Budget roundup
Wednesday, Mar 7, 2007 - Posted by Rich Miller
* The Daily Herald starts off our coverage of the governor’s budget proposal…
The $60 billion budget - a new state record for spending if enacted - also calls for selling the Illinois Lottery and borrowing $16 billion to shore up the shaky state worker pension system, a new payroll tax on companies that don’t offer health care to employees and revamping riverboat casino taxes. But the Regional Transportation Authority would not receive a requested bailout, and it’ll be up to lawmakers to propose a way to pay for a transportation-centered capital spending plan.
All of that new money for schools and health insurance would flow from a new tax on businesses’ gross receipts the administration projects will fetch $2.6 billion in the first year and $6.3 billion once fully implemented.
* It looks like the Tribune either broke the traditional embargo or did what I did and got a budget book through back channels. Their story is the most complete in the mainstream media…
The gross receipts tax would include a 0.5 percent levy on the transaction of goods and a 1.8 percent levy on service firms, to generate $3 billion in the next budget year and $6 billion yearly when fully operational. The tax would be imposed on revenues that business takes in, regardless of profitability, sources said. […]
Revenues from the gross receipts and payroll taxes would help fund Blagojevich’s recently unveiled Illinois Covered health-care plan, which is eventually aimed at helping 1.5 million uninsured and underinsured state residents get health-care coverage. The administration says the cost of that plan would be low in the next fiscal year. When fully implemented, the administration says the cost would be $2.1 billion a year, through critics contend the figure could go much higher.
Actually, the budget book I have estimates the annual cost by Fiscal Year 2011 (which starts in three years) to be between $3.2 and $4 billion a year. Anyway, as I told you yesterday the budget offers up $1.5 billion for schools in the first year, but as the Tribune correctly notes…
(T)he $6,020 per-student figure Blagojevich is proposing falls short of the $6,405 figure that state education finance advisers recommended two years ago.
* Copley has more details on smaller aspects of the governor’s education plan…
# Allocating $60 million to expand early-childhood programs and reach 12,000 additional children. Another $10 million would go to early-childhood program providers.
# Setting aside $40 million to pay “quality teachers” to go to or stay at schools that are underperforming or hard to staff.
# Working with teacher unions and school officials to create a “performance pay” program recognizing good teachers and schools where students improve their academic performance.
# Encouraging school districts to consolidate.
# Creating a statewide teacher-mentoring program.
# Creating a new program to serve homeless students.
* Back to the Daily Herald story, which points out that the governor will not propose any direct property tax relief today…
“More money is good, it’s hard to squabble over that,” said state Sen. James Meeks, a Chicago Democrat who dropped his bid to challenge Blagojevich for governor last year after Blagoejvich promised to reform education funding. “But reform has to include property tax relief.”
* Senate President Jones supports the gross receipts tax, but Sen. James Meeks says that his SB 750, which includes an income tax increase and property tax relief, is still on the table…
Meeks said Jones assured him that S.B. 750 would be kept alive as “a backup” plan to the gross receipts tax.
* And Sneed claims the governor is prepared to play some hardball…
Word is Blago told insiders during a hush-hush meeting that if his proposal to insure all Illinois residents who lack coverage does not pass, there will be no money for capital infrastructure and construction programs and other special projects.
* You can watch the budget address on the General Assembly’s website, or you can tune into your local public television station, which should be carrying it live. I’ll be on PBS starting at noon to help with the lead-in and wrap-up coverage.
- VanillaMan - Wednesday, Mar 7, 07 @ 9:02 am:
“More money is good, it’s hard to squabble over that.â€
Where do they think this money comes from? Since when do these guys think that this money is theirs? What happens when we get a government full of people who think like this?
We go broke, drive businesses away, lose jobs, put more people on a shrinking public dole, and everyone ends up losing - except the politicians who keep promising something for nothing.
This government is a complete disaster. It will take decades to fix what is being destroyed, if it ever could be.
