Our horrible cash crunch
Wednesday, Dec 3, 2008 - Posted by Rich Miller
* You’ve probably already heard about the nation’s governors asking for money from Barack Obama…
Forty-eight governors met with President-elect Barack Obama [yesterday] to press their case for a federal package to help them weather the U.S. recession that began in December 2007.
The state executives want an assistance plan to create jobs through infrastructure projects, such as highways, and to aid with programs such as unemployment benefits, food stamps and health care for the poor, said Pennsylvania Governor Ed Rendell, chairman of the National Governors Association. Rendell said more than $130 billion in infrastructure projects are waiting to go ahead if funding is secured.
“We’re not asking for the federal government to bail us out,” Blagojevich said. “We will do our part.”
* But Gov. Schwarzenegger says he wants to get his own house in order before asking for federal money…
Governor Arnold Schwarzenegger, who declared a fiscal emergency yesterday in California, said the state won’t accept federal money until it balances out its books.
The governor has proposed $4.7 billion in increased taxes and fees and $4.5 billion in spending cuts to close a shortfall of $11 billion. He said he is hopeful lawmakers will approve his plan, and he won’t accept federal aid until the state balances its budget.
“I’m an optimist,” he said. “We cannot ask the federal government for help until we get our act together in California.”
* Gov. Blagojevich, on the other hand, wants federal money to patch existing holes in the state’s budget. The state’s fiscal crisis is spreading fast…
Urbana schools are owed more than $2.6 million by the state of Illinois, and if the state doesn’t start paying up, the schools will probably be broke by mid-March, said Urbana school district Business Manager Carol Baker.
At the school board’s Tuesday meeting, Baker and David Adcock, the director of Urbana Adult Education, said the funds were overdue since August.
Oy.
By the way, the state will probably be flat broke by mid-March as well. We’re heading for a huge crisis, campers.
* The Urbana school board probably doesn’t have the flexibility to close loopholes with massive privatization schemes like Chicago…
Rates for most city parking meters will increase to $1 an hour starting Jan. 1 as a result of Mayor Richard Daley’s deal to lease the spots for $1.1 billion to a private firm.
Two-third of the city’s meters now cost 25 cents an hour, but once the paperwork is finalized, any metered spot costing less than $1 per hour will increase to $1 next year, city officials said today. And by 2013, those same metered spots will cost $2 an hour, according to City Hall.
The most expensive meters, which are found in the Loop, cost $3 an hour now. They will increase to $3.50 an hour next year and $6.50 by 2013.
* More…
Daley plans to use the nearly $1.2 billion in proceeds to pump $400 million into a long-term reserve fund, $325 million to help balance city budgets through 2012 and $100 million on programs to support residents in need. The remainder — about $324 million — would be a rainy-day fund “to help bridge the period until the nation’s economy begins to grow again,” he said.
* Eventually, the city is gonna run out of stuff to sell. But Daley will (hopefully) be long gone by then. This is a very good point…
REDFIELD: It’s an indication that the current revenue structure, property taxes, sales taxes, revenue sharing from the state, isn’t sufficient to allow the city to keep doing the basic things that it’s doing.
Kent Redfield teaches political science at the University of Illinois at Springfield. He says a lot of cities across the country are leasing assets. But Chicago stands out.
REDFIELD: Now we’re talking about six billion dollars or so of assets over a fairly short period of time.
Redfield says privatization can work, but there’s an inherent danger to it. That, essentially, the city is giving up control of things like the Skyway and parking meters, infrastructure central to transportation and getting around town. That can undermine other aspects of how the city operates, down to the basic level of industry and commerce. Despite what Redfield sees as dangers, some aldermen are still on board.
* Related…
* Shortage of road salt, soaring prices vex states
* News conference to address parks closings
* Proposed rate increases
* Unfiltered: Daley Discusses Proposed Parking Meter Increase
* Questions and answers on the Chicago parking-meter deal
* Financial Mismanagement Caused Illinois’ Backlog of Bills
* Expect Changes in Chicago’s Snow Removal Service This Winter
- Speaking at Will - Wednesday, Dec 3, 08 @ 10:56 am:
time to move to missouri
- Anonymous - Wednesday, Dec 3, 08 @ 10:57 am:
Would a complete moratorium on member initiatives/pork projects make as much of a difference as John Bambenek states? How about an extension of existing sales taxes to services?
- Phil Collins - Wednesday, Dec 3, 08 @ 11:09 am:
When the governors ask for money, from the federal government, Obama should say no. Each year, the federal government gives about $400 billion to state and local governments, although that spending isn’t authorized by the Constitution. Some federal tax money that is earned in Illinois is sent to Washington, DC, and is later sent back to the same state from which the money came. Some money that we earn is sent to the governments of other states, although we’ll never see the benefits of that spending. Congress should eliminate all grants to state and local governments, cutting the federal budget by 13%. If they do that, they would also pass an across-the-board 13% tax rate cut, since the federal government would need less money. Since our federal income tax rates would be lower, state and local governments would change their tax rates, to ensure that they’ll receive enough revenue.
