Budget buzz

Budget will be No. 1
Anything the Illinois General Assembly wants to accomplish this session will revolve around the state budget. Gov. Rod Blagojevich will propose the budget for fiscal year 2008 on March 7 (in combination with his State of the State address). Three challenges — taxes, pensions and Medicaid bills — could trump the buzz about some of his new proposals for social programs.

We already know gaming and privatization are options for new state revenue. Raising taxes is not, according to the governor.

House Speaker Michael Madigan and Senate President Emil Jones Jr., on the other hand, have each mentioned the possibility of tax reform. One panel of budget analysts considered some possibilities Tuesday. (The panel was part of a series of luncheons sponsored by the Institute of Government and Public Affairs and the University of Illinois at Springfield’s Center for State Policy and Leadership.)

While the panel members’ comments echoed reports by the Commercial Club of Chicago and the Center for Tax and Budget Accountability, the panel also highlighted some ideas for tax reform.

Economics Professor Patricia Byrnes at the University of Illinois at Springfield says the state is missing the boat in taxing Internet sales. In 2008, she says Illinois can expect to miss out on $622 million to $900 million in collections from Internet sales. That’s about 2.8 percent to 4.4 percent of sales tax collections.

That combines with the state’s sales tax being too narrow. She says Illinois currently taxes only 17 of 164 services. And unlike the governor’s budget office, Byrnes says she wouldn’t focus on corporate taxes. Instead, she would focus on the state income tax, which she called the least progressive because it’s a flat rate for all incomes. She recommends increasing the tax rate up to 5 percent and increasing the reasons for personal exemptions.

According to economics Professor J. Fred Giertz of the University of Illinois at Urbana-Champaign, the political question this session is whether lawmakers would override a governor’s veto and raise taxes without his support, particularly when a tax increase simply would generate more money for the governor to spend on his programs. Giertz says that’s “unlikely.”

State Sen. Christine Radogno, the Senate Republican’s rising budget expert (and unsuccessful candidate for state treasurer last year), says another big question this session is whether lawmakers would have the political will to implement changes that would have delayed gratification.

She adds the public has no confidence in state government to spend money responsibly if Illinois general taxes were to increase.

The next portion was written by Deanese Williams-Harris, the Public Affairs Reporting intern working in the Statehouse with Bethany Carson. The Chicago native joins us from Southern Illinois University Carbondale, where she was a McNair Scholar.

Education will be No. 2
The legislature’s new Education Caucus met Monday afternoon and debated whether the group’s reform efforts should focus on elementary education, higher education or both.

Rep. Dave Winters, a Shirland Republican, opened the debate to whether the caucus should focus on K-12 to avoid being distracted by higher education.

Rep. Robert Pritchard, a Sycamore Republican overseeing the meeting, quickly rebutted, saying, “Illinois has always had a disconnect between pre-school, K-12 and higher education. We need to make those connections now.”

He recalled a recent visit to one of the state’s juvenile detention centers and said it was heartbreaking to see kids getting less than two hours of education or skill development.

“We need to develop a system that does it right the first time so that kids don’t get discouraged and drop out and don’t turn to a life of crime,” he said.