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The budget beat goes on

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Illinois

* As I’ve been telling subscribers for weeks, the Democrats will do their best to drag Republicans into any budget solution if the GOP wants a capital bill…

Legislators won’t leave the state Capitol this year until they approve a capital construction program, and it will be tied to the passage of a new state budget, Senate President John Cullerton said Monday.

“My number one priority has always been a capital bill, and it hasn’t changed. We have to do the budget and the capital bill together,” said Cullerton, a Chicago Democrat who took over as Senate president earlier this year.

“The two are linked, and by the way, the votes will be linked,” Cullerton told the editorial board of The State Journal-Register. “So for the Republicans who think that they’re going to let the Democrats … raise the taxes, and they’re going to just vote for the spending, I don’t think it’s going to work that way.”

Later Monday, Republican legislative leaders said they don’t want to link the two issues. Instead, they think lawmakers should pass a capital plan as soon as possible, enabling projects to begin this construction season.

Of course the Republicans don’t want any linkage, but they may have no choice.

* This won’t go over well…

At the same time Gov. Pat Quinn is calling on most Illinoisans to pay higher income taxes, his budget proposal calls for he and other top state officials to get cost-of-living raises.

The governor’s spending blueprint would raise Quinn’s salary to $182,400, up from $177,000, while boosting base pay for lawmakers by about 2.7 percent to $69,735 annually, up from $67,836.

Oops.

…Adding… The governor’s budget office just called to say that the COLAs are not in the actual budget proposal. Instead, they’re outlined in the comptroller’s narrative.

* And my weekly syndicated newspaper column talks about the budget fight ahead…

The biggest problem Gov. Pat Quinn faces in getting his tax hike and budget proposals passed is not that almost every special interest group opposes them.

The Illinois Federation of Teachers, for instance, sent out a statement before Quinn had even finished his budget address to say that any state legislator who votes for the governor’s proposed “pension cuts” would automatically lose the union’s endorsement.

State workers are spitting mad about paying more into the pension plan and being forced to take unpaid days off.

Business groups are beside themselves about the tax hikes.

Mayors hate the idea that they won’t get their usual 10 percent slice of Quinn’s proposed income tax increase.

These are very serious, almost insurmountable obstacles, of course. But they’re not the worst.

The biggest hurdle, by far, is the governor focused on a problem that he alone wants to deal with, but nobody else really cares about.

The governor, you already know, wants to raise the state’s personal income tax rate from 3 percent to 4.5 percent, but also triple the $2,000 personal exemption so almost 5 million people will get a tax cut or pay no extra taxes. Quinn claims this is about “tax fairness” as much as it is about raising new money to close the state’s $11.5 billion budget deficit.

But, seriously, when was the last time you heard anybody complain about the Illinois income tax?

At just 3 percent, Illinois has the lowest flat tax in the nation. Quinn has pushed this tax fairness idea for decades, but almost nobody else has. Tripling the personal exemption is just not something that any legislator has ever cared much about.

Since the governor’s tax proposal has no real constituency within the General Assembly, he starts out with almost no legislative allies.

Just about every legislator has fervently campaigned to reduce the property tax burden and increase spending for schools. Also, suburban Cook County and Chicago representatives are hearing loud and constant screams of anger from their voters about their region’s super-high sales tax.

There are some very angry everyday people demanding a solution to these festering problems. Yet, Quinn’s budget and tax hike proposals do nothing about any of them.

In fact, the governor’s proposals may be making the political situation for incumbent legislators far worse than they would be with a more “normal” tax hike and budget fix.

For one, the governor has proposed a relatively tiny education spending increase. That pretty much guarantees some local school districts, which are also experiencing serious problems in this economy, will have to raise property taxes even higher.

Local governments are strapped in this economy as well and are dying for money. Without help from the state via their usual share of the income tax hike, they may also have to raise sales or property taxes.

Quinn wants to expand the state sales tax to cover items like grooming and hygiene products, sweetened tea and coffee drinks currently exempted from the full sales tax rate. That’s not really a big thing, but in this sort of environment it could make for big headlines.