- Bill - Wednesday, Mar 7, 07 @ 9:12 am:
This gov’t is the best thing to happen to the citizens of our great state since the time of Lincoln and Douglas.
Finally, we have a pro-active plan to shore up the pension funds depleted by 30 years of under funding. We have the opportunity to equitably fund education so that the quality of education a child receives does not depend upon the wealth of her parents or the value of the dirt under their residence.
We have the opportunity to provide health insurance for every citizen of Illinois.
This gov’t has done more to equitably provide services for its citizens than any other in our history. It is about time that big business pay their fair share to benefit the society that supports their profitable endeavors. I’m proud to be a citizen of our porgressive state and I’m proud of our courageous leaders.
- Fan of the Game - Wednesday, Mar 7, 07 @ 9:20 am:
Bill,
“Big” business pays its share and then some. Who do you think pays payroll taxes? Who pays income taxes? Who creates jobs so others can have the funds to purchase homes and cars?
If your state doesn’t have “big” business (and small business, for that matter), who will pay for all these services we are providing through the government.
If the business climate in Illinois gets much worse, the businesses that fund those programs through their tax contributions will be gone, and the “do-gooders” will be wringing their hands wondering how they will pay for the services for which people clamor.
- Dreamin' - Wednesday, Mar 7, 07 @ 10:35 am:
I’ll believe it when my wife, daughter and I get a State of Illinois health and prescription card in the mail with no strings attached.
Who will truly be eliglble for this “pie in sky health insurance”? Who or what state agency will make that determination?
- Niles Towmship - Wednesday, Mar 7, 07 @ 10:40 am:
I’m not for any new taxes until we de-bloat Illinois government. We are not even close to doing that. I am for a swap out of lower property taxes for higher personal and corporate income taxes, but we should not be creating new categories of tax when government is this bloated with waste and inefficiency. Let’s not chase businesses out of the state. Our record for keeping and gaining new businesses isn’t so great that we should think we could get away with this. Blago is really acting like he won a toal mandate on election night. Maybe he should look closely the numbers.
- Truthful James - Wednesday, Mar 7, 07 @ 10:45 am:
Bill –
You wrote “porgressive” Are you sure that you did not mean “porkgressive.”
In Louisiana under Huey Long, the oil companies had nowehere to go, because that’s where the oil was. Not so for Illinois manufacturing, it is mobile, as are the productive workers. Illinois is a nation in competition with neighboring nations — Indiana, Wisconsin, Iowa, Missouri and the countries further to the south. Look East. Indiana changed its tax structure to attract business and they have been quite successful.
The increased taxes will be built into prices. If prices can not be increased, it will be built into lower labor costs — i.e. fewer workers. Or it will be built elsewhere.
I know this looks like free lunch to you, Bill, as well as to the thousands of illegal aliens and the legal residents but it is not
- Gene Parmesan - Wednesday, Mar 7, 07 @ 11:04 am:
Bill’s going to get carpal tunnel syndrome if he plans on defending Rod all day.
- Bill - Wednesday, Mar 7, 07 @ 11:20 am:
Whoa,
We can’t argue the merits so let’s just bring out the illegal alien red herring. I can just see all of those d@mned aliens boarding busses to Illinois to get that free health insurance.
In fact, the portion of income taxes paid by business has been steadily decreasing throughout the years. This year, businesses paid a mere 12% of income tax revenues with 88% paid by individuals. Compare this with 20% a decade or two ago. Somehow, I can’t see business re-locating to a high tax state like Wisconsin to avoid paying their fair share of taxes in Illinois. None of these catastrophic things happened in other states when their tax structures were changed. Jobs are increasing under this administration and will continue to do so. Big business in Illinois will finally have to pony up.I realize that this is distasteful to them and their lackeys in the Chamber and Taxpayers Union, especially since they have been allowed to avoid the corporate income tax for so long. Too bad! Small businesses will be exempt from GRT and the payroll tax if they provide health insurance for their employees which they should have been doing all along.
