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* Outlines of a budget deal are beginning to emerge. I had my own story for subscribers today, but here are a couple of other reports. SJ-R…
Illinois Senate Democrats will accept House revenue projections and craft a 2011-12 budget that cuts nearly $1 billion from the Senate’s earlier spending plan.
Senate President John Cullerton, D-Chicago, said Wednesday he’s been in talks with House Speaker Michael Madigan, D-Chicago, and the focus will be to reach a compromise based on the significantly lower revenue estimates for the next budget year put out by the House.
“That’s what the goal is,” Cullerton said Wednesday. “I think we can do that. That’s what we are going to be negotiating.” […]
The House placed the revenue estimate next year at about $33.3 billion while the Senate determined it would be about $34.3 billion. The Senate said its number was based on estimates produced by the General Assembly’s Commission on Government Forecasting and Accountability.
That all depends on how you define “revenue projections.”
* Daily Herald…
[Rep. Fred Crespo] says the House might cut even further parts of its general services budget - stuff like the Department of Commerce and Economic Opportunity or the Illinois Environmental Protection Agency.
That stuff, by comparison, is politically easier to cut. Then, that money they save on general services could go to human services - stuff like care for the disabled, poor and elderly.
That stuff, by comparison, is politically tough to cut.
* Meanwhile, this objection to long-term borrowing to pay off old bills needs to be flagged…
“My problem with this is, if we borrow again, it’s going to get better?” asked Sen. David Luechtefeld, R-Okawville, during a meeting of the Senate Executive Committee. “How long will it take for those bills to go back up?”
As I’ve tried to explain time and time again, the income tax increase wiped out most of the state’s structural deficit. But there wasn’t enough money in that tax hike to also meet the one-time cost of paying off the past-due bills which were created by that deficit. Ergo, the borrowing, payments for which were actually built into the income tax law.
* Whatever the case, this latest borrowing plan is going nowhere. Republican votes are needed, and none are willing to support it…
Republicans said the state should instead slash spending and pay off bills with those savings. They attempted to amend Sullivan’s bills to place tighter spending caps on the state budget, which they said would allow the state to pay off its bills in cash in roughly 18 months. That effort failed.
“Have you laid out a budget that actually identifies where those cuts are going to come?” Sullivan asked state Sen. Matt Murphy, R-Palatine, who introduced the spending caps.
“We put out a plan that has specific cuts in it and a piece of legislation which has a cap,” Murphy responded.
“File the amendments. We’d love to see it,” Sullivan said.
* The Sun-Times is kinda unclear on the concept…
The Illinois Legislature wouldn’t be thrilled if Congress suddenly decided to seize a chunk of state revenues on the grounds that Washington needs the money more than Springfield does.
But that’s what Springfield is talking about doing to municipalities and counties across the state. To close the state’s gaping budget gap, legislators are discussing siphoning off tax revenues that traditionally have gone to local government.
The state has, indeed, lost a ton of federal money since the stimulus expired, and it is about to lose even more.
* Related…
* Mautino: ‘Mark will be fine’: The relocation of Hartney to Mark was of great benefit to the village. Records show that before 2003, Mark only received about $10,000 a year in sales tax revenue. After Hartney came to town, the village’s total sales tax receipts climbed, and in 2007, Hartney paid more than $3 million in sales tax receipts.
* Illinois Capitol police short-handed due to budget, attrition
* VIDEO: John Cullerton on the budget
* VIDEO: Borrowing Q&A
* Your share: $42,000
* VIDEO: Kelly Kraft on borrowing plans and budget deadline
posted by Rich Miller
Thursday, May 26, 11 @ 4:55 am
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It’s smart to lowball revenues. Helps to instill some discipline.
Comment by wordslinger Thursday, May 26, 11 @ 8:36 am
I was at the executive committee and it’s interesting to point out that there is not a single group opposed to restructuring the debt to vendors other than the Republicans. Everyone else understands that this is already a debt and the State should take care of it.
How many lobsters and special interest groups are there in Springfield? And none of them showed up against the bill.
Comment by Ahoy! Thursday, May 26, 11 @ 9:11 am
===How many lobsters and special interest groups are there in Springfield? And none of them showed up against the bill.===
Astute observation, and pretty telling.
If I’m not mistaken, isn’t it much more expensive to pay the late fees to vendors than it would be to pay the bonded debt service on the same principal?
