dropped almost $40 million the next year due to early retirements and didn’t catch up to 2002’s payroll til 2006.
Comment by Six Degrees of Separation Tuesday, Nov 18, 08 @ 2:01 pm
>>If so, have at it.
Comment by Niles Township Tuesday, Nov 18, 08 @ 2:07 pm
How about some good news even if it’s not releveant to to this thread Kevin will like it. http://www.sj-r.com/breaking/x4
66660148/Dempster-Cubs-reach-4-year-deal
Comment by Dan S, a Voter and Cubs Fan Tuesday, Nov 18, 08 @ 2:25 pm
Rich:
The planet I’m from? Government workers salaries come from people who pay taxes.It’s just that simple.I know the true hurts.
Comment by Steve Tuesday, Nov 18, 08 @ 2:36 pm
Six Deg.,
Thanks for the excellent stat production.
So, we saw 2.3% increase in employment (non state, non Federal from 2003 to 2007 only) with a corresponding 15% increase in payroll costs. I think we are beginning to see the problem here.
Was there a corresponding increase (15%) in government productivity? Did 15% more kids get health care? Did we build more CTA tracks or increase the number of trains? Did test scores go up? Did more Mosquito’s get ‘abated?’
Let’s open all the books and do all the math. Let’s find out what worked, and what didn’t. Hack what didn’t work.
Also, given that IL spends about $21 billion on education ($12+bn local, ~$9bn state, and ~$2bn Federal), and that payroll is probably at least 75%+ of that (you seem to be much faster with stats than I am), it appears that your figures do NOT include the education sector - all of which falls under government employment.
I don’t have the time to dig up the growth rates, but I do know the stats from 1987-2003 (thanks to Speaker Madigan’s road show)
http://www.extremewisdom.com/wp-content/uploads/madigan_slide.gif
This was the slide that drew my favorite comment from Rep. Fritchey. When reminded of the numbers, he said “Yeah, but that all went to pensions.” I just wish every Soccer Mom in Illinois could have heard that one.
Seriously, lets throw everything on the table. Let’s open all the books (Rev. Meeks seems to have NO INTEREST in funding disparities INSIDE Chicago’s schools.)
Comment by Bruno Behrend Tuesday, Nov 18, 08 @ 2:37 pm
Steve, you said government workers don’t produce tax revenues. Preposterous.
Comment by Rich Miller Tuesday, Nov 18, 08 @ 2:40 pm
1st — State workers pay taxes on sales, property etc as Rich stated but much of that money is already coming from tax payers. Rich pays his taxes and those taxes pay Barry the bureaucrat who pays a portion of his income back to taxing bodies.
2nd. Before taxes are brought up how consolidating some programs; developing some measures and reducing the poorest performing programs before going after programs that could be working. A BRAC for state programs might help reduce some burden.
3rd. A downturn like this where you are taking a one time hit is the time to start selling assets.
4th. Temporarily lifting some regulation on labor laws — prevailing wages etc for state programs could spread some pain with letting fewer workers go.
5th. We shrunk state government in Ryan’s last year and while there was pain it wasn’t the end of the world. We’ve made tough decisions before.
Take some serious and concerted steps to consolidate and make programs more efficient; before across the board devastation and tax increases that won’t generate the revenue you want in the first place.
Finally, some of those Medicaid reforms around the country put in by those evil Republicans are working as advertised. Maybe looking at some of those can relieve some of the pressure. If you want to expand Medicaid, I wouldn’t worry, if the recession is bad expansion will take care of itself.
Comment by Greg Tuesday, Nov 18, 08 @ 2:46 pm
=== Rich pays his taxes and those taxes pay Barry the bureaucrat who pays a portion of his income back to taxing bodies.===
Correct. And many of those workers also produce something of value either to myself or my community. Some people just see government as this evil entity. Is it screwed up? Yeah, but so are a lot of people.
Comment by Rich Miller Tuesday, Nov 18, 08 @ 2:47 pm
In March 2002 the state’s payroll was $525.5 million. It dropped almost $40 million the next year due to early retirements and didn’t catch up to 2002’s payroll til 2006.
Early Retirements? Have you heard about the unfunded pension liability.
Out of the frying pan, into the fire.
I know the entire ‘early retirement’ scheme was sold as a way to reduce payroll, but all those new hires are going to expect the same bennies (they aren’t going to get it).
