CapitolFax.com - Latest Comments in Explaining the deficit, whacking the tax hikes

Re: Explaining the deficit, whacking the tax hikes

Secret Square — Tue, 17 Mar 2009 10:03:29 -0000

OK, for those of us who are convinced that we cannot tax our way out of a deficit, that we cannot afford to drive away businesses, etc. how about we try this: shut down state government -- everything but police, prisons and courts -- for two years, cut all taxes in half, and wait for new businesses to start knocking on our door in droves and bringing new jobs with them. Voila, all our economic problems solved, full employment, no more need for education funding or healthcare because everyone will be rich and live happily ever after. Think that will happen? Has anything like this ever been tried elsewhere, and how did it work?

Re: Explaining the deficit, whacking the tax hikes

JohnR — Mon, 16 Mar 2009 23:16:52 -0000

Additionally, "Cut It", most of the super-duper $1 billion you cut comes from 2 areas:

1) $650 million from the Department on Aging
2) $280 from the Department of Employment Security

First, let's take the $650 million from the Department on Aging. Do you know where the vast majority of that $650 million goes (its actually $570 million in state general funds)?

$500 million of that is for home and community based care. That is home support services for seniors who get medical or other services in their home by nurses, etc., instead of having to check into a long term care facility. If you cut that money, those seniors are still going to need help, but instead will have to move into a long term care facility in order to get it - which costs the state three times as much to provide. This program was actually instituted to save the state money (and help seniors be more independent).

So, by cutting $500 million, you actually increased the deficit by $1 billion. Good job, you are on a roll!

Second, you are cutting $280 million from the Department of Employment Security? Congrats! That gets you absolutely no savings against the deficit. Most of that $280 million (90%) is unemployment insurance. That isn't general funds, and doesn't count as part of the deficit. That is unemployment insurance collected from employers and given out to the newly unemployed. Tough luck.

Please. Next time you want to talk about this stuff, do your homework first. Especially if you are going to be so snide.

Because by my count, you just increased the deficit by $1 billion.

Re: Explaining the deficit, whacking the tax hikes

JohnR — Mon, 16 Mar 2009 23:04:57 -0000

Cut It - you can quit with the fantasy.

"Right" and "George" are right - the vast majority of the budget is roads, healthcare, education and public safety. And don't forget the grants to locals.

Your little bully prevention cuts are exactly the kind of thing that is already slated to be cut. Your cuts simply don't add up to that much because they can't -

Out of the $29 billion in General Funds in the state budget this fiscal year:
$11 billion went to education (k-12 and higher ed)
$8.6 billion went to healthcare (state funds, not including federal match)
$6 billion went to human services
And $1.5 billion went to public safety

Of the rest, only $1 billion went to government services.

So, you are spending almost $27 billion of your $29 billion on the categories above.

If you have to cut $11.5 billion from that total, you are not going to get anywhere cutting legislative add ons and small projects like your bully programs. You have to cut education, healthcare, human services, or public safety.

Re: Explaining the deficit, whacking the tax hikes

Cut It — Mon, 16 Mar 2009 22:22:45 -0000

Steve? "Adds up to nothing"? That was 15 minutes from a citizen browsing around. I guarentee that if someone knew what all this stuff was and filtered it through the "question", a third of the 30 Billion GRF budget would disappear.

Why does everyone focus on the big stuff? Sure, they can be quick fixes but the root of the problem is the "Bully Prevention" crap. Take the stuff I listed above and the larger stuff I listed above that and stuff I didn't even look at and drag it out 20 years in the past and cut it all. Where would we be? Leave it out and project 20 years in the future. How much savings total? There is so much crap impacted on the bowels of this state it will take an autopsy to figure it out.

Here's my guess on what the State will do in the new budget. $700-900 Mil in mostly "cut-backs" not eliminations, but cut-backs. $2-3 Billion in new tax "revenue". The State will be adding positions, not decreasing. The economy will rebound in 2-3 years. The "cut-back" programs will begin expanding, the number of employees will continue creeping up and the Bully Prevention program will be at $3M. In 7 years people will be saying "You can cut your way out of a deficit like this. We haven't had a tax increase for 7 years."

Re: Explaining the deficit, whacking the tax hikes

Excessively rabid — Mon, 16 Mar 2009 22:18:14 -0000

OK. it's late enough no one will read this but:

1. Many voters recognize the need to get the state solvent and are reluctantly willing to accept a tax increase. A jump to 4.5% is too much, especially from an unelected governor. A temporary two year 1% surtax would be an easier sell. And no mixing it up with talk of reform and fundamental fairness -- that's just smoke and mirrors so we can't tell what's happening. Save the reform for 2011 and just take care of the immediate problem.

