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* My weekly syndicated newspaper column takes a look at the recent tax hike…
Whether they admitted it or not, a large majority of Statehouse denizens was relieved last week when the General Assembly approved the income tax hike.
Ironically enough, Republicans may have been the happiest. The state’s horrific structural deficit was finally addressed, which is good news all around. And since they didn’t put any votes on the tax hike bill, the Republicans now get to use it as a wicked political hammer against the Democrats.
Their silent, but tacit consent came late in the evening when several Republicans, including the Senate GOP Leader, joined the Senate Democrats to support a borrowing plan to make the state’s pension payments this year. The Republicans wouldn’t put votes on the bill last spring until they got some budget reforms. But now that the $3.7 billion borrowing plan was paid for with a tax hike, they explained they could now go along.
House Republicans offered up their own version of tacit acceptance shortly before the tax hike was approved in their chamber. They took what amounted to a rare “caucus position” against putting any votes on Gov. Pat Quinn’s $14 billion bond program to pay off old debts, but afterward privately said they would likely agree to the plan down the road, as soon as they could extract some concessions from Democrats. The tax hike proposal, of course, includes designated cash to pay off those $14 billion in bonds.
And while there was relief and even elation in the building after the tax hike finally passed, the tax hike is definitely causing an uproar amongst the general populace.
It is, in a way, a bit like the federal healthcare legislation. Like President Obama, Gov. Quinn would’ve been badly hobbled at the Statehouse if his tax hike had failed (undoubtedly even worse, since no new revenues would’ve resulted in catastrophic budget cuts).
But also like Obama, Quinn and legislative Democrats will pay a steep political price for passing a very big plan without a clear popular mandate. Again, it will likely be worse for Illinois Democrats because most people tell pollsters they actually like individual pieces of that federal healthcare law. Not many are gonna love any part of this tax hike.
History may eventually look kindly on what the Democrats did last week. But the foreseeable future is going to be absolutely brutal.
There has also been much consternation about the “temporary” nature of this tax hike. For some reason or another, Illinois memories only go back to 1989, when the last “temporary” income tax increase was approved. That one never went away, goes the reasoning, and neither will this one.
That previous temporary tax hike was made permanent after the 1990 election. Republican Jim Edgar campaigned for governor on a pledge to make it permanent. Democrat Neil Hartigan said he would kill off the income tax hike. Edgar won and he got what he, and the voters, wanted.
But income taxes were also raised temporarily in 1983, during a deep, dark recession. That tax increase was even more controversial than this one because it came after an election when Republican Governor Jim Thompson had promised not to raise the income tax at all. It was allowed to expire on its own.
There is no doubt that the planned 2015 expiration of most of this tax hike will be the prime focus of the 2014 governor’s race. It’s probably a good bet that the permanency of the increase will likely be decided by whoever wins the next governor’s race. Just like it was in 1990.
Even so, voters last year thought they were electing a guy who backed just a one-point tax hike. Gov. Quinn said last week that conversations over the past couple of months with financial institutions that lend the state money led him to break his campaign promise on taxes. The state’s ability to borrow was about to be eclipsed, Quinn said.
Last summer, Quinn promised not to sign any tax hike above one percentage point. He made that pledge after his top budget aides were caught on video telling an out-of-state financial reporter that a 2 percentage point increase would likely be passed in January to deal with the structural deficit. It’s hardly believable, therefore, that the governor came to this realization just since the election.
If Quinn runs again, he’ll probably have to put his house up as collateral against his new promises.
Thoughts?
posted by Rich Miller
Tuesday, Jan 18, 11 @ 6:28 am
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Their silence and lack of organized, public opposition going into the vote were tell-tale signs that the GOP wanted the money, too.
If they sign off on the borrowing, perhaps they’ll refrain from spending the next two years loudly filing bills calling for repeal of the tax increase. Maybe.
Comment by wordslinger Tuesday, Jan 18, 11 @ 6:48 am
If Quinn can keep spending discipline for the next two years, he takes away most of the negatives of the tax hikes because he can counter republican campaign rhetoric with some positive results. Not going hog-wild and derailing the long term recovery plan is in the long-term interest of the house and senate dems.
Voters forgive much, if you can show them results.
That’s how Chicago government worked for decades.
Comment by Newsclown Tuesday, Jan 18, 11 @ 7:05 am
Absolutely. Republicans don’t just like it, they love it the most. They’ll get their share of the new loot and still get to sit around pointing fingers at the Democrats for making it possible. It’s incredibly dishonest and cynical, but they think it’s funny.
I think everyone sees right throught it. The Republicans just come across as immature high school kids who don’t take anything seriously. Worse, they expect all of us to drop to their level.
Yet another gimmick blowing up in the face of the IL GOP.
