Observations and comments about state government by State Representative Robert W. Pritchard.
In this issue:
· Supplemental Budget Mushrooms
· Address Reflected a State of Mind
· Economic Recovery Continues to Lag
· Committee Hears Testimony on FY14 Revenue
· Governments Levy Hefty Taxes on Cell Phone Consumers
· Fund Sweeps Cause Medical Crisis
· Join me for coffee
Supplemental Budget Mushrooms
Anytime a supplemental budget is rushed through the legislature you can assume either the sponsor wants to prevent amendments for more spending or fears hidden spending will be revealed. Since what started out as a modest spending proposal in the millions of dollars had grown to $2.1 billion by the time of the vote last week, it’s obvious that the sponsor was not limiting spending growth.
I had been involved in negotiations about the supplemental budget into the weekend before the vote. Appropriation chairs from both parties had lots of questions about the amount of available revenue, the moving target over what spending authority was in and what was out of the bill, and the lack of spending details. Nevertheless, the Speaker drafted a bill over the weekend, ran it through committee quickly and then allowed several amendments which changed the bill just hours before the vote. The Senate also quickly passed the bill and the Governor signed the bill into law within hours.
HB190 was designed to fill some funding holes in the budget, and some of the bill’s allocations had merit. The legislation included $25 million to hire 140 more child abuse investigators for the Department of Children and Family Services, $12 million for mental health grants unintentionally cut in the budget last spring, $25 million for rental housing assistance, and $5 million toward a veterans’ home to be built in Chicago.
An additional $550 million was added for the state employee group health insurance program which was intentionally underfunded in the budget. Another big piece of the appropriation went for accelerating road projects on the five-year plan, using additional revenue, and reassigning projects.
The supplemental budget was woven with items that were not essential and seemed to be special member projects. The East St. Louis school district received $9 million so it could make payroll through the end of the year but the mismanaged district needs to be totally reorganized.
The vote on the issue sadly indicated that legislators were more interested in spending than on fiscal restraint and reforms.
Address Reflected a State of Mind
On the eve of the 2014 campaign for Governor I can empathize with Governor Quinn for wanting to paint a rosy picture in his annual State of the State address last week. However, his view of conditions in Illinois and the reality most people see was like a “Tale of Two States.”
For the sake of our citizens looking for bold leadership, I was hoping to hear a speech that focused on growing the Illinois economy, protecting the hard-working taxpayers and preserving services for our state’s most vulnerable citizens. He mentioned many initiatives the legislature has passed to improve education for our children, reduce the growth in Medicaid costs and increase opportunities for veterans so I wondered why his administration has been slow to implement them.
Everyone knows the state is broke, faces mountains of debt and is bleeding jobs so you’d think the Governor would have drawn from the ideas of President Franklin Roosevelt or Prime Minister Winston Churchill who united their nations in the depths of despair. The Governor had an opportunity to pull our state together, ask for common sacrifice, focus on a few strategies to recover and ignite hope for a better future.
Instead, the plan he outlined continued the drive off the fiscal cliff, recycled dead-end ideas, and further pushed jobs out of the state. His desire to increase the minimum wage came completely out of “left field.” Illinois’ current minimum wage is already significantly higher than the minimum wage in surrounding states and also higher than the minimum wage in California, New York, Florida and Michigan.
He ignored the violence in Illinois cities; the release of prisoners who are unprepared to be productive law-abiding citizens; or the college graduates who can’t find work. He praised the role of small business in our economy but missed an opportunity to call for streamlining regulations, reducing their cost of doing business in Illinois or hope for tax stability.
In the words of another Illinois politician—Abraham Lincoln— unfortunately, “The world will little note nor long remember” what he said.
Economic Recovery Continues to Lag
The Department of Revenue has released its latest monthly report on state revenue which confirms a slow, uneven economic recovery in Illinois from the near-depression conditions of the past four years. While some General Revenue Fund (GRF) income sources—such as corporate income taxes have recovered, others—including sales taxes– have shown lagging returns.
Individual Income Taxes (IIT) are now estimated to generate $19.8 billion in the current fiscal year while sales taxes would total $7.3 billion. While these and other taxes will generate slightly more revenue for the state compared with FY12, the increases are not expected to keep pace with costs increases for programs such as state pensions and Medicaid.