2. As always it's easy to bash public employees. The state needs to fund its pension obligations. If you don't think so, look up the word obligation.

3. Illinois may be neither a very high or low tax state, but we get less for our tax dollars than anywhere I've ever been familiar with. I suspect the reason is all the insider dealings for leases and contracts that have been going on since before I was born. The Tollway Authority was a scandal in the 1950's and hasn't gotten any better.

I'd move to Oregon but their income tax is 8% and you can't even pump your own gas.

Re: Explaining the deficit, whacking the tax hikes

enrico depressario — Mon, 16 Mar 2009 21:18:18 -0000

$20 million here, and $20 million there, Rich, and soon you're talking about real money. An awful lot of this stuffâ€”like Rodney's healthcare fantasiesâ€”has to be chopped. We're broke and can't afford it.

Re: Explaining the deficit, whacking the tax hikes

wordslinger — Mon, 16 Mar 2009 20:35:34 -0000

Cut It, you should get to work on this with Sen. Brady.

He said weeks ago that he could eliminate the deficit without tax increases. But he's apparently had some trouble getting his plan down on paper.

The best part is, since he's in the GA, he could introduce an all-cut plan in the form of a bill. And I guarantee you it would get a prompt vote.

Give him a call. I'm sure he'll be all over it.

Re: Explaining the deficit, whacking the tax hikes

steve schnorf — Mon, 16 Mar 2009 20:34:21 -0000

Cut it

Cut them all (you might actually find sponsors and votes for cutting some of those you listed), but other than symbolism it adds up to nothing, and some of what you list is non-GRF. And, come up with say, 400 more and you are really cooking.

Re: Explaining the deficit, whacking the tax hikes

Right — Mon, 16 Mar 2009 20:34:19 -0000

Cut It -

I am sure many of those are where they will come up with the 850 million in cuts.

But it is laughable to claim you could find 11.5 billion of that. Not because it is not politically feasible (it isn't), but because we all know there isn't 11.5 billion of that in the budget. The biggest budget expenses are the big grant programs.

That's education - 6 or 7 billion
Healthcare - 12 billion

Coming up with 1-2 billion in cuts is easy. Heck, even Blagojevich did that!

It is that other 9 billion that is hard.

Re: Explaining the deficit, whacking the tax hikes

Marianne North — Mon, 16 Mar 2009 20:18:17 -0000

Uh, there was a lawsuit filed over the AllKids expansion and Blagojevich lost. This was last April. Adults are not eligible for AllKids if their income exceeds 133% of the FPL.

Re: Explaining the deficit, whacking the tax hikes

Cut It — Mon, 16 Mar 2009 19:48:31 -0000

You can cut it. It's all there line by line. No one will do it. There are too many white elephants. Everyone buys the hype that it's too big to cut. Here is just a 15 minute glance at the Comptroller's website. Why aren't we questioning the need for these at this time?

$1M - The High Technology School-to-Work Act
$1.7M - Expanding International Markets for Illinois Business.
$4.5M - Grants for companies relocating
$20M - Renewable Energy Resources Program
$28M - AMTRAK
$15M - DES Benefit Information System redefinement? How long does the redefinement take? Further than the Comptroller shows records on the website.
$37M - Reduced Fares for RTA Service Boards
$7M - Literacy Programs
$1.7M - Chicago Public Library
$7M - Executive Inspector General. Seriously? 7mil? over 60 position?
$1.5M Bikeways program
$25M - Coal Technology Development Assistance
$4M Upward mobility
$2M Natural Areas Assessment
$36M Education technology
$46M Travel U of I
$2M To encourage County Fairs
$12M Reimbursement for wireless carriers
$1M To prevent Bullying. Really? One mil. to stop bullies?

These are just the lines and don't include salaries or fringes that would be eliminated as well. Plus the pension savings in the future. Is this really the time for these things?

Re: Explaining the deficit, whacking the tax hikes

Truthful James — Mon, 16 Mar 2009 19:22:05 -0000

Many of the comments are like woodpeckers making holes here and here in the financial tree that is the Gross State product of the State of Illinois.

The problem is that few of the solutions are devoted to growing the tree rather than gumming up sawdust to patch here and there.

The solution to the State's problems lie well beyond the fiscal fixes. They involve structural State reform in how it does business. The Governor is ideally placed to do just that if he would only take advantage. He has a lifelong history of representing reform. If he now morphs into the standard political beast we will not be able to distinguish him from the other political beasts.