This budget plan provides the revenue needed to provide services to the citizens of Illinois and re-balances the burden so that, for the first time, big business will have to pay their fair share of that burden and live up to their responsibility as corporate cirtizens.
- VanillaMan - Wednesday, Mar 7, 07 @ 11:56 am:
Blagojevich, Hillary “I’m taking that profit” Clinton and Hugo Chavez believe in the same thing; businesses are filled with magic money for them to redistribute to others. Capitalism is greed, the rich don’t earn what they get, and socialism is the answer.
They have conviently ignored the past 20 years that clearly show their ideology is bunk. Instead they are going for the political power behind the engorged governments they create.
It will take decades to fix what this administration has wrought.
- Tea Leaves - Wednesday, Mar 7, 07 @ 11:58 am:
Sorry Bill
It’s a fact, they are already here. I sure you won’t have any trouble opening your wallet.
Maybe Carol Adams could be promoted to lead this new state agency.
- PalosParkBob - Wednesday, Mar 7, 07 @ 12:05 pm:
This sort of conficatory tax plan to maintain, and bloat, government waste and corruption would be the Death Knell for a political party any where but Illinois, New York, Massachussets, and Louisiana.
If only we had another Party to turn to in Illinois…….
- Truthful James - Wednesday, Mar 7, 07 @ 12:27 pm:
Would you be including the Personal Property Replacement tax in that, Bill?
It is the sum of all taxes, you see, including Cook County’s property taxes, Workman’s Compensation, Unemployment, and the list goes on. All of those taxes go on the income statement, before profits are calculated.
And out of all that taxable profit windfall (?) you seem to believe exists, must come the purchase of capital equipment to keep production going.
Is it any wonder that Indiana, Kentucky, Georgia, Alabama and Missippi keep knocking on our doors?
And BTW, in case you didn’t notice it, our very own Lake County I seeing business move to Kenosha and Racine Counties. Now why would that be?
I know you must have the cite for your statement, Bill, so just give it to us.
- RickMonday - Wednesday, Mar 7, 07 @ 12:48 pm:
I am for this only if it includes property tax relief. With all of this money going to the school districts will we really see a decrease in property taxes? I dont think so unless there is a law that states it. Have you ever seen a politician who is willing to cut property taxes?
- cermak_rd - Wednesday, Mar 7, 07 @ 12:51 pm:
I’m glad to see a more equitable situation proffered for schools. I’m no Robin Hood, I don’t mind that expensive suburbs have more but I do care that children in really poor areas don’t have enough. But I am sorry to see a continued effort to “encourage” consolidation. I’m sorry, floundering rural school districts that can’t keep their head above water should be forced to consolidate, not encouraged. We’ve been trying to encourage them for at least a decade now. If the concern is that the children will be bussed about why not try innovative techniques like distance learning?
- steve schnorf - Wednesday, Mar 7, 07 @ 1:21 pm:
Business should have jumped behind 750 when they had the chance. They would be far better off than under the Governor’s plan.
- Bill - Wednesday, Mar 7, 07 @ 2:58 pm:
Steve,
You’re right, as usual, but it is too late now. Don’t give up on 750 just yet, After today, they may be begging the GA to pass it. I tend to agree with Jones that it favors the property rich districts but then there’s Lang who says his constituents would lose. Whatever, this tax eater has developed a big appetite. It is feeding time!
- Punley Dieter Finn - Wednesday, Mar 7, 07 @ 3:52 pm:
To borrow from the late, great Phil Burton, when you show them the gates of hell (GRT), everything else looks pretty good.
- VanillaMan - Wednesday, Mar 7, 07 @ 4:09 pm:
I have already taken some time to research 750. If you think 750 isn’t as bad as what was proposed today, you are sadly correct.
According to the Tax Foundation, Illinois’ business climate would plummet under 750. Our state would rank as one of the ten worst states to do business in. Now consider that what the Governor has proposed today - we are looking at a complete destruction of Illinois businesses.