IIT represents the Individual Income Tax, CIT stands for Corporate Income Tax,
and Sales come for the Sales Tax. Source: IL Dept. of Revenue December Revenue Report
Committee Hears Testimony on FY14 Revenue
A number of groups presented higher revenue projections to the House Revenue Committee last week as it took the first steps to building a FY14 state budget. The Governor’s Office of Management and Budget estimated that state revenue could grow by $1.3 billion next year while the Commission on Government Forecasting and Accountability looks for a $1.4 billion growth.
Over the past two years the House has set a conservative revenue estimate which it used as a cap on spending for the fiscal year. Certain expenses were paid first and then the balance of expected revenue was allocated to each appropriation committee based upon a five year average share of total expenses.
None of the groups testifying saw a major economic recovery ahead. Employment and retail sales are expected to rise modestly while home price declines appear to have bottomed. Despite the expected revenue growth, pension payments will consume any increase. The committee is unlikely to set a revenue target until after the governor’s budget address which has been delayed two weeks until March 6.
Governments Levy Hefty Taxes on Cell Phone Consumers
If you take a look at your cell phone bill, you may be surprised at the amount of taxes and fees you are paying. The Tax Foundation recently issued a study of cell phone charges that reveals many states are using this often hidden source of revenue for a variety of uses.
Nebraska adds the most taxes and fees to the cell phone bill followed closely by Washington, New York, Florida and Illinois. When the federal-state-local taxes and fees are combined, Nebraska customers pay an extra 24.49 percent compared with the national average of 17.18 percent. Illinois customers are charged an extra 21.76 percent of their phone service for taxes and fees. See the full report at www.taxfoundation.org.
The study indicated that overlapping, uncoordinated cell phone taxes by various units of government resulted in a much higher rate than for other consumer items. The number of cell phones has increased from 48.7 million in 1997 to more than 321.7 million last year. Over 34 percent of households use only wireless phones.
The Telecommunication Law will undergo a major rewrite this year to make wired communication regulation more competitive with wireless. The emergency 9-1-1 providers will be seeking a higher tax on cell phones to fund new technology that can receive electronic messaging as well as phone calls.
Fund Sweeps Cause Medical Crisis
The Illinois State Medical Disciplinary Fund which oversees new and renewed licenses of medical providers has run out of money. As a result, the number of compliance officers reviewing the license applications has been reduced by two-thirds which delays review for a year or longer, and keeps doctors without a license from working.
Various solutions to the crisis have been debated for months but so far neither side wants to compromise. The doctors for their part say the current license fees cover the cost of compliance for the Medical Practice Act. They note the fund ran out of money because Governors over the past decade have swept (taken) money from the fund to pay for other programs. Sounds like the same practice that has contributed to the pension crisis.
The medical community proposes that the administration just return the $9.6 million to the Disciplinary Fund. Hundreds of millions of dollars were just moved around in the budget by the supplemental appropriation bill last week so the doctor’s proposal seems possible.
However, what the Quinn Administration wants to do is raise the fee by 250 percent which will not only replenish the Disciplinary Fund within a few years but also provide a fund balance that likely will be swept in the future as needed for other programs. The administration argues that the fee is lower than other license fees but they fail to understand the consequences of increasing the cost of doing business in Illinois.
It’s a perfect crisis that has been created unnecessarily so that fees can be increased. As a result, current graduates of medical school looking for work will certainly leave Illinois like many other people fed up with the tax and spend philosophy of state leaders.
Two bills have been introduced to solve the stand-off—HB193 sponsored by Speaker Madigan and HB1001 sponsored by a group of Republicans. Want to guess which bill gets passed?
Join me for Coffee
I will be holding discussions over coffee in various towns around the district. I hope you will stop by to see how my office might be of assistance to you and to share your ideas.
Feb 22: 8 a.m. -Belvidere Township Hall; Feb 23: 8 a.m.- Hampshire Village Hall; 10 a.m. -Kirkland Village Hall. March 2: 8 a.m. – Big Rock Township Hall; 10 a.m. -Campton Township Community Center.
District Office 815-748-3494 or E-Mail to firstname.lastname@example.org
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