He has prepared himself during his political life to do this. Or have we been watching a myth,

Illinois needs more than triage. It needs a leader who the people believe is fighting for them.

Re: Explaining the deficit, whacking the tax hikes

Six Degrees of Separation — Mon, 16 Mar 2009 19:11:24 -0000

Now weâ€™re really close to closing up the deficit.

And only $26 billion in capital program financing to go!

Re: Explaining the deficit, whacking the tax hikes

Budget Watcher — Mon, 16 Mar 2009 19:07:30 -0000

I think short term borrowing, with debt retirement in subsequent years will also be part of the overall plan. The state has to borrow significantly, maybe $1 billion (give or take) in order to leverage the enhanced federal Medicaid matching rate. This has to happen soon. Like they did recently with the hospital assessment, they may decide to go borrow from some of the big special state funds, but when you're talking about that much, I'd expect they'll have to borrow from the funds, not raid them.

If they establish essentially revolving credit lines, they can leverage about $1.2 billion in federal Medicaid stimulus next year along with maybe $500 million this year. Not bad. Plus, you've got much better Medicaid payment cycles, which is certainly a big plus.

The income & corporate tax increasees might yield around $3.2 billion.

Assuming pension reform for new hires and then skipping the state contribution for 15 months...maybe $3.5 billion

Assume cuts of $850 million, athough those have a way of shrinking thru session.

We're close to getting there...I almost forgot $500 million in fund sweeps. And the education stimulus $$$ too.

Now we're really close to closing up the deficit.

Re: Explaining the deficit, whacking the tax hikes

Hoping For Rational Thought — Mon, 16 Mar 2009 17:48:09 -0000

Rich - RRB made a lot of claims based on his own delusional reality so in the real world they are worthless.

George - you rock.

Re: Explaining the deficit, whacking the tax hikes

George — Mon, 16 Mar 2009 17:44:30 -0000

True, True.

A not insignificant amount got restored, I believe. Don't remember how much.

Plus, he didn't cut all of the deficit. I believe there was a several hundred million dollar discrepancy between what he said was the deficit and what he outlined in cuts.

He also "slowed down" spending, supposedly. I would assume that is still going on under Quinn, but would be worth checking.

Re: Explaining the deficit, whacking the tax hikes

Rich Miller — Mon, 16 Mar 2009 17:41:45 -0000

George, RRB claimed he cut most of that $2B already.

Re: Explaining the deficit, whacking the tax hikes

Rich Miller — Mon, 16 Mar 2009 17:34:51 -0000

=== Answers that arenâ€™t doable arenâ€™t answers.===

Which is exactly why I cut off that silly thread.

Re: Explaining the deficit, whacking the tax hikes

steve schnorf — Mon, 16 Mar 2009 17:26:17 -0000

Seven years ago the GA couldn't cut (at his request) $1B from Governor Ryan's budget. Instead he made the cuts by veto, and the Senate Republicans upheld the vetoes. Some part of what we face here is what happens when all of state government is run by one party.

But that's far from the whole problem. I can flat-a__ guarantee you that the R's, if offered the opportunity, couldn't propose a balanced 2010 budget with no tax increases in it.

The spending everyone complains about doesn't just appear in the budget by osmosis. It has a constituency, frequently a large one, that put it there and wants it kept there.

A classic example is the earlier silly comment by some one suggesting that the Department on Aging could be abolished, and Veteran's Affairs. Right! Find a sponsor, big shot, and good luck. Answers that aren't doable aren't answers.

Re: Explaining the deficit, whacking the tax hikes

George — Mon, 16 Mar 2009 17:15:01 -0000

Here is what I think -

Quinn, as the Governor, is going to wear the jacket for the tax hikes.

In return, the General Assembly *should* own up and wear the jacket for the $2 billion in excess spending they did last summer, when every projection except for their imaginary made-up one showed that there would be $2 billion less money available that they said. They should be required to make that $2 billion in cuts, since that would account for $4 billion of the $11.5 billion deficit.

Just my 2 cents.