The fact is that with pension benefits guaranteed by the Const., your early retirement scenario merely moved that $4o mil. into another column on the balance sheet.
Comment by Bruno Behrend Tuesday, Nov 18, 08 @ 2:48 pm
Bruno,
the state can’t go into your township assessor’s office and say “you don’t need this or that anymore” anymore than your county board member can walk into the General Assembly and vote.
They are different levels of government and generally independent of one another. Your debate is best suited for moot court or hooka bars where such nonsensical debates are the norm.
Comment by Frank Booth Tuesday, Nov 18, 08 @ 2:57 pm
The state can abolish township, or any other form of lower government, however.
Comment by wordslinger Tuesday, Nov 18, 08 @ 3:00 pm
Bruno,
Here’s where it gets complicated. Long term, the retirees were going to retire anyway; the “early retirement” simply accelerated the benefits and increased the potential payout period according to each employee’s mortality. A “good” early retirement program could execute this with a positive balance of salaries saved vs. the amortized value of the retirement payouts. The retirement systems’ stewardship of existing funds, along with the fortune or misfortune of the stock and bond markets, could have either made up the difference or put the state in a bigger hole. The best place to see “what happened” is probably Dan Hynes’ website.
Comment by Six Degrees of Separation Tuesday, Nov 18, 08 @ 3:15 pm
SDS
Comment by Truthful James Tuesday, Nov 18, 08 @ 3:17 pm
SDS –
Not quite eggsactly correct.
In the schools for instance, early retirement was game played — as well as regular retirement — with the local body dishing out 20% raises in the last three years to maximize the pensions (which they were not responsible for paying.
Second it was not unudual for the early retiree to go on and acquire another high paying job either in the system or as a consultant.
Either way, the locals screwed the State — and each other
Comment by Truthful James Tuesday, Nov 18, 08 @ 3:21 pm
’slinger
Those ratings are only as good as the sub prime mortgage securities ratings by the same firms. Not much there.
Comment by Truthful James Tuesday, Nov 18, 08 @ 3:30 pm
TJ-
You are correct that “some” public employers - most local, most in the educational system but a few in public safety as well - gamed the system by giving last year - or in some cases last day - raises to retiring employees who did not pay a fair share to fund the excess. Some of those loopholes have been closed to force the burden back on the communities or school districts that allow golden parachutes to happen. There are probably loopholes that still need to be tightened, as well as community awareness that their local tax dollars are being used for such tricks.
Comment by Six Degrees of Separation Tuesday, Nov 18, 08 @ 3:45 pm
Correct, Rich they produce something of value in their community after something in value has been taken from another community, or neighborhood or individual. But it doesn’t grow the economic pie it simply cuts the economic pie in different ways, hence, no value created. . .
The specific benefits you see don’t mean the diffuse costs throughout the economy aren’t there. It just means they are harder to identify but as they add up the pain felt by everyone grows.
Doesn’t mean we don’t need government. It means we need limited government.
Comment by Greg Tuesday, Nov 18, 08 @ 4:18 pm
Great grammar Greg.
Comment by Greg Tuesday, Nov 18, 08 @ 4:18 pm
===It means we need limited government. ===
I think over 50 percent of voters disagreed with you a couple weeks ago.
Comment by Rich Miller Tuesday, Nov 18, 08 @ 4:18 pm
Rich:
Taxes aren’t voluntary.Maybe you didn’t notice.Taxes aren’t club dues.They are coercive payments.If you don’t pay you go to jail.Government workers salaries come from the taxpayers.No other institution in society is based on being financed by coercion.Not the Catholic Church,not Wal-Mart,or any business.This is a simple but often forgotten point.Government workers are overpaid because they vote for politicians who overpaid them.
Comment by Steve Tuesday, Nov 18, 08 @ 4:31 pm
Steve, my suggestion to you is move to a place with no taxes.
Soon.
Comment by Rich Miller Tuesday, Nov 18, 08 @ 4:38 pm
Rich:
I’ll take that under advisement.Rich,are you hearing anything about the SEC being concerned about Illinois’ underfunded pensions? Do you think the SEC will allow these public entities to run shaky pension funds?
Comment by Steve Tuesday, Nov 18, 08 @ 4:47 pm
There’s a constitutional guarantee of pension payments. Not sure what you mean.