- South Side Mike - Wednesday, Dec 3, 08 @ 11:14 am:
I hear the GRT is making a comeback. Now it might lose 103-4. Blago’s on the way, baby!
Can a school district sue the State to get the funds released? For breach of contract, or unlawful retention of property? I could almost see this happening. Or maybe the schools could sell the payment to a debt collection agency, who then harass Rod with phone calls every evening during dinner.
- culatr - Wednesday, Dec 3, 08 @ 11:16 am:
This article has the answer to Illinois’ budget woes: PRINT OUR OWN CURRENCY! Maybe we could call it “Rod-Bucks!”
check it out:http://www.chicagotribune.com/b
usiness/chi-talk_moneydec03,0,
2902061.story
- Fan of the Game - Wednesday, Dec 3, 08 @ 11:17 am:
Phil Collins,
I have advocated that for years. It’s the same tax money, but instead of moving through two bureacracies, it needs only move through one. And that saves money. Plus, it’s not tied to some federal program that may or may not be appropriate for Illinois.
- Anonymous - Wednesday, Dec 3, 08 @ 11:19 am:
Gov. Ahnuld’s hardball position is refreshing. It appears he’s trying to fix some of his structural problems instead of papering them over with federal money money.
- wordslinger - Wednesday, Dec 3, 08 @ 11:20 am:
Saw Rod on TV last night. He’s getting out a lot more, seems to be forgetting his troubles.
- Phil Collins - Wednesday, Dec 3, 08 @ 11:31 am:
Fan of the Game, I’m glad that we agree. Did you contact any U.S. senators or reps., about that idea? I wrote to about 15 of them, about it, but I didn’t receive any responses.
- jake - Wednesday, Dec 3, 08 @ 11:41 am:
We desperately need an amendment to the Illinois constitution permitting a graduated income tax. Currently, Illinois is a high tax state for those at the lower end of the economic scale and a low tax state for those at the high end. Raising taxes within the existing structure is regressive, hurting people who are most in need of governmental services. People should be pushing their legislators to get such an amendment on the ballot for next general election. This won’t come quickly enough to deal with the current crisis, but is essential for a long-term solution to our chronic financial mess. In the short term we probably have to bite the bullet and do a temporary tax surcharge within the current system. The necessity will outweigh the harm and this is the time to do it;i.e., in a non-election year.
- jake - Wednesday, Dec 3, 08 @ 11:44 am:
A follow up on the member initiatives. The traditional member initiatives were tiny in magnitude compared to the total budget problem, and this year did not contribute at all, since there were none.
- Legaleagle - Wednesday, Dec 3, 08 @ 11:49 am:
Chicago must stop creating so many TIFs, which just divert property tax revenues away from the schools. Raising taxes during a recession is a bad idea - perhaps instead the state should just stop trying to do so much. Government cannot provide everyone with cradle-to-grave security.
- Plutocrat03 - Wednesday, Dec 3, 08 @ 11:49 am:
If the profit in leasing the meter to a private concern comes from increasing the rates, why doesn’t the city raise rates on its own and keep ALL the money.
The one benefit of no con-con is that the flat rate income tax stays for now.
- SIUPROF - Wednesday, Dec 3, 08 @ 11:51 am:
jake:
Illinois could do so now, with the use of personal exemptions or low income credits. Raise the rate to 5%, but the increase the personal exemption to 25,000 or so and phase that out for incomes above 150,000. That way the effective rate on the low income earners would not move much or even go down, but those with higher incomes would pay the increased rate. Obviously the exact amounts would need to be calculated to get the desired amounts, but a graduated tax could in fact be crafted out of our regressive flat tax structure.
- GoBearsss - Wednesday, Dec 3, 08 @ 11:53 am:
So, Rich, are you saying we should raise the Illinois equivalent of $4.7 billion in taxes? And make another $6 billion in cuts?
The Governor has been cutting, and it has created an uproar.
Besides, isn’t California’s deficit next year looking to approach $28 billion? A $28 billion hole needs more than federal money …
- Rich Miller - Wednesday, Dec 3, 08 @ 12:05 pm:
===The Governor has been cutting, and it has created an uproar.===
The biggest “uproar” came when the governor cut programs that the GA specifically restored.
Also, most of the “cuts” made to date are simply eliminations of spending increases, deliberate delays in payment, or draconian cuts to the operating budgets of his political adversaries.
IOW, posturing.
- Anon - Wednesday, Dec 3, 08 @ 12:08 pm:
==Obviously the exact amounts would need to be calculated to get the desired amounts, but a graduated tax could in fact be crafted out of our regressive flat tax structure. ==
True, but then it would be an unconstitutional graduated tax. We need a Con-Con! Mr. Miller, why didn’t you tell us?
