Wednesday, January 24, 2007
Is 2007 the year of reform in Illinois?
Posted by Harold Henderson on Wed, Jan 24, 2007 at 6:37 AM
The sizzle may be in Chicago, but the steak is being cooked in Springfield. Our transit, roads, schools, health care, and planning in general are in the hands not of the City Council, but of a state government mired in deficit spending. For that reason, much as I hate the nonconcept "most underrated," I have to say I think the bipartisan Center on Tax and Budget Accountability is the most underrated Chicago policy shop going.
Among those who haven't drunk the anti-tax Kool-Aid, many think 2007 is the year something will finally get done in Springfield -- but not everyone agrees on what that should be. Key points from CTBA's annual fiscal symposium last week:
- CTBA released its own new study (summarized here) documenting Illinois' "structural deficit" -- showing that state taxes are both unfair and inefficient. Illinois' "low, flat income tax places a much greater tax burden on low and middle income taxpayers than affluent taxpayers," and "its sales tax structure fails to track the modern economy." So they fail to produce enough money to balance the budget even with zero growth in programs or expenditures.
- Mike Lawrence, longtime Springfield journalist and a top staffer in Governor Jim Edgar's administration, invoked the example of another Republican governor, Richard Ogilvie (who instituted the state income tax 38 years ago), but added that controlling spending is just as important as adding revenue.
- R. Eden Martin of the Civic Committee of the Commercial Club reiterated both halves of that group's proposal: cut costs and raise revenues. In particular, change the public schools' incentive structure by allowing more charter schools. Putting more money into an unchanged monopoly would be "mostly wasted," he said. Many audience members didn't get it and others just disagreed. (Full report here, PDF.)
- You might think taxes for transportation maintenance and improvement would be a slam dunk, but Mary Sue Barrett of the Metropolitan Planning Council says Illinois needs a single transportation planning process to beat down public cynicism and make sure we actually build what's most needed. Such a priority-setting process would fall under the new Chicago Metropolitan Agency for Planning (C-MAP) -- but how would it encompass Moving Beyond Congestion, the current campaign to lobby the General Assembly specifically for more money for the RTA, CTA, Metra, and Pace?
- Greg LeRoy of Good Jobs First pushed Gold Collar (PDF), his group's new report on how state business incentives go where they're least needed (well covered by Stephen Franklin in the Tribune). In times of heightened capital mobility, he said, public money should be invested in things unlikely to move away, including a well-educated workforce.
CTBA director Ralph Martire had the last word: "If Illinois were a separate country, its economy would be the 27th largest in the world, bigger than Ireland, Saudi Arabia, or Greece. And we can't talk about raising taxes?"
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Hi Harold, Just read the Gold Collar report (I am very busy). While I generally agree that subsidies are a waste, there are couple of glaring holes in the research. 1) TIFF districts were excluded. Of all the good reporting in The Reader, Ben Joravsky had really pegged TIFFs as a massive, generally misguided subsidy. 2) The Gold Collar report shows that approximately 80% of the "subsidy" takes the form of Tax Free Bonds. To the best of my knowledge, these bonds have the advantage of being tax free, but still must be repaid. Perhaps, at a 28% tax rate, one should take (1-.28) x the 80% = 57% of the "subsidy", is of no advantage at all. So if you subtract $680 Million (57%), from the total $1.2B, I am convinced that the disparity will not seem so large. Add in the nutty TIFF Districts, and I sounds like the point of the paper is not very well founded. JBP
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