State's economic future bleak

DEER GROVE - The future of the state's economy is looking bleak, one Illinois business association leader told the audience at Rep. Jerry Mitchell's annual business leaders' breakfast Friday at Deer Valley Country Club.

Jeff Mays, president of the Illinois Business Roundtable, a nonprofit, nonpartisan group that studies and makes recommendations on public policy, was the keynote speaker at the event, which drew dozens of business leaders from the Sauk Valley, as well as several state and national candidates in the 2008 election.

Mays, a Republican state representative from 1980 to 1990, said he can not remember a time when the climate in Springfield was this combative.
"We have all read with some sort of concern, the antics going on in Springfield," Mays said. "Old guys like me can remember days like this, but I can't remember it ever being quite so vitriolic."

Illinois has fallen behind other Midwestern states, and the nation as a whole, when it comes to employment and job creation, he said.
"Since 1990, Illinois has languished in job creation. Because of that lag, there have been millions of dollars in jobs lost," Mays said.

The Commission on Government Forecasting and Accountability completed a study last month comparing the Illinois economy with surrounding Midwestern states. Some of the findings paint a bleak picture for Illinois business, he said.

For example, Illinois unemployment has been one of the highest in the country over the last 30 years, and been higher than the national average 70 percent of the time since 1997.
The jobs that are being created are often lower-paying service industry positions versus the manufacturing positions that have been leaving the state, Mays said.

Mitchell also is frustrated with the last year's worth of business in Springfield. The budget has still not been signed by Gov. Rod Blagojevich, who is insisting on an expensive health care program that many don't see as financially viable, Mitchell said.

"It is unbelievable to me what has happened. We didn't get it done on May 31, June went by and we didn't have a budget. July came and went with a temporary budget, which was just enough to hold the state together," Mitchell said. "It is a sad state of affairs, because we are not done (with the budget) yet."The Sad truth

Behind the great tax push
By Bob Secter | Tribune staff reporter
October 21, 2007

There's an old political maxim in Illinois that speaks volumes about why it's so hard to put governments on a diet.
"If you can't get a meal, at least take a sandwich," officials like to say as they cut deals with taxpayer money that can lead to bigger programs and payrolls and, sometimes, political fiefdoms.

But suddenly, it might seem, some of the state's most powerful political leaders have wearied of budget snacks and are headed for the all-you-can-eat buffet.

Eye-popping new budget plans from Mayor Richard Daley and Cook County Board President Todd Stroger ask taxpayers to pony up nearly $1.2 billion in new taxes and fees. Meanwhile, the CTA and other transit agencies are pushing for a regionwide one-quarter percent sales tax increase.

And this all follows Gov. Rod Blagojevich's failed attempt to raise $7 billion in business taxes.
Civic Federation president Laurence Msall calls it a "tsunami of tax increase proposals," but the question is, why is all this happening now?

The answer isn't simple or singular, but there is at least one common thread running through the recent tax hike frenzy that sounds flip in the telling. Political leaders are pushing big ticket increases partly because they can.

Little risk of election rejection
Stroger, Daley and Blagojevich are all in the first year of new terms, and any voter outrage the tax plans may stir has a long time to dissipate before the next election.

'Tax everything that you can'
Daley's spending plan for next year would jump property taxes more than in his previous 18 years in office combined. Stroger wants to triple the county's share of the sales tax, bump up the gas tax and add more than 1,100 new jobs to a payroll that critics have long claimed is larded with cronies and inefficiency. Blagojevich's proposal to apply a gross receipts tax to most business transactions was so massive it collapsed under its own weight. It would have been used largely to bankroll new spending initiatives instead of fixing the state's chronic budget woes or making a big dent in a crushing multibillion dollar pension debt.

"Critics, and they are easy to find, say the tax proposals stand out both because of their titanic dimensions and because they are not in sync with any national trend.
"We are seeing tax cuts at the state and local level in a lot of other places, but not here in Illinois," said J. Thomas Johnson, president of the Taxpayers' Federation of Illinois.

In Johnson's view, bureaucratic tunnel vision is only contributing to an impression that taxpayers are being piled on, especially by the city and county.

Driving a hard bargain
In his budget address to the City Council earlier this month, Daley said that revenues from the sales, fuel, parking and cigarette taxes have been down and that the "dramatic slowdown" in the housing market has depressed real estate transaction tax revenues.
"The cost of government continues to rise faster than inflation and our tax base," he said. "The cost of personnel wages, pension and health care makes up over 80 percent of our city's budget and continues to grow." For emphasis, he repeated the same sentence.

Stroger makes a similar argument, saying county finances are hemmed in by declining federal Medicaid dollars as well as ever-increasing personnel costs largely driven by generous union contracts agreed to before he succeeded his ailing father, John Stroger, as board president last year.

But it was the Daley and John Stroger administrations which signed off on those deals. Just in August, Daley announced new 10-year labor agreements with 33 city worker unions that should guarantee labor peace through the 2016 Olympics that the city is bidding to host.
Daley's new spending plan includes a $108 million property tax hike, which the mayor justified by saying the money was to needed to build new libraries and run the old ones.

When he was running for election to his first full term last November, Todd Stroger pledged not to raise county taxes for his first year in office.
"There was a lack of credibility to come in and ask for taxes when you first move in," Stroger told the Tribune editorial board last week. But Stroger's next budget will be his second. The pledge has been fulfilled and new revenue is now a must, he said.

Shooting for the moon?
It's hard to tell what the endgame of Stroger and Daley might be, but economist J. Fred Giertz said they could simply be shooting for the moon so the public will be more willing to accept scaled back versions of the tax plans.


  1. SP Biloxi said...
    Yeah, did Baloneybitch take into consideration about tourism in Illnois and the high rise of taxes?
    Third Generation Chicago Native said...
    And Daley is trying to get the Olympics here? Unaffordability in hotels, restaurants etc. might be something the Olympic committee takes into consideration.
    SP Biloxi said...
    Good luck on Daley trying to get the Olympics to a state with no budget and high taxes!

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