Tax Cuts Aren’t the Only Answer for New Illinois Governor Print
Commentary/Politics - Illinois Politics
Tuesday, 21 January 2003 18:00
By now, you’ve probably heard that new Illinois Governor Rod Blagojevich was so surprised about the actual size of the state’s budget deficit that he is considering breaking his campaign promise to not raise taxes.

Blago claims the deficit is at least a billion dollars higher than he expected. He claims we’re facing a $4.8 billion deficit. And he said last week that he probably can’t just cut his way out of the hole.

Well, for starters, if he really didn’t know the budget problem was this bad, he was engaging in willful ignorance, and the media went way too easy on him last week when he uttered that nonsense. We just finished four years with a governor who regularly engaged in willful ignorance, and look where it got us (and him). If Blago truly wants to change the way things are done, he’ll can the goofy excuses.

For good reason, the drama surrounding Blago’s “discovery” is seen by some as setting the stage for tax hikes. George Ryan did essentially the same thing four years ago. Ryan said during the 1998 campaign that he could fix the state’s terrible infrastructure problems without raising taxes. Then, once elected, he suddenly realized how bad the problem “really” was, so he raised taxes and fees to pay for the repairs.

Jim Thompson did the same after both the 1982 and 1986 elections. The budget deficit was much worse than he thought, he claimed. Jim Edgar flip-flopped after the 1994 election.

But everybody should just calm down. At this point, knowing what I know about the budget, and always being cognizant of the fact that G-Rod believes he will be president one day, I’m not willing to bet that your taxes will go up much, if at all, unless you own a corporation. However, some taxes that were going down will stay right where they are.

For instance, the scheduled federal reduction in the estate tax will cost Illinois’ budget $200 million. Over half of that tax cut will go to just a couple hundred families. Expect Blago to “de-couple” the state from the federal cut.

Lieutenant Governor Pat Quinn’s idea to charge more than 400 quasi-government agencies and funds a 5-percent “administration fee” could, he says, bring in anywhere from $500 million to $1 billion a year.

Blagojevich is rumored to favor giving the state’s nine riverboat casinos an extra 300 gaming positions each. That idea alone could generate $250 million a year. Blago promised not to expand gambling during the campaign, but this could be rationalized away because the state’s 10th casino license isn’t being used right now. A proposal to expand gaming to Chicago (which could bring in another billion) won’t be so easy to spin, however.

The guv will undoubtedly go after “corporate welfare” and “corporate loopholes,” which could bring in anywhere from $200 million to $1 billion per year, according to the Center for Tax & Budget Accountability, which claims that repealing the “single sales factor” change to the corporate income tax would bring in $100 million.

“Means testing” for the Illinois tuition tax credit could save $52 million per year. Means testing for the property-tax credit could save $100 million.

Not filling any of the 11,000 state job openings created by the early-retirement program saves anywhere from a half a billion to $800 million a year.

There are other things Blagojevich can do, including borrowing on future tobacco-settlement proceeds, before he raises taxes.

Plus, he can also cut the budget. As Lieutenant Governor Quinn said last week, the administration’s top priority is to “cut costs, cut costs, and cut costs.” Look for mostly symbolic cuts (Blago is a Democrat, after all), but he’ll have to inflict some pain to retain any credibility.

And unless the budget goes completely in the tank, don’t pay much attention to reports that the income tax will go up, or that a new service tax will be implemented, or that pension income will be taxed. This stuff is most likely just a distraction from the smaller tax and fee hikes that will likely come out of the spring legislative session.

By not raising taxes on the working class, Blagojevich could help break the cycle of cynicism in this state that has followed almost every statewide election for the past 20 years. He would go a long way toward guaranteeing that the legislature remains Democratic in two years and that he is re-elected in four years. And his presidential dreams, which seemingly hover over everything he does, will be kept alive (at least in his own mind).

Rich Miller also publishes Capitol Fax, a daily political newsletter. He can be reached at (http://www.capitolfax.com).