And not surprisingly, legislators aren’t particularly thrilled with voting for Quinn’s 50 percent income tax hike and still having to vote for well over a billion dollars in state budget cuts. Quinn’s tax exemption reform proposal took a tax hike that could’ve raised almost $6 billion down to only about $2.5 billion.

The governor said Friday that he hoped he could convince the business lobby to support his tax hike by showing them how he’s forcing teachers and state workers to pay more into the pension systems. But it’s the height of folly to assume the business lobby will ever get behind a tax hike.

The only groups that can be counted on to reliably support tax hikes are the very groups Quinn has gone out of his way to whack. Public school teachers, state workers and people such as Chicago Mayor Richard M. Daley are absolutely key, and all of them are firmly in the “no” category.

I still think there will be a state tax increase in our near future. I just don’t think yet that it’ll be this one. Quinn has a horrific fight ahead of him.

* Related…

* GOP attacking Gov. Quinn over income tax increase: Republicans still haven’t answered that question, other than to call for spending cuts. That approach alone can’t erase the deficit, because much government spending is legally mandated, for Medicaid, education and other big-ticket items.

* So you want tax relief? Better get to it

* Brady criticizes Quinn’s “unfortunate” budget

* Federal cigarette tax increases April 1

* Quinn issues ‘emergency’ calls for public works spending

* Quinn, labor groups push construction plan

* Quinn Wants Part of Capital Bill Passed Before Lawmakers Recess

* Countdown to capital begins

posted by Rich Miller
Tuesday, Mar 24, 09 @ 9:19 am

Comments

I could be way wrong on this, so my apologies if I am. But I thought cost-of-living raises for elected officials were mandated, and that the legislature had to vote them DOWN. Since they’ve shown no desire to do that in the past…is Quinn just taking a realistic look at (that part of) the situation?

Comment by Concerned Observer Tuesday, Mar 24, 09 @ 9:57 am
Well, I’ve been saying for a while that our fearless legislators are affected little by any potential tax increases since they can always vote themselves a raise to mitigate or eliminate such increases for their personal budgets.

Looks like that’s a definite possibility this year.

Quinn does seem to be speaking out of both sides of his mouth here. He proposes a pay increase for folks who have not, to put it politely, done a great job in recent years then suggests that they and he not take it, or not take part of it. Why propose it at all? Crazy. And manipulative. The taxpayers are stupid approach from yet another Chicago Democratic pol. I guess it works in Chicago.

Comment by Cassandra Tuesday, Mar 24, 09 @ 9:57 am
The governor’s spending blueprint would raise Quinn’s salary to $182,400, up from $177,000, while boosting base pay for lawmakers by about 2.7 percent to $69,735 annually, up from $67,836.

Yeah this seems reasonable they have done such a good job the state is only 9 Billion in the hole. Maybe they could use some of the stimulus money (our tax dollars) to give themselves performance bonus’s too.

Comment by fed up Tuesday, Mar 24, 09 @ 10:01 am
So after governmental paralysis caused by the Illinois Democratic Civil War of 2005-2008, the Democrats expect the GOP to step in and lead them into cutting a budget they filled to collapse? That’s crazy talk!

The Illinois Democrats have publically demonstrated that they do not want or need the GOP at all. They have jacked our state budget without listening to the GOP. They have sold off our state assets, leased anything that could be leased, borrowed to the hilt and robbed the state pensions. They didn’t give the GOP the time of day while doing any of this.

But now they are demanding that the GOP join them in solving the budgetary problems the Democrats have been ignoring? They demand that the GOP explain what budget cuts should be taken out of the budget the Democrats have controlled for ten years? Give me a break!

Voters are unhappy, and want heads to roll. They want to see budget cuts. It is the Democrat’s friends that have to be cut out. It is the Democrat’s lobbyists that have to be cut out. It is the Democrat’s voter bases that have to be cut out. So - do it! Then, tell us what additional taxes need to be raised in order to make ends meet. Don’t expect help from the opposition party that has been living in the wilderness for a decade and losing political power every year.

The Democrats have to pay their bills. They don’t get to play Robin Hood and expect the GOP to play Sheriff of Nottingham for them when everything collapses.

Voters are actually giving the Illinois GOP another look. Why? Because like them, the GOP is in favor of cutting the budget first, then evaluating what taxes are needed - not vice versa.