- walter sobchak - Wednesday, Dec 3, 08 @ 12:18 pm:
It would be instructive to compare what Professor Redfield considers to be ‘basic services’ with what the bloated Daley budget includes. Perhaps he could include an independent analysis of the staffing levels required to perform those basic services. I would bet that his budget would look nothing like Dayle’s budget and there would be no ’shortfall.’
- vole - Wednesday, Dec 3, 08 @ 1:02 pm:
Does anyone really think the guv of CA is actually going to get by without a huge fed handout? And is their deficit not higher than 11 billion?
It is scary considering so much is riding on the last resort. And does anyone really believe that the taxpayers will ever have to pay any of this back? We are still leveraging the leveraging. This is almost like believing in a life after death.
- Phil Collins - Wednesday, Dec 3, 08 @ 1:16 pm:
LegalEagle, I agree with your comment, about TIF’s. According to the budget estimates, on the city government website, the city has many city sales taxes. Some of them can be avoided, by conducting business in other towns. These taxes are the automatic amusement device tax, cigarette tax, employers’ expense tax, home rule municipal retailers’ occupation tax, hotel accommodation tax, liquor tax, motor fuel tax,
motor vehicle lessor tax, municipal automobile renting occupation tax, municipal automobile renting use tax, municipal hotel operators’ occupation tax, off-track betting tax and admission fee, parking tax, personal property lease transaction tax, restaurant and other places for eating tax, soft drink tax, and vehicle fuel tax. If you think that the city government receives enough of your money, please conduct more business in other towns.
- John - Wednesday, Dec 3, 08 @ 1:29 pm:
Selling/Leasing City Assets
Lease the CTA. A private company could run it 500% better than it is run now. Inefficient and dirty trains and buses. How many billions would that bring? Also, throw in the RTA.
- Levois - Wednesday, Dec 3, 08 @ 2:54 pm:
LOL!!! That would be a Blago style answer if this was something he’d consider. Printing our own money that’s backed by nothing!
- Captain Flume - Wednesday, Dec 3, 08 @ 3:06 pm:
– That would be a Blago style answer if this was something he’d consider. Printing our own money that’s backed by nothing! –
Geez, what do you think U.S. currency is backed by now??
- JohnnyC - Wednesday, Dec 3, 08 @ 3:14 pm:
The point of the assets that have been sold are that a private company can run them more efficiently and the City no longer has to be in a business of which they little expertise. The sale of these assets is ingenious and will set the trend for other municipalities.
Selling the CTA is a ridiculous idea. Do you really want a private company holding a monopoly over our public transportation and trying to squeeze every dollar they can out of it?
- Amuzing Myself - Wednesday, Dec 3, 08 @ 3:34 pm:
I haven’t been able to read all the posts on this yet, so maybe this has already been covered. But doesn’t this seem akin to refinancing your house and rolling credit card debt into your new mortgage? Putting off responsibility for a later date, basically. Not surprising, though, since that’s how this state has operated for many, many years.
- jake - Wednesday, Dec 3, 08 @ 4:27 pm:
siuprof:
In principle you could craft a more progressive tax structure without a constitutional amendment by doing as you suggest, and I would certainly support trying to do that. But I wonder if it would survive a court challenge as to its constitutionality, as it could be argued to be a circumvention of certainly the intent and possibly the content of the Constitution. The business community would have the means and motivation to make that argument and bring that court action, as the corporate income tax rate is tied to the personal income tax rate.
Anon:
This can be done without a con-con. The Illinois Constitution has already been amended 10 times without a con-con. In any case, the con-con issue has been settled. The constructive thing now is to consider particular ways in which the Constitution should be amended, and this one would be at the top of my list.
- Emily Booth - Wednesday, Dec 3, 08 @ 5:14 pm:
The City of Chicago passed a $6 billion budget. $6 billion. The city is wealthy. The state can’t even pass a budget. They haven’t passed a balanced budget since…Edgar? Olgivie? There was $30 billion sitting in special funds. Now, the state is crying poor and they have department heads who have state paid chauffeurs.
- Disgusted - Wednesday, Dec 3, 08 @ 9:45 pm:
Capt. Flume: U.S. currency is backed by yen.
- Arthur Andersen - Thursday, Dec 4, 08 @ 12:20 am:
The Urbana School District wouldn’t have to be crying about the State cash if they had hired marginally competent principals and administrators who would check the references of teachers being hired from another school district.
They didn’t, and a serial sex offender was hired from Normal (before they could can him) and more young children were molested by this lousy creep before a smart parent talked to another parent who was the police about the “food tasting game” going on at school, and now the Urbana taxpayers are on the hook for millions of dollars in lawsuits. Normal taxpayers will be next.
No sympathy here for the school board.