Comment by just sayin' Tuesday, Jan 18, 11 @ 8:24 am
Quinn and spending discipline?! A backbone? You’re joking, right?! That’s the funniest thing I’ve read on here in a long, long time.
Comment by Amuzing Myself Tuesday, Jan 18, 11 @ 9:13 am
AM and GCC, your ignorance of history is no excuse here.
https://capitolfax.com/FY2011BudgetByAgency080210a.pdf
Comment by Rich Miller Tuesday, Jan 18, 11 @ 9:16 am
It was a huge win for the GOP on so many levels. They got the tax increase that we all know we needed. And they never had to put up a competing plan.
It is unbelievable to me that Dem leaders were not out front demanding that the GOP offer an alternative. They should have had a constant refrain of “We want to sit down the GOP and hear their ideas. We want their plan.” Instead, the usual closed-door meetings making it lool like even if the GOP had any ideas, they would not be heard.
Comment by Skeeter Tuesday, Jan 18, 11 @ 9:18 am
I don’t think it’s a win for the GOP at all. I think the Republicans just look like children who tried to pull a fast one on the people of Illinois. Voters don’t like being played for fools.
Comment by too obvious Tuesday, Jan 18, 11 @ 9:31 am
Not ignorant of history at all, Rich. We’re in this mess because no one considered saying “no” before it was too late. Quinn’s budgets have been pathetic patchwork - at best, and every time he’s taken a clear position on something, he’s somehow managed to do a 180 not far down the road. He’s almost universally caved to the Legislature - the one exception being when Madigan threw his hands up and just sent that last ridiculous budget.
With new revenue, I have no doubt he will cave to pressure that will undoubtedly come from both chambers clamoring for increased spending on education, health programs, etc. This isn’t speculation. We’ve seen it time and again for at least the last ten years - if not longer.
Comment by Amuzing Myself Tuesday, Jan 18, 11 @ 9:37 am
===We’ve seen it time and again for at least the last ten years===
Not for the last few, when revenues have plummeted.
Also, there are now spending caps in the law, and there’s that budgeting for results law, which puts a crimp on what the guv can propose.
Comment by Rich Miller Tuesday, Jan 18, 11 @ 9:40 am
i’m really struggling with how taking a caucus position against the tax hike equals tacit support by the GOP. I’ve read this column 3 times and I just don’t get it. Seriously, snark free, someone explain it to me. You may make an argument some are relieved we will not face a shutdown, but that is far from “support”.
In terms of the bonding, rumors are rumors and I know how rumor-mongers are treated on this blog so I cannot give any credence to rumors of deals down the road.
Comment by The Gimmees Tuesday, Jan 18, 11 @ 9:48 am
TG, the idea was to stop it now and then move forward later. Read the whole thing, not just that one line.
Comment by Rich Miller Tuesday, Jan 18, 11 @ 9:52 am
TG, I think the point is the GOP didn’t offer any alternatives. A tacit endorsement of the only plan on the table.
Comment by too obvious Tuesday, Jan 18, 11 @ 10:16 am
I believe the “temporary” nature of this tax hike rests primarily on one thing - the state’s economic picture in 2014-15. If we are still struggling then I think a great case will be made to extend them further or make them permanent. I don’t see the electorate clamoring for new programs and the spending that comes with it. But if any candidate running for governor has as part of their platform either extending or making the tax hike permanent and wins by even the narrowest of margins they will undoubtedly view it as a mandate and press their case with the GA.
Comment by Fed-Up Tuesday, Jan 18, 11 @ 11:00 am
Too Obvious-
that doesn’t make any sense. They voted against the plan, there is no equating that with support.
And I still don’t accept Rich’s premise that there was tacit support based on rumors that GOP may engage in future negotiations on borrowing. That just doesn’t justify the argument of support.
Comment by The Gimmees Tuesday, Jan 18, 11 @ 11:25 am
–They voted against the plan, there is no equating that with support.–
In the days prior to the vote, what organized effort did they undertake to defeat it? TV news show appearances? Talk radio? Editorial boards? Rallies at the SOI Center and the Capitol?
Contrast the Illinois GOPs silence and inactivity with the national GOPs massive efforts in opposition in the runup to the healthcare bill vote.
Comment by wordslinger Tuesday, Jan 18, 11 @ 11:31 am
Exactly right wordslinger. Republicans wanted it to pass, with only D votes of course. That’s why they left only one plan on the table. Eventually someone had to be adults and it was the Democrats.
Comment by too obvious Tuesday, Jan 18, 11 @ 11:35 am
The national GOP had about 4 months to prep and quite a bit of their efforts were funded and organized by insurance industry.
Seriously–where were you guys? GOP legislators were all over the tv and radio leading up to the tax hike.