Combining the Capital Bill and the Budget so that they can drag the GOP into the blame game and save their massive majorities in both houses is what the Illinois Democrats are hoping the GOP will do for them. Instead of leading, they are playing games.

The GOP should continue to say “no”. What are they going to lose since they have already lost everything? Sorry Democrats, you cannot revive the GOP corpse, just to have another burial.

Comment by VanillaMan Tuesday, Mar 24, 09 @ 10:07 am
I’m not sure how much leverage the teachers and Daley have. Because if they don’t go along with some substantial tax increase, they’re going to get whacked harder.

Comment by wordslinger Tuesday, Mar 24, 09 @ 10:08 am
Cullerton may think he’s on to a winner by coupling the revenue bill with the spending bill, and in truth, it’s the responsible approach. However, if the Democrats really don’t support getting any new revenue either, there won’t be a capital bill.

I’m curious who the first elected person is going to be to suggest the logical outcome — tolls on all trunk highways in the state. Realistically, that’s where we’re headed. Maybe privatize the entire Illinois interstate system too. Everybody is so fearful of raising the lowest income tax in the nation that they’d rather uphold the state’s tradition of nickel-and-diming working stiffs to death, all so that trust fund babies on the North Shore and all the other babies scattered around the state can buy another imported widget.

Comment by Angry Chicagoan Tuesday, Mar 24, 09 @ 10:16 am
The overwhelming concern by the special interests is what got us into this financial mess in the first place.

The modern result of lobbying is to get a large number of people to pony up a small amount each for the benefit a few who individually reap large rewards.

Do you think that hat has worked out well for us in Illinois?

Comment by Plutocrat03 Tuesday, Mar 24, 09 @ 10:28 am
Please tell me that this doesn’t mean another year of gridlock while everyone jockeys for position?

Comment by Hank Tuesday, Mar 24, 09 @ 10:35 am
VanillaMan,

I appreciate your analysis re the budget issue. I hope the ILGOP can get it together enough to field a candidate who doesn’t implode come election time. There is alot of infighting being reported. Of course, the dems will try to paint the GOP as part of the problem due to some of the history there. I hope the republicans can hang tight and let the current crop “hang” themselves. If people can stay clear on the fact that the budget being proposed is more smoke and mirrors/creative bookeeping rather than the pragmatic solutions that are needed to really start to sort out this mess we can make some progress. What bothers me is that we will all have to feel some pain, so why not do what will help short/long term while we are feeling the pain? Why more games? Just more politics. MOTS. Is Quinn complicit or too naive?

Comment by dupage dan Tuesday, Mar 24, 09 @ 10:39 am
==I still think there will be a state tax increase in our near future. I just don’t think yet that it’ll be this one. ==

From your lips to the intelligent designer’s ear!

Comment by Bill Tuesday, Mar 24, 09 @ 10:59 am
“Gov. Pat Quinn is calling on most Illinoisans to pay higher income taxes, his budget proposal calls for he and other top state officials to get cost-of-living raises.”
It is an absolute outrage that Quinn’s budget proposal calls for COLA raises for himself and other top officials while everyone else is being asked to sacrifice. I hope the voters will be reminded of this when Quinn and any other elected official who receives a COLA increase this year run for re-election.

Comment by Just a Citizen Tuesday, Mar 24, 09 @ 11:01 am
Excuse me GOP, what have you done for us lately. Come up with solutions ASAP. This raise the temperature and not bring solutions to the table is not leadership!

Comment by Gameplan Tuesday, Mar 24, 09 @ 11:11 am
I fervently wish the Rs would get involved in the budget. They have an opportunity to play a critical role.

First, I assume both the Senate President and thee Speaker would like to have R votes on the budget and tax increases. It lets them protect targets and make the actions bipartisan, and it gives them some cover for things they know need to be done. The question would then become, what would the Ds be willing to pay?

I think the Rs could say “here are our demands to provide votes for the budget and taxes; more spending cuts, pension reforms must be included in final package, etc, etc”. They are the only real hope of discipline in the process, the role Pate used to play. I don’t know whether the Ds want their votes bad enough to make concessions, but I hope the Rs try.