Comment by Obamarama Thursday, May 26, 11 @ 9:36 am
The senate R’s seem so please with themselves here. It’s like they are playing gotcha, but are the only ones who get the joke. Watching that video was very interesting and makes me wonder how long the Senate R’s can hold onto such a fanatically small position and still be relevant.
Comment by Time keeps on ticking, ticking... Thursday, May 26, 11 @ 9:42 am
Mayor Emanuel is on Windy City Live, the new show in the Oprah spot, and was talking about the contract with parents for after school programs that was inspired by a kid who told him he drafted the contract. In addition to money, personal involvement is very important for school success. (also interesting, the Mayor’s comments on not having water as a guest, in fact, kind of cringe worthy for the show producers, and actually, the behavior of the Mayor is also cringe worthy.)
Comment by amalia Thursday, May 26, 11 @ 9:49 am
Senator Brady: “How much of the states budget goes to servicing debt”
Answer: Under 9%
Senator Brady: “So nearly 10%”
Answer: No. Under 9%
Senator Brady: So Nearly 10%. I just want to get the numbers right”
If we are talking billions of dollars 1% makes a huge difference if you want to “get the numbers right”. To quote The Score: “hey Buddy who ya crappin’?” Sentor Brady then goes on to compare Illinois to Iran, Iraq, and Greece. It’s like the Senate R’s don’t want to acknowledge that Illinois is a major economy unto itself. This is clearly a case of mistaking the forrest for the trees; or the general election has never stopped and be damned everything else.
Comment by Time keeps on ticking, ticking... Thursday, May 26, 11 @ 9:58 am
to be fair, that’s more budget policy specifics from Brady than we heard the entire campaign.
Comment by Michelle Flaherty Thursday, May 26, 11 @ 10:03 am
Murphy, Brady, and the Senate GOP are indifferent to the employee layoffs, small business bankruptcies, extra interest the state pays on delinquent bills as long as they can suck-up to the Tea Party fringe…
Comment by King Louis XVI Thursday, May 26, 11 @ 10:46 am
as long as they can suck-up to the Tea Party fringe… ——-
You’d think they’d be worried about everyone else. It seems to me like you’d jump in here get this done so you can have impact on other more important things rather than sit by and watch everything else unfold while you laugh to yourself or sit with your arms crossed looking mad.
Comment by Time keeps on ticking, ticking... Thursday, May 26, 11 @ 10:53 am
Regarding long term borrowing to pay off old bills.
Clicking on the link “Your Share: $42,000″.
The following is revealed.
- You’ll recall that on the night they jammed a 2-percentage-point income tax increase through the General Assembly, Quinn’s fellow Democrats essentially assured all of us that more borrowing wouldn’t be necessary: The new $7 billion a year would cover the state’s back bills. -
Immediately following are two quotes that caught my eye.
Senate President John Cullerton: “The purpose of this bill is to raise enough money so that we can continue to pay our pensions without borrowing the money. To pay off our debt. To have enough money to pay the interest on that debt. And, for the first time ever, establish caps on how much we can appropriate. … We have just come through the worst economic crisis in our lifetimes. And we have not paid our bills.”
And House Majority Leader Barbara Flynn Currie: “Remember, the point of this income tax increase is not to expand programs, not to do brand-new things in Illinois state government. It is only intended to pay our old bills and deal with the structural deficit.”
That is a different story than Rich provided, I’ve cut and pasted his comments from the blog above.
- As I’ve tried to explain time and time again, the income tax increase wiped out most of the state’s structural deficit. But there wasn’t enough money in that tax hike to also meet the one-time cost of paying off the past-due bills which were created by that deficit. Ergo, the borrowing, payments for which were actually built into the income tax law. -
Citizens were told by Democratic leaders the tax hike would allow past due bills to be paid off. And remember, it’s a temporary tax hike.
Now just a few months leaders are saying the tax hike did not allow past due bills to be paid off.
And apparently it’s not a temporary tax hike because if the tax hike is removed, won’t structural deficit will re-appear? Based on Rich’s comment above.
Comment by Mark Thursday, May 26, 11 @ 10:58 am
I find it ironic that the same individuals who are opposed to borrowing to pay past due debt are the same individuals who utilize this same strategy as business owners- through use of lines of credit, restructuring properties,debt, and use of investment tools. But for the State this is irresponsible? That would be an interesting ecomonics lesson for all those opposed to demonstrate that they pay “cash” for everything and do not employ any credit or investment strategies to run their businesses and their personal lives. Then they can actually say that they are leading by example.