Comment by The Gimmees Tuesday, Jan 18, 11 @ 1:29 pm
The Gimmees - Can you share a link with me to the GOP plan that they were talking about “all over the tv and radio”? I don’t listen to the radio much, so I must have missed it.
Comment by AnonX Tuesday, Jan 18, 11 @ 2:17 pm
The Gimmees, I didn’t know y’all had your own dedicated IP address. Moving up in the world, apparently.
Comment by Rich Miller Tuesday, Jan 18, 11 @ 2:21 pm
I spoke with a cluster of state legislators before the November election, and commented that if Brady won, there was no reason for the Dems to pass the tax increase — let Brady cope with his rhetoric. The group’s eyes widened in panic and amazement that the Dems might not pass a major tax increase after the election, if the Republicans took over the Governor’s Office.
Comment by Capitol View Tuesday, Jan 18, 11 @ 2:35 pm
–The national GOP had about 4 months to prep and quite a bit of their efforts were funded and organized by insurance industry.–
That’s swell.
No one saw this tax vote coming? Please. Anyway, I catch a lot of TV news and radio in Chicago metro and didn’t see or hear a peep. Maybe it was different elsewhere in the state.
Comment by wordslinger Tuesday, Jan 18, 11 @ 2:40 pm
I am certain that history will look kindly on this action. But it was not only necessary, but foreseeable. I wrote on the blog way back before the election that the action was not going to be in the ordinary veto session but in January. What else would a special session have been called for, it not for just what was on the agenda.
Chapin Rose is articulate and quotable, and even smart in some ways, but in other ways a joke. He specializes in demagogic gestures that have no hope of passage, gestures that are based on people being mad about something they did not like but is in fact a done deal. If he learned to think ahead, he might be dangerous.
As far as the political cost for the next two years, anybody who thinks that Madigan and Cullerton have any taste for political suicide, just doesn’t know them. In the next two years they will get behind the following initiatives, and perhaps manuever some Republicans to support them:
1. They will support changing the game with respect to the teachers’ unions, enabling incompetent teachers to be removed from the classroom and the entire education establishment to be more accountable. The teachers’ unions really screwed up this year. The Democrats now owe them nothing, but they do owe Stand for Children a lot, and Stand for Children has a very hard-nosed reform agenda.
2. They will introduce Workers Comp reform that will both save the state money and also draw support from business.
3. They will support further pension savings by making state pensions taxable income for the state and by requiring retirees to pay part of their health care premiums.
4. They will support an amendment to the Illinois Constitution that will permit the legislature to enact a graduated income tax in place of the now-mandatory flat tax. This will totally change the game when the current temporary increase is due to roll back, because then the income tax can be constructed to reduce the hit on lower and middle income tax payers with no reduction in the revenue stream.
Each of these measures will draw fire from important interest groups, but will be broadly popular, including drawing crossover support from independents especially and even some Republicans.
Save this, and call me to account in two years
Comment by jake Tuesday, Jan 18, 11 @ 3:52 pm
Here’s Judy Baar Topinka — the Top Republican votegetter in 2010 — on the Tax Hike:
Topinka said the biggest problem is that the state is spending more than it is taking in. She said she would not rule out a tax increase, as a policy option, but she took issue with its size.
“There is a place for tax increases, but certainly not of the size like this and certainly not before you’ve made the necessary cuts and reforms,” she said. “I mean, to just arbitrarily say that your only option is a tax increase, I think is very limiting, and it’s very short-sighted.”
Oddly enough, a combination of cuts and new revenue is exactly what Quinn passed.
Comment by Yellow Dog Democrat Tuesday, Jan 18, 11 @ 4:05 pm
There is no shortage of old school, Edgar-type R’s in the State. They probably loved it. New school Republicans recognize this huge tax increase, no spending cuts for what it really is…more of the same bad, really bad government.
Comment by park Tuesday, Jan 18, 11 @ 7:25 pm
Park, what are “new school” republicans?
Comment by steve schnorf Tuesday, Jan 18, 11 @ 8:54 pm
Ones who were taught “self esteem” rather than the 3 r’s?
Comment by JustMe Tuesday, Jan 18, 11 @ 9:16 pm
–what are “new school” republicans?–
Unelectable statewide?
Comment by wordslinger Tuesday, Jan 18, 11 @ 9:46 pm
I deleted a moderated comment that I should’ve left alone for hilarity’s sake. Sorry about that. Most of you would’ve enjoyed it. The commenter said that Schnorf ought to back off of Dave because Dave is a great budget expert.
To the deleted commenter: Schnorf used to be the state budget director.
Comment by Rich Miller Wednesday, Jan 19, 11 @ 7:12 am
I’m just annoyed that there is another Dave around here. I’m dave with a little d. The other Dave is Dave with a lot of wrong ideas.
Comment by dave Wednesday, Jan 19, 11 @ 8:28 am