Springfield Politicians Played Taxpayers for Chumps--Again

So, all you retired public employees, suppliers waiting for your long over-due checks, "underfunded" schools and the rest of the pack that thought the blow-off-the-roof Illinois income tax increase would solve your problems, what do you think of your Democratic pals now?

You've been chumped.

 

Gov. Pat Quinn and Democratic lawmakers were all grins after their passage in the dark, final hours of a lame duck session of the 67 percent increase in personal income tax and 46 percent hike in the corporate tax. The back slapping and self congratulations are an image we need to keep in mind when it turns out--as it surely will--that the added revenues will fail to cure what ails the state.

Consider: The new revenues will produce little more than $7 billion. (Mind you, all these numbers are as soft as the brain matter that produced them.) That amount has to be spread out to cover a $15-billion budget deficit and $8 billion in unpaid bills. Unless there's a miracle of loaves and fishes, it won't work.

Going in, Democrats said they would address, among other things:

  • Unpaid bills. Health care providers, social service agencies and other state suppliers getting stiffed by the state still will have to wait for their checks. How long? No one knows. House Democrats admitted as much when the "all-powerful" House Speaker Michael Madigan tried to push through a proposal to borrow $8.7 billion, funded by the tax increase, to immediately pay off the backlog. But even Madigan couldn't muster the three-fifths majority needed for more the borrowing that would add billions to the $80-billion to the--oh, who knows? -$160 billion the state already owes in borrowing and unfunded mandates, such as the public employee pension funds.
  • Unfunded pensions. But the Legislature did authorize another $3.7 billion in bonding to pay this year's obligation to the state pension funds. Here's a state that already has the worst credit rating in the state, going once again into the bond market to pay an annual obligation. Thanks to Illinois' possible plunge into the "junk bond" category, the cost of that borrowing will be all that more. And, by the way, that does nothing to reduce to backlog of what the state owes to the pension funds. What happens next year? More borrowing?
  • "Desperately needed" additional money for schools and social services. The legislature's black caucus got aced out of the millions it wanted to flush down the Chicago Public Schools sinkhole. They didn't get it when Democratic leaders had to trim the originally proposed 75-percent tax hike down to 67 percent to get the deal passed. The black caucus was directed to take its seat in the back of the bus. Mysteriously, though, Quinn promised that he'd designate $250 million more to education over each of the next four years. But where is that money coming from. Maybe some of it from...
  • New initiatives. The deal does contain $113 million for unspecified new projects, apparently to be determined by the governor. So, here's some new money for who knows what, when the state urgently needs to reduce spending. Nice.
  • Overspending. Oh, boy! The deal puts a 2 percent cap on increased spending over the next four years. But, the cap doesn't apply to spending for education and human services--two of the biggest budget items--and property tax relief. Oh, and I'm just wondering if empowering the state inspector general to rescind the tax increase if the spending exceeds 2 percent is constitutional. Just a minor problem, though, I expect.

Not to fret though, the tax increase is only "temporary." In four years, it will go down (if the Legislature allows it in 2015) to 3.75 percent for individuals and 5.25 percent for corporations. It will go down even further in 2025, presuming the state hasn't become insolvent by then. Ignore the fact that the last time the state passed an income tax increase, it also was dishonestly sold as temporary.

Maybe there's something I'm missing in this deal that makes up for all these unsolved problems, but there was hardly any time to figure it out. The Democrats skipped such niceties as public hearings and disclosure of the bill's language in time to fish out the bad stuff. All we know for now is that when the deal came out of hiding, it turned out to be a massive, worthless deception.

Gee, what will they promise next?

This column also appeared in The Chicago Daily Observer

Comments

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  • This analysis seems correct.

    However, the only practical bug is that they couldn't pass the $8.7 borrowing, and with a 60% requirement for any borrowing, are unlikely to pass it in the new GA. Thus, the vendors won't get paid. However, the Democrats, especially the suburban ones, will say that they will.

    As far as temporary, I hearken back to when I lived in upstate New York, where King Cuomo I kept saying every year that a "temporary income tax surcharge" just had to be extended just one more year, until the people finally had enough and voted him out in 1994. Yet, the Tribune Editorial Board believes that King Cuomo II is going to implement austerity. In any event, Illinois, as shown by that great defender of law and order, Jim Thompson, undoubtedly will take the King Cuomo I path. And if we are supposed to wait until 2025 for the full reversion, we are still waiting for the 1960 promise that the Tollway would eventually be free to happen. 50 years later, it is certain that it won't. Nonetheless, the north suburban Democratic legislators bought this bill of goods. However, since they succeeded in reapportioning things to run out all the Republican house members from the area 10 years ago, it isn't going to make any difference, as I noted yesterday. I still wonder why Highland Park votes for Democrats, and then extends their districts into Cook County.

  • Hello Dennis, were you ever able to find out any more information about Local Matching Funds for area Major Capital Projects (like the $560 million Illinois share of the Red Line Extension funding)?

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