Comment by steve schnorf Tuesday, Mar 24, 09 @ 11:23 am
Ah — the income tax increase — the gift that keeps on giving — for the politicians. After this deluge they have a beautiful pot of new money to misuse. The taxpayers will be numb and be used to paying the higher tax.

In the meantime the business community bears the higher burden and job creation is minimized. Locate in Illinois when the Indiana tax burden is lower? You have got to be kidding.

You measure burden by where new business goes and it is not Illinois.

A one time statewide property tax hike — statewide — to support an infrastructure bond issue will release current money to make up the deficit, except for the pension shortfalls. It makes no sense to fund capital projects out of current revenues.

Comment by Truthful James Tuesday, Mar 24, 09 @ 11:37 am
I say PRIVATIZE CORRECTIONS…the payroll is bloated my merit comp and UNION employees. Shift Commanders make 98,000 dollars a year thanks to being unionized. Take a good look at their payroll and overtime expenditures. Many states are saving millions by privatizing.

Comment by middlestate Tuesday, Mar 24, 09 @ 12:44 pm
I can’t recall the exact details, I think it was Rich, broke donw the State budget by pulling out the fed funds and required funds which showed IL had something like 12 billion left in discretionary spending. Of that roughly 3 billion is labor. So exactly how does the GOP expect us to cut out 12.4 billion from 12 billion in total discretionary money? VM the dems are not asking the GOP to lead, hey are asking them to reveal the the man behind the curtain with empty demands. Or if you prefer the street version, the GOP can put up or shut up.

I guees the GOP stood behin Rod because they both beleive in spending money they dont have regardless of the impcat on the state.Right now the taxpayers need better then GOP/Blago policies, we need actual solutions.

Comment by Ghost Tuesday, Mar 24, 09 @ 1:43 pm
Hey gameplan,

Do you mean that the GOP has to come up w/a plan to save the democrats from themselves? Since the dems continue to play the gamesmanship games why should the GOP help the dems? The GA and the Gov’s mansion are in the hands of the democratic party. When you are in power you will be held responsible.

Comment by dupage dan Tuesday, Mar 24, 09 @ 2:13 pm
Cassie,
Quinn is from Oak Park.

Comment by Bill Tuesday, Mar 24, 09 @ 2:38 pm
=== PRIVATIZE CORRECTIONS [to save money] ===

Are you not assuming that a business for profit would be cheaper? They may not pay the shift commander, but thats just so they can put the money in the owners pocket.

Comment by Ghost Tuesday, Mar 24, 09 @ 3:27 pm
oh Dupage Dan, GOP needs to say what they are willing to cut! Line for line, what are they willing to cut. I was a gop’er Dan, independant now, and the party is more than willing to consistantly point the other way rather than come up with really good ideas.

Comment by Gameplan Tuesday, Mar 24, 09 @ 3:44 pm
So let me get this straight…
The Illinois Democrats took over the State by promising things they knew they couldn’t pay for. Now that the bill is due, they want the GOP to come up with a plan?

That’s like expecting Ford to come up with a plan when Chevrolet Corvettes promised to one and all by GM refuse to start, or can’t be delivered as promised due to costs.

The Democrats sold us rotten bill of goods, hoping that they would be so politically entrenched in power they can survive any voter anger that could end their political careers. We have discovered that the situation has gotten so bad, voters are angrier than imagined, and now the Democrats want the GOP to share blame.

And I am also reading how Blagojevich was supported by the GOP? Talk about stretching the truth! Rod Blagojevich was nominated twice by a party so focused on winning the governor’s office they didn’t care how insane Blagojevich was, his empty track record in the House, his utter failure in Office during his first term, and his record of impeachable offenses. The GOP had nothing to do with the destruction we have witnessed in Illinois since 2003, other than the fact that they were too weak and dying to take a stand against the budget insanity we’ve suffered under.

The Illinois Democrats have wrecked Illinois. Expecting what few GOP state leaders are still around to carry some of the blame is ridiculous.

Comment by VanillaMan Tuesday, Mar 24, 09 @ 5:01 pm
VM, from a partisan political perspective you are exactly right. The Rs should demand that the Ds, being in control, do all the hard things, and then attack them for the choices they make.

