The cacophony of angry voices has started rising to a fever pitch in the wake of Governor Rod Blagojevich's state budget address last Wednesday. Most of the complaining is coming from three areas: riverboat owners; elementary and secondary educators; and higher-education institutions. Let's take them one at a time.
• Boat owners are not exactly sympathetic characters. Many boats are either owned now or were founded by politically connected investors. The owners have made a ton of money off their relatively small initial cash outlays.
But their anger at the governor's $200-million tax increase is understandable, particularly considering they were slammed with a big tax hike last year. The Elgin casino's annual tax bill would rise by $34 million, to $166 million - and that doesn't include the proposed $2 increase in the entrance-fee tax. The stock price for the company that owns the casino in Aurora dropped close to 10 percent in the two days after the governor's speech. Argosy, which owns the Alton boat, watched its stock price drop about 13 percent in those same two trading days.
If the governor reduces his tax hike in the face of intense lobbying by the powerful boats, he could probably "balance" out the reduction with a higher estimated selling price for the 10th casino license, which is currently in legal limbo. The proposed tax hike could make the license almost worthless, so easing up on the increase would help state coffers in the short term. This would be a one-time-only revenue source, of course, but he could always raise boat taxes next year.
Blagojevich could also pull back the tax hike somewhat and make up the difference by allowing the horse-racing industry to install slot machines at their tracks - but House Speaker Michael Madigan opposes that idea. Or, he could give the boats more gaming positions - which wouldn't help Jumer's Casino Rock Island, because it can't use all of its allotted positions as it is. He could also give a completely new casino license to Chicago. Or he could legalize video-poker machines, which are already operating illegally in just about every tavern in the state.
• The governor visited a Chicago public school last Friday to tout his budget plan. Blagojevich said his school-funding proposal would result in a $42.7-million increase in general state aid for Chicago schools. What he didn't mention was that his budget plan also slashes $65 million earmarked for the Chicago Teachers Pension Fund. That money will have to be made up by the school system. And then there are all the other education grant funds that he wants to cut - which would further reduce funds for the city's school system.
Wealthier suburban districts are also grumbling. The Northwest Suburban High School district would receive about $250,000 more from the $250-per-student increase but would lose about a million dollars in grants. And some downstate schools will miss out on the funds because of a law originally designed to prevent them from losing out on state money.
Governor George Ryan tried to do just about the same thing with education money last year as Blagojevich proposed last week, and Ryan lost that fight. Blago will probably lose this one, too. He'll have to find more funds elsewhere to maintain his education-budget "increase" of $315 million - about $200 million of which came from simply robbing education-grant programs to fund the state-aid formula.
• The universities were hit hard last week, but it wasn't quite as bad as many had predicted. The governor slashed spending on universities by $112 million for next fiscal year. But $50 million of that will have to be cut out of base spending before the end of this fiscal year. The schools had expected a $58-million cut this fiscal year. The other $8 million will come out of grants.
The cuts are supposed to focus mostly on administrative costs, but the reductions are completely in the hands of university administrators. In the past, the campuses have ignored legislative resolutions that demanded, for instance, that a certain amount of their appropriations be spent on faculty-salary increases. But, if the universities avoid deep cuts in their bureaucracies this time, they would most likely lose much of their spending authority to the governor and the General Assembly next year.
The guv also cut some grants to private universities. Those campuses have very solid constituencies in the General Assembly, so that reduction might not last.
Rich Miller also publishes Capitol Fax, a daily political newsletter. He can be reached at (http://www.capitolfax.com).
• Boat owners are not exactly sympathetic characters. Many boats are either owned now or were founded by politically connected investors. The owners have made a ton of money off their relatively small initial cash outlays.
But their anger at the governor's $200-million tax increase is understandable, particularly considering they were slammed with a big tax hike last year. The Elgin casino's annual tax bill would rise by $34 million, to $166 million - and that doesn't include the proposed $2 increase in the entrance-fee tax. The stock price for the company that owns the casino in Aurora dropped close to 10 percent in the two days after the governor's speech. Argosy, which owns the Alton boat, watched its stock price drop about 13 percent in those same two trading days.
If the governor reduces his tax hike in the face of intense lobbying by the powerful boats, he could probably "balance" out the reduction with a higher estimated selling price for the 10th casino license, which is currently in legal limbo. The proposed tax hike could make the license almost worthless, so easing up on the increase would help state coffers in the short term. This would be a one-time-only revenue source, of course, but he could always raise boat taxes next year.
Blagojevich could also pull back the tax hike somewhat and make up the difference by allowing the horse-racing industry to install slot machines at their tracks - but House Speaker Michael Madigan opposes that idea. Or, he could give the boats more gaming positions - which wouldn't help Jumer's Casino Rock Island, because it can't use all of its allotted positions as it is. He could also give a completely new casino license to Chicago. Or he could legalize video-poker machines, which are already operating illegally in just about every tavern in the state.
• The governor visited a Chicago public school last Friday to tout his budget plan. Blagojevich said his school-funding proposal would result in a $42.7-million increase in general state aid for Chicago schools. What he didn't mention was that his budget plan also slashes $65 million earmarked for the Chicago Teachers Pension Fund. That money will have to be made up by the school system. And then there are all the other education grant funds that he wants to cut - which would further reduce funds for the city's school system.
Wealthier suburban districts are also grumbling. The Northwest Suburban High School district would receive about $250,000 more from the $250-per-student increase but would lose about a million dollars in grants. And some downstate schools will miss out on the funds because of a law originally designed to prevent them from losing out on state money.
Governor George Ryan tried to do just about the same thing with education money last year as Blagojevich proposed last week, and Ryan lost that fight. Blago will probably lose this one, too. He'll have to find more funds elsewhere to maintain his education-budget "increase" of $315 million - about $200 million of which came from simply robbing education-grant programs to fund the state-aid formula.
• The universities were hit hard last week, but it wasn't quite as bad as many had predicted. The governor slashed spending on universities by $112 million for next fiscal year. But $50 million of that will have to be cut out of base spending before the end of this fiscal year. The schools had expected a $58-million cut this fiscal year. The other $8 million will come out of grants.
The cuts are supposed to focus mostly on administrative costs, but the reductions are completely in the hands of university administrators. In the past, the campuses have ignored legislative resolutions that demanded, for instance, that a certain amount of their appropriations be spent on faculty-salary increases. But, if the universities avoid deep cuts in their bureaucracies this time, they would most likely lose much of their spending authority to the governor and the General Assembly next year.
The guv also cut some grants to private universities. Those campuses have very solid constituencies in the General Assembly, so that reduction might not last.
Rich Miller also publishes Capitol Fax, a daily political newsletter. He can be reached at (http://www.capitolfax.com).