Honestly, after the new electricity bills flattened so many small businesses recently, the Governor now wants to do this to them? You have to be completely out of your mind to stay in this state for business reasons. It is the responsibility of successful businesses to be managed successfully. This means that if the Governor’s proposals pass, any half decent business manager will move their business right over the border to Indiana.
If you thought doing business in Illinois sucked before today, you are packing your bags right now. Our new tax rate will make Wisconsin’s look downright CONSERVATIVE.
This is a very sad day for this state. We are out of business.
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- Anonymous - Wednesday, Mar 7, 07 @ 5:47 pm:
Exempted from GRT are sales under $1M, exports, food, medicine…and insurance? Exempting health insurance would make sense, but all insurance?
It would be very interesting to see the specific companies (at least the public ones) that would be affected and how much they did and would pay. Which companies and their consumers would get hit?
Are the lobbyists exuberant about such a controversial big dollar proposal?
- Anonymous - Wednesday, Mar 7, 07 @ 6:14 pm:
Why spend billions on roads and school buildings when we could actually reduce property taxes and congestion by telecommuting to work and school using high speed internet? Why spend property taxes on buses, drivers, maintenance, oil, cleaning supplies, janitors, kitchen equipment and cooks when we could invest the saving in technology and teachers that directly benefit our kids? Our kids would be far better prepared for a more competitive world where doing work cost efficiently will be critical. We can no longer afford to waste time and money driving everywhere when many jobs, especially services like education, could soon be done from home. The fastest way to start saving is training our teachers and students to telecommute. Our colleges and www.ivhs.org are wisely leading us into the future.
- Disgusted - Wednesday, Mar 7, 07 @ 6:45 pm:
Someone at my office said today that they heard on some radio talk should that Caterpiller said if the GRT became reality, they were moving to Iowa. Anyone else hear that???
- Amazed - Wednesday, Mar 7, 07 @ 7:56 pm:
Instead of calling the health plan “Illinois Covered” Rod should call it “Illinois Buried”. Buried in debt…
- Gregor - Wednesday, Mar 7, 07 @ 8:33 pm:
I found it interesting that Doctor Young, who was a big booster and advocate for Rod’s earlier health intiatives like AllKids and RX-whatever, panned this new expansion program.
- Philonian - Monday, Mar 12, 07 @ 11:11 am:
Here’s some simple math for you.
If a business runs a 5% *Net* margin (and a lot of businesses don’t make that much), this is a 10% tax. Ten Percent! This does not include the fact that many of the op expenses are going to go up.
You think prices are going to go up?
You think the cost of childcare is going to go up? (they get to pay the 1.8%, plus .5% on everything they buy).
Ironically, it’s going to hurt poor people worst. People living hand to mouth right now aren’t going to be able to bear the coming price increases.
Do you think wages will go up or new jobs will be created when business expenses go up massively?
They try to sell it as a class warfare deal, saying .5% isn’t much, clearly, that’s a lie.
Last, the business owner/taxpayer dichotomy is baloney. If a business owner in Illinois doesn’t pay Corporate income tax, he pays Corporate Replacement tax *and* Illinois income tax. Example, I’m a business owner that pays multiple times more than teh “average” $1500 in Illinois State income tax. Last year, I also paid over $5000 in Illinois replacement tax. ASSuming they get rid of the Replacement tax, this tax will merely be an increase of 81% in my corporate tax expense while my Illinois Income tax stays the same.
Moreover, I haven’t seen anything that is going to exempt businesses that provide healthcare for their employees. If so, I’ll be exempt, but I’m not holding my breath.
Blagojevichs promised *tax relief* means he’s not going to raise taxes. That’s pretty Orwellian for a Democrat.
This is going to increase the price of *everything*.
Last, I’m getting tired of seeing companies building plants and creating high paying jobs everywhere but Illinois. Toyota and Honda alone added 27,000 jobs in Indiana in the past ten years. Because of Illinois’ ridiculous taxes, our state wasn’t even in the running for these plants.