Comment by Rich Miller Tuesday, Nov 18, 08 @ 4:50 pm
Yes,you are right there is.Plus federal contract law protects contracts made.But,the SEC can shutdown a pension fund for lack of prudent operation.Funding below 85% isn’t “prudent”.The Illinois Teachers Pension Fund is only 56% funded.The SEC could shut it down and there’s nothing the Illinois State Constitution can do about that.Remember,what happened in San Diego a few years ago when the SEC wouldn’t allow the City of San Diego to float muni bond debt?
Comment by Steve Tuesday, Nov 18, 08 @ 4:55 pm
The only place i saw mentioned in the Constitution regarding Pensions was in the general Provisions Article and reads as follows
“…
SECTION 5. PENSION AND RETIREMENT RIGHTS
Membership in any pension or retirement system of the
State, any unit of local government or school district, or
any agency or instrumentality thereof, shall be an
enforceable contractual relationship, the benefits of which
shall not be diminished or impaired…”
(Source: Illinois Constitution.)
Membership…shall be an enforceable contractual relationship, the benefits of which
shall not be diminished or impaired…”
Seems to me that implies that each member has a relationship to a pension fund, once joining the fund they cannot be diminished or impaired, but new members may be assigned upon joining a different set of benefits contractually binding on the parties.
Comment by Truthful James Tuesday, Nov 18, 08 @ 5:17 pm
TJ-
On top of that…
When the State Judges were denied a cost of living raise one year, they took the state to court and it was decided the COLA’s were part of the enforceable contractural relationship of judge’s pay which has a similar IL constitutional protection.
Judges shall receive salaries provided by law which shall not be diminished to take effect during their terms of office.
So, by the same principle, not only are current retirees’ benefits protected by the state constitution, their traditional 3% annual COLA raise upon retirement may also be, too.
Comment by Six Degrees of Separation Tuesday, Nov 18, 08 @ 5:27 pm
Steve,
It is very rare that the feds would take over a state pension system, although in extreme circumstances (like not being able to meet a current year’s payroll) it might be a remote possibility. Even at a 50% funded ratio of current and future liabilities, the state and university pension systems have several years’ worth of reserves to pay current and future beneficiaries, and the money keeps rolling in each year from members, the state, and their investments. Less than 100% funding of a pension system is not ideal, but it is not that uncommon in the public or private sectors.
Comment by Six Degrees of Separation Tuesday, Nov 18, 08 @ 5:34 pm
TJ-
I, and every other attorney I have talked to, believe you are correct that new hires could be subject to a two-tier pension system with the blessing of the IL constitution. As long as the pension deal does not change for the worse for that employee during their lifetime, the state is free to put whatever pension setup in place. Subject to the collective bargaining rules of its highly unionized work force, of course.
Comment by Six Degrees of Separation Tuesday, Nov 18, 08 @ 5:39 pm
Uh, Steve? Why do you think state workers are paid a salary? Ya really think they just home and wander over to the mailbox a couple times a month to collect a taxpayer sent freebie check? It happens to be a paid fee for services provided. Like when you call a plumber and get a bill that must be paid. I’ve had my fill of people who think state workers are not due salary for performed services. And because the state worker does the services for below private sector cost they get additional benefits to offset the differences. And before state employees get their hands on their salary it is taxed and they send right back to the public pot money to then again help pay for their performed services. Not only are many of us expected to have multi skills (which would be several different people out in the private sector) we get to do even more performce as the number level of employees has drindled. And the best part, after we perform a service, get paid minus taxes, we also open the wallets to pay our own property taxes, sales taxes blah blah blah. You, Steve, aren’t special just cause you pay my salary, it’s a salary well earned by providing a service. And, I don’t have a problem paying taxes whether they asked me if I’d like to pay them or not. If my taxes go to grants for community mental health, alcohol and substance abuse, state prisons, medicaid, whatever the like, it is money spent on a well rounded civil society. Yeah, I’m sure some waste cuts could be found around the corners but thinking of state employees as leaches on society that don’t deserve nor earn a fair salary , but rather a ‘welfare’ check that we should sent you a ‘thank-you’ note for is ridiculous.