Re: Explaining the deficit, whacking the tax hikes

steve schnorf — Mon, 16 Mar 2009 17:12:56 -0000

Pretty good snapshot, George

Re: Explaining the deficit, whacking the tax hikes

George — Mon, 16 Mar 2009 17:12:07 -0000

Here's the political problems:

A) There isn't enough "Rod" stuff to cut out.
- You could cut out his FamilyCare expansion (to 400%), but as Progress Illinois mentioned, that only gets you $20 million.
- You could roll back All Kids eligibility to where it was before - about 100,000-125,000 enrollees cut off - but those kids are so cheap to cover, plus you lose the premiums they are paying, and you only save about $60 million. All Kids succeeded by not only covering newly eligible, but previously eligible kids who weren't enrolled (another 150,000 who were previously eligible), so you would have to roll back eligibility even more to get rid of all "Rod's kids."
- You could roll back education funding to where it was in 2003 (about $2 billion less annually), but legislators take as much credit for that increase as Rod did, so that is unlikely.
- Patronage hires? You get rid of the 100 and its only $6 million in savings. A whopping 1,000 firings gets you only $60 million, if you can find that many new hires since 2003.

B) The easiest way to get a few billion in savings this year is to skip a pension payment altogether, and just owe it to the pension system like it does the rest of that $40 billion or $60 billion. That's our only vehicle for "deficit spending" like the federal government does. I just can't see how anyone does it after railing against that issue for the past several years.

C) Quinn's Tax Reform only nets you $2.x billion (plus several hundred million from the increase in the corporate rate) toward next year's budget deficit, so there is going to be some hope there that the economy rebounds enough to at least make next year's tax revenues are near-flat instead of $3 billion down.

D) They are going to have to make "Rod-style" cuts to the base budget - and get rid of that $2 billion hole in the base budget that has been there (as we have been told) since last summer. The $850 million just won't cut it.

Re: Explaining the deficit, whacking the tax hikes

Hoping For Rational Thought — Mon, 16 Mar 2009 17:10:09 -0000

George,

Great post. I think it helps people to understand what is really meant by the $11.5 billion number.

It is also clear that the "pet projects" cut doesn't get you near where you need to be. So what do you cut? Assuming zero tax increase. You could push out some pain by borrowing but you are just hoping that the economy getting healthier will let you catch up to those bills.

So cuts? Do you cut the whole Medicaid program? Half of it? Like it or not there will be parts of our healthcare system in Illinois that would collapse if you take that much money out. Hospitals, nursing homes, and other providers will go out of business. So more jobs are lost, unemployment rises, personal income tax revenues decrease, and sales taxes decline. Not to mention the fact that cutting $1 in Medicaid spending only saves 40 cents right now in State revenues. So cutting the entire Medicaid program only gets you about half way to closing the gap.

And education? Cut half of state funding for schools? Property taxes can't cover that hole for local school districts so what then?

How about we protect Medicaid and education? Then that means COMPLETELY cutting every other service funded by state general revenue and you rpobably still have a problem.

Don't get me wrong. I don't like the idea of paying more taxes and I think IL gov't could be more efficient and focused but you must realize how significant cuts must be if this is all done with cuts and how cuts alone will have a negative economic impact.

That's part of the problem with the debate. People use rhetoric, emotions, and half-truths which leads to wrong conclusions and bad policy. Nothing gets better.

Re: Explaining the deficit, whacking the tax hikes

Rich Miller — Mon, 16 Mar 2009 16:53:04 -0000

===If voters threaten effectively, it will scare the GA into making more sacrifices among their sacred cows===

No. More likely, based on past experience, is that they'll do the easy and irresponsible thing.

Re: Explaining the deficit, whacking the tax hikes

George — Mon, 16 Mar 2009 16:52:56 -0000

Back to the substantive discussion...

Here's my best shot at explaining the state's current deficit. This could be off, considering I don't have the inside data. But I can provide a quick summary with rough estimates.

FY2009
Started $2 billion in the hole
$2-$3 billion additional tax revenue shortfall due to economic downturn

That's $4-$5 billion that, if it doesn't get paid (and it won't without money), will just accrue via the payment cycle (which will be at about 12 months minimum) to FY2010.

So, FY2010 starts out $4-$5 billion in the hole.
* Add $700 million - $1 billion for medical inflation due to costs(actually less %-wise than normal health insurance market)
* Add $1.2 billion increase in pension payments due
* Add that $2 billion the base budget is still in excess (without cuts to those items)
* Plus the $3 billion revenue shortfall that still is not projected to pick back up

So that puts your FY2010 budget at $11.2 - $12.2 billion in the hole. You can't do anything about the FY2009 deficit, since it is too late in the year.

Plus, your little "pet project" cuts, as Rich liked to call them, will likely be cut anyway to cover that $2 billion hole in the base budget.

Some of those figures may be off - that's just my off-the-top-of-my-head calculations.