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Mon June 2, 2014
Unfinished Budget To Become Campaign Issue
With the Illinois General Assembly’s spring session over, lawmakers aren’t scheduled to return to the Capitol until November. Two months of fierce debate over state spending and taxes culminated in a stalemate, so they passed a placeholder budget that will likely have to be revisited at the end of the year.
What they did — and more importantly, what they didn't do — will shape the political conversation heading into this fall’s general election.
This year began with Democrats outlining an ambitious, progressive agenda for Illinois.
Here’s Gov. Pat Quinn, at his State of the State address in January:
"Let’s double the number of MAP college scholarships for students in need in Illinois."
"We should provide at least two earned sick days for every worker in Illinois."
"It’s time to raise Illinois’ minimum wage to at least $10 an hour."
Not one of those things happened. And neither did attempts by other Democrats to institute a graduated income tax, help more people save for retirement, or even do something significant to deal with the problem of violence in Chicago.
That last one was a priority for Rep. Mike Zalewski of Riverside. But he says after last year’s work on same-sex marriage and pensions, more controversial legislation was not an easy sell.
“Members are leery of continuing to make decisions that are going to be difficult to explain to their constituents," Zalewski says. "I think this session needed to be sort of a maintenance session, and get us through to the next General Assembly."
On no issue was that more apparent than what to do about the state’s income tax.
Current law has today's five percent individual income tax rate scheduled to drop by more than a percentage point at the end of the year. But that would leave a huge hole in the state budget, so Quinn said the five percent tax rate should be made permanent. Senate Democrats supported that, but it was reportedly well short of passing the House.
So instead Democrats passed what’s being called a maintenance budget: most state agencies are getting the same amount of money they did last year, even though rising costs mean that will likely not be sufficient to fund the same level of activity.
Republicans are declaring victory over the failure to extend the higher income tax.
“We stood firm on keeping our promise to make the temporary income tax actually temporary," said Rep. Tom Demmer, a Republican from Dixon. "We also stood against having a progressive income tax, a millionaire’s tax."
Those stands meant, in order to avoid making drastic cuts to services, Democrats had to be creative to pass a budget they can call balanced. But those techniques — borrowing from other state funds, putting off payments to organizations that do work for state government — will only make things worse down the road.
Senate President John Cullerton says the day of reckoning could come at the end of the year, and that lawmakers likely will have to revisit the tax question in the post-election veto session.
“And if Gov. Rauner was to win, and become the governor-to-be, I would think he would have a real tough job managing the government for half-a-year without any revenues," Cullerton says.
Cullerton, of course, is referring to Bruce Rauner, the Republican nominee for governor who criticized the budget deal as “dishonest” and “phony.”
It stands to reason that the question of income taxes will now be one of the key differences in this year’s campaign for governor. Quinn favors a permanently higher tax rate; his Republican opponent says he’s against it.
But it remains to be seen how seriously Rauner will engage with the issue. So far, he’s been vague about how he’d make up that multi-billion dollar deficit, citing a need for “structural reforms.” But when asked for specifics, Rauner will only say a plan is coming "soon."
At this, Cullerton could not resist taking a jab: “It’s like … Richard Nixon: ‘I have a secret plan to get out of Vietnam, just after the election.’ "
Regardless of how much or how little time the candidates spend talking taxes, many in government will think of the election as a referendum on the income tax rate. And with the state budget potentially heading for hard times around the new year, the debate over taxing and spending is nowhere near over.