Comment by Princess Tuesday, Nov 18, 08 @ 5:39 pm
The focus here seems isolated on state related costs. Does the for-profit world have no influence here? Of course, every for-profit employee is the prime example of 100% efficiency. The cost of GM cars did not go up to cover health care and high salaries? Why not rant about their productivity. Must have missed that. The millions paid as bonuses in financial companies (and now the billions in tax money for bailouts), why didn’t that go back to the investers and pension plans who put in the money looking for better returns. The 53,000 people getting dropped by Citicorp, that has no effect on anything? Guess the the money they spend is too miniscule to worry about. All the roads and education systems built and maintained (Not!) by McDonalds, Sears, Lowes, Wells Fargo, and Sony, didn’t they do a great job? The health coverage provided by Medtronic, drug companies, and BCBS took care of everyone who needed it? And of course no one here bought a home that was beyond their real ability to pay for it.
The state is not the only player here, even as they are easy to take shots at. The state provides a very large basic infrastructure that costs mucho money, gets complicated because of size, and is used by many groups. If it is not maintained, you eventually pay a price to remodel stuff irregardless of your personal political leaning. Do not want to deal with the people who need help? Does not make them go away. And there are lots of them. You may even know some. You may become one.
Has the state screwed up? Duh? Been reading Cap Fax? When life is phat, life is good and easy. You can only procrastinate for so long before the rain comes. So now in panic mode “something” will get done because there is nowhere to turn and fingers (talking points) can point out every flaw. Do not want to pay more taxes? Ok, what gets cut so the rest gets covered by the bucks available. Have not put money aside for that rainy day? Good planning. You get what’s coming. Not in my backyard.
Comment by zatoichi Tuesday, Nov 18, 08 @ 5:52 pm
Don’t worry about anything, our new prez from Illinois will bail out his home state if worse comes to worse
Comment by plus2hdcp Tuesday, Nov 18, 08 @ 5:55 pm
“I think over 50 percent of voters disagreed with you a couple weeks ago.”
Rich, I don’t remember seeing limited government on the ballot…
Comment by Greg Tuesday, Nov 18, 08 @ 6:05 pm
Greg-
Weren’t the Libertarians on your ballot?
Comment by Six Degrees of Separation Tuesday, Nov 18, 08 @ 6:30 pm
Government and taxes are the price of civilization. Geez, the whining, folks. Did someone tell you that everything was going to be easy all the time when you were growing up?
Despite today’s problems, tell me where and when in the history of the planet that you’d rather be than the United States right now?
Your gf state budget basically goes to Health, Human Services and K-12, with some for the universities and corrections. That’s about it. Start whacking, if that’s the answer. But say where.
Comment by wordslinger Tuesday, Nov 18, 08 @ 6:37 pm
===The fact is that with pension benefits guaranteed by the Const===
Thanks Bruno for finally admitting the truth.
Comment by Bill Tuesday, Nov 18, 08 @ 7:00 pm
Steve, your 4:55 post is an absolute load of crap.
The SEC has zero power to “shut down” a state government pension fund for inadequate funding, or anything else.
The San Diego matter was, and is, complicated and ongoing and had nothing to do with the funded status of the pension system and a lot to do with false statements made in bond offering documents.
When you don’t know what you’re talking about, shut it.
Comment by Arthur Andersen Tuesday, Nov 18, 08 @ 7:23 pm
Of course bloated and inefficient government is not a good thing and tax monies should be carefully spent, not wasted. And it’s probably true that Illinois does not really need 6,000-plus units of local government (many of them carryovers from the 1870 Constitution which fostered the creation of special purpose districts).
But I wonder how many of these limited-government, no-tax absolutists have put their money where their mouth is by living in some remote rural community with nothing but dirt roads, no public water or sewer system, no public transportation, no libraries, no parks, and only bare bones public schools.
I did that once, for several years. Yeah, it was nice having low taxes and all, but having to dig up my own septic tank in the dead of winter, having no way to get to work if my car broke down, and running out of water during drought seasons (because we were dependent on a private well) got kind of old after a while.
It’s one thing to do that when you’re relatively young and healthy and have a bunch of strapping teenage sons to help you around the house (like my father in law did when he moved to a fixer upper rural home in the early 70s). It’s quite another to do that when you’re well past 40, you’re the only able-bodied person in your household and you have no relatives living within 100 miles. Call me a wimp, but I’m not as much of a rugged individualist as I used to be and I don’t mind paying for a decent public infrastructure.
Comment by Bookworm Tuesday, Nov 18, 08 @ 7:46 pm