Unfortunately, that’s at least partially how we got here. We’re talking now about governing, not electioneering slogans, and theoretically at least, that’s why they all ran for office. People need to step up. A bipartisan solution will be better than a partisan one unilaterally imposed.

The Ds didn’t get us into this by themselves, though they own the past 6 years. More than 15 years of pension underfunding came from R governors. Getting us out of this mess in the best, least painful way should be the goal of both parties, not picking up a couple of seats in one house or the other. Be grown ups, do the right thing.

Comment by steve schnorf Tuesday, Mar 24, 09 @ 8:02 pm
everyone wants to hammer the rank and file state worker pensions as excessive, but you never hear what the GA gets. This is straight from their retirement website.

Eligibility

You may retire:

• At age 55 with 8 years of credited service.

• At age 62 with 4 years of credited service.

Your retirement benefit is paid monthly for your lifetime. However, you must apply for benefits in order to receive them. Contact GARS approximately 30 days before your retirement date. Your pension will start on the day following your withdrawal from service.

Your Retirement Benefit

Contributions made before January 1, 1982 were taxed when you received them. Your contributions after January 1, 1982, were not included in your gross income and therefore are not immediately taxable. However, when you begin receiving benefits, you will be taxed on your contributions accordingly.

Your retirement benefit is based on your salary and credited service on your last day of service using the following formula:

3.0% for the first 4 years of service
3.5% for the next 2 years of service
4.0% for the next 2 years of service
4.5% for the next 4 years of service
5.0% for each year after 12 years

The maximum pension payable to a member of GARS is 85% of their final salary with 20 years of service credit.

Example: Assume a member is age 55, has 20 years of credited service, and a final salary of $57,619:

First 4 years x 3.0% = 12.0%
Next 2 years x 3.5% = 7.0%
Next 2 years x 4.0% = 8.0%
Next 4 years X 4.5% = 18.0%
Next 8 years x 5.0% = 40.0%
TOTAL = 85.0%

85.0% x $57,619 = $48,976.15 annually or $4,081.35 a month.

A member terminating service with four to eight years of service credit is eligible for the following pension rates at age 62:

• 4 Years 12%

• 5 Years 15.5%

• 6 Years 19%

• 7 Years 23%

This table illustrates the percentage of salary that GARS members with 8 to 20 years of GARS service credit will receive at age 55.

Years of Service Percent of Salary
8 27%
9 31.5
10 36
11 40.5
12 45
13 50
14 55
15 60
16 65
17 70
18 75
19 80
20 85

Annual Pension Increases

If you retire at age 60 or over, you will receive a 3% pension increase every year on January 1 or July 1 following your first full year of retirement. These annual increases are compounded on your previous year’s annuity. Pension increases are not limited to the 85% maximum.

Example: A member is age 55, has 20 years of credited service, and a final salary of $57,619. The initial retirement annuity is $48,976.15 (85% of final salary). The automatic 3% annual increase (not payable until age 60) would be: 3% x $48,976.15 = $1,469.28 annually or $122.44 per month

Accruals

The 3% increase also accrues each January 1st for GARS members who remain in service after age 55 with 20 years of credited service. These increases are payable on January 1 or July 1 following the first full year of retirement at age 60.

Example:

Using the table above, a member retires at age 60 in December 2001 with 25 years of credited service. On January 1, 2003, the member would receive a pension increase of 18%.

Reversionary Annuity

This option reduces your monthly retirement benefit to provide a lifetime income for your survivors after your death. This election should be filed with GARS at least two years prior to your contemplated date of retirement. This benefit is paid in addition to survivor benefits.

Returning to State Employment

If you return to work for the General Assembly Retirement System after retirement, your annuity will be suspended. It is your responsibility to notify GARS immediately of your reemployment.

When Benefits are Paid to You

• You pay no state income tax.

• You will pay federal tax on most benefits. Specific information will be furnished when benefits are payable.

The best tax treatment for you depends on your individual financial situation. GARS advises all members to check with a qualified tax consultant or financial planner before receiving benefits or refunds.

I’ll gladly take my furlough days and pension cost increase when the general assembly and constitutional officers earn the same as everyone else.

Comment by start at the top Tuesday, Mar 24, 09 @ 11:32 pm