Wednesday, February 27, 2008

The new "tax swap"

Senate President Emil Jones Jr.’s name appears on the list of sponsors of a version of a “tax swap” that would reform the way Illinois pays for public education. His support is a reversal from the Democratic leaders’ alliance with the governor last year but consistent with Jones’ stances in years before that. Support from the chamber leader is a big boost for Sen. James Meeks and Sen. John Cullerton’s measure, but the bill has two main hurdles: 1) Gov. Rod Blagojevich’s expected veto of anything that increases state income taxes and 2) the curse of gaming legislation, or getting so weighed down by trying to please everyone that the bill implodes and goes nowhere.

The measure advanced today from the Senate Education Committee, the first of many public hearings planned for this legislation before it’s ready for a vote by the full Senate.

Senate Bill 2288 is the new Senate Bill 750, but it has major differences. (Some are mapped out by Senate Democrats here. The main difference is that the new version would raise a lot more revenue — $7.2 billion — to do a whole lot more, funding a statewide infrastructure program and paying down state debt. Specifically, highlights include $633 million for early childhood and primary education, $300 million for higher education, $2.9 billion for property tax relief adjusted for inflation each year, $600 million for a family tax credit adjusted for inflation each year, $1 billion for a road and school construction plan and more than $1 billion for state pension and Medicaid debt.

“The goal of this bill is to pay off our debts,” Cullerton said in the committee hearing. He later added, “Not one penny is going to the operations of state government.”

Some Republicans in the committee found that hard to believe, but Cullerton said the sponsors eagerly seek input from the GOP and the House to codify better language. The sponsors still have the same list of supporters and opponents as 750. Most education and labor groups support it. Opponents include business groups and the Illinois Department of Revenue. (One school board in Chicago’s northwest suburbs of Palatine and Schaumburg opposed the property tax relief portion and said schools across the state can’t trust Illinois government to deliver, but those witnesses also said they supported many funding reform ideas in the legislation.)

The way the measure would raise the money is by increasing the personal income tax rate from 3 percent to 5 percent and the corporate rate from 4.8 percent to 8 percent. It also could, although it doesn’t yet, take back $800 million from the portion of the state income tax revenue that local governments currently receive.

On the spending side, the measure lists general initiatives but doesn’t specify where the money would go. Also absent, so far, are “accountability” measures, or safeguards for how state and local governments spend the money as intended. That’s a necessary component for Democratic Sen. Susan Garrett of Lake Forest. She voted “present” in committee to symbolize her concerns. “There has to be oversight. It’s not going to happen with this magic wand. I could never support this, especially from my area, without some major, major reforms.”

Meeks said those reforms are going to be drafted after collecting ideas in a series of public hearings, which is particularly important when “nobody trusts us to do what we say we’re going to do.”

We’ll have more details as they unfold. In the meantime, it’s safe to say this version isn’t going to advance for a while, maybe months.

The governor’s response is, according to an e-mail from spokeswoman Rebecca Rausch: “The push for an income tax increase isn’t new in Springfield. The governor’s position hasn’t changed. He thinks we should cut taxes, not raise them — especially at a time when families are already dealing with higher gas bills, higher prices for goods and stagnant wages.”

Jones’ spokeswoman, Cindy Davidsmeyer, said the Senate president has said and continues to say that he will not call this type of controversial measure for a vote on the Senate floor unless it has enough votes to pass — that’s 30 to pass and 36 to override a governor’s veto. Considering all the work that needs to be done to complete the legislation and all the GOP recruiting that needs to happen before the measure has a veto-proof majority, it’s optimistic to think that the bill could be called for a vote before May 31, as Meeks would like.

1 comment:

W Thomas Payne said...

A flat income tax rate makes NO sense, the state needs a graduated income tax to really have any impact.

And just where do the legislatures think the local governments are going to turn to get that share of income taxes GENERATED BY THEIR TAXPAYERS that would be taken away? Streets, sidewalks, water and sewer departments, parks - all will suffer tremendously.

And frankly, I'm cynical and skeptical of any plan that Clown Prince Emil Jones backs. He's figured out some way to turn this to his personal advantage, or he would stand against it.