Comment by carbaby Thursday, May 26, 11 @ 11:04 am
Mark, the Senate Republicans have a valid issue on the tax hike and whether or not it will need to be/should be extended. Bring that arugment in front of the public…but as I recall some R’s supported it so… the borrowing is a completely different issue and one where the republican stance is just not making sense. It’s like talking to someone about the bulls and they want to expand the issue to Jerry Reinsdorf’s ownership of the sox. It’s just thick and exhausting.
Comment by Time keeps on ticking, ticking... Thursday, May 26, 11 @ 11:11 am
The point I was trying to make is the Jan 2011 tax hike was billed by Democratic leadership as a way to pay off past due bills and handle the structural deficit.
But that apparently was not the case.
Comment by Mark Thursday, May 26, 11 @ 11:19 am
Mark, if you recall borrowing was part of that and a percentage of the tax hike that does not go away was dedicated to the borrowing. Republicans in the Senate got together that night and all pledged not to approve amny borrowing and thought it would be leverage later on…meanwhile everything else continues to move forward and they are being left behind and the issue of common sense remains while the senate r’s continue to pander to an increasingly smaller set of support, as many downstaters under stand how much timely payments to schools, hospitals, vendors, effect the economy and levels of service we all expect from the government. So it just seems like a tactical move that is no longer effective and no one has tapped them on the shoulder to explain to them that the parade has passed by already.
Comment by Time keeps on ticking, ticking... Thursday, May 26, 11 @ 11:24 am
The federal stimulus money wasn’t a permanent revenue source and good, forward-thinking budgeting should have allowed the State to adjust to the eventual end to the payments. The revenue promised to local governments is permanently built into Illinois law. The income tax share has been around since the inception of the income tax in 1969.
Comment by Illanoyed Thursday, May 26, 11 @ 11:26 am
Someone should explain to Fred Crespo that there is no GRF in the IEPA budget. It’s all federal funds and special funds generated from fees for - guess what! - doing what the IEPA does. So much for his plan for moving money to human service programs. Scary that the Approp Chair overseeing the IEPA budget doesn’t know that.
Comment by Paying Attention to the Budget Thursday, May 26, 11 @ 12:50 pm
===Citizens were told by Democratic leaders the tax hike would allow past due bills to be paid off===
As I wrote above, the income tax law included funds to pay the bonds that would pay off old bills. You’re being deliberately obtuse.
Comment by Rich Miller Thursday, May 26, 11 @ 1:56 pm
- Citizens were told by Democratic leaders the tax hike would allow past due bills to be paid off. -
I’m not being deliberately obtuse.
Don’t give me that much credit.
I am just trying to figure this stuff out.
So maybe you can make the claim in-deliberate.
Comment by Mark Thursday, May 26, 11 @ 3:21 pm
Now I understand what Rich has been explaining.
IASB Alliance Legislative Report 96-72
January 12, 2011
INCOME TAX BILL PASSES; BORROWING FAILS
After a long, dramatic day in the Capitol on the last day of this legislative session, the Illinois General Assembly approved a bill to increase the state’s income tax rates. However, in the House of Representatives, a companion bill failed which would have allowed the state to issue bonds in order to pay off nearly $9 billion of state debt. One-half of one percent of the income tax increase would have been used to establish a revenue stream to pay off the bonds over 14 years ($426 million per year).
The income tax bill, SB 2505 (Cullerton, D-Chicago), only needed a simple majority vote for passage. It received the bare minimum number of votes necessary in the House, passing 60-57, with all of the Republicans and 10 Democrats voting “no”. The Senate approved the tax increase bill on a vote of 30-29. The borrowing bill, SB 336 carried in the House by Representative Frank Mautino (D-Spring Valley), needed an extraordinary majority House vote (71) because it required bonding authority. It failed on a vote of 68-49.
Members of the new 97 th General Assembly, who will be sworn into office today (Wednesday) will have to take up the borrowing issue.
INCOME TAX RATE INCREASE
SB 2505 will bring approximately $7 billion into state coffers through an increase in both the individual and corporate income tax rates (retroactive to January 1 st). The individual rate will increase from the current 3% to 5%; the corporate rate will increase from 4.8% to 7%. The rates would eventually decrease over the next 15 years. In the first four years the new tax receipts would be used to pay off state debt. Public education would begin receiving additional funding from the tax increase in 2015.
http://www.iasb.com/govrel/alr9672.cfm
Comment by Mark Thursday, May 26, 11 @ 4:26 pm