tax hikes

Chicago’s Monthly Phone Tax To Rise 56 Percent?

New and higher fees, fines, and taxes. Less government services.

That’s what Chicagoans should expect going forward considering the city’s fiscal health and who’s running the show.

Fran Spielman reported on the Chicago Sun-Times website last night:

After playing cat-and-mouse for days, Mayor Rahm Emanuel’s administration came clean Thursday: Chicago wants to raise the monthly fee tacked on to hardline telephone and cell phone bills by 56 percent — to $3.90…

(Editor’s note: “After playing cat-and-mouse for days, Mayor Rahm Emanuel’s administration came clean Thursday…” Beautifully worded; bold added for emphasis.)

Spielman continued:

Instead of simply asking the General Assembly to renew a $2.50-a-month surcharge due to expire July 1, cash-strapped Chicago is seizing the opportunity to get more money — by asking state lawmakers to raise the cap to “the highest monthly wireline surcharge imposed by any county or municipality” in Illinois.

The highest monthly telephone tax around the state is the $3.90 imposed in Putnam County. Under the bill Emanuel is hoping to push through in the waning days of the Legislature’s spring session, Chicago would be empowered to match that $3.90 — and go higher if any other city or town goes first.

The new and higher tax would apply to both cell phone bills and wireline phones, according to a summary sheet of the legislation distributed by City Hall. The bill would also empower the city raise the fee imposed on prepaid cell phones from the current “seven percent of the transaction amount” to nine percent…

According to Spielman, a 56 percent increase in the monthly phone tax would generate an additional $50.4 million for the City’s coffers.

John Byrne, Monique Garcia, and Ray Long added on the Chicago Tribune website Thursday:

Emanuel’s late push for a measure that would allow the City Council to raise 911 fees by as much as $1.40, which could bring the monthly charge on landline and cell phone bills to $3.90 a month, cleared its first hurdle in the Senate.

Senate President John Cullerton, D-Chicago, said the increase was needed because the current $2.50 fee isn’t raising enough money to pay for operating the city’s emergency response center, forcing the Emanuel administration to dip into other pots of money to keep it running. How much more the fee hike would bring in depends on whether aldermen vote to increase the fee and to what level.

The city collected about $90 million last year through the current $2.50-per-month phone fee, Emanuel spokeswoman Kelley Quinn said. This year’s budget for the Office of Emergency Management and Communications is $123 million. Quinn did not directly answer whether the mayor wants to raise the 911 fee to an amount that will bring in more revenue than the city needs to cover the OEMC budget or how the city would use any extra revenue

Let’s see. Assuming the City of Chicago collects the same amount ($90 million) as last year from their monthly phone tax, adding the projected $50.4 million from a 56 percent hike totals just over $140 million. That’s enough to pay for OEMC operations plus tax- although something tells me that’s probably not where all the money would be steered to.

(Editor’s note: Bold added for emphasis)

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Spielman, Fran. “Emanuel seeks 56 percent hike in telephone tax.” Chicago Sun-Times. 29 May 2014. (http://politics.suntimes.com/article/chicago/emanuel-seeks-56-percent-hike-telephone-tax/thu-05292014-434pm). 30 May 2014.

Byrne, John, Garcia, Monique and Long, Ray. “Emanuel makes late push to raise 911 fees paid by those own landlines, cell phones.” Chicago Tribune. 29 May 2014. (http://www.chicagotribune.com/news/politics/clout/chi-emanuel-makes-late-push-to-raise-911-fees-paid-by-those-own-landlines-cell-phones-20140529,0,6958184.story). 30 May 2014.

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Illinois House Speaker Michael Madigan Vows To Get State Income Tax Hike Made Permanent

The Illinois House of Representatives approved a $35.7 billion state spending plan yesterday which didn’t factor in funds from a 2011 temporary income tax hike being made permanently available. I surmised Tuesday:

So does this mean Illinois Democrats have abandoned their push to make the temporary income tax hike permanent? I doubt it. This is “Madiganistan,” after all. And what Mike wants, Mike gets.

I wouldn’t be surprised to see some sort of maneuvering being carried out to eventually land these funds. Perhaps another “temporary” increase in such taxes sometime after the November 2014 election, with buzz words such as “fiscal emergency” and “for the children” being used to justify the measure?

Monique Garcia, Ray Long, and Maura Zurick reported on the Chicago Tribune website last night:

Speaker Michael Madigan acknowledged the budget proposal would leave unfinished business and vowed to spend the summer and fall working to get the income tax hike made permanent to provide more money to run state government. The approach also ensures the governor’s race will continue to be framed up by opposite positions on a tax hike Democratic Gov. Pat Quinn and Republican challenger Bruce Rauner have staked out.

“My expectation is that this issue will be taken into the general election and I think the governor will be supportive of an extension of the income tax increase through the general election,” Madigan said. “My expectation is that Mr. Rauner will be against. So you’ll have a clear line of division going into the election. And people can make their choice.”

(Editor’s note: Bold added for emphasis)

Hmmm. Should Governor Quinn be re-elected, one more buzz word I suspect Illinoisans might hear before legislative action is taken by the Democrats to make the income tax hike permanent is “mandate,” as in “Illinois voters have given us a mandate to make the temporary income tax hike permanent during this fiscal emergency. Remember- it’s for the children!”

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Garcia, Monique, Long, Ray and Zurick, Maura. “State budget would put off tough decisions until after election.” Chicago Tribune. 27 May 2014. (http://www.chicagotribune.com/news/politics/clout/chi-state-budget-would-put-off-tough-decisions-until-after-election-20140527,0,6506902.story). 28 May 2014.

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Illinois Democrats Abandoning Attempt To Make Temporary Income Tax Hike Permanent?

“In his election-year budget speech Wednesday, Gov. Pat Quinn called on lawmakers to make permanent the 67 percent temporary income tax increase they approved in 2011…

Quinn’s budget speech was the first time he directly addressed what should be done about the pending expiration of much of the temporary tax increase. When lawmakers approved raising the state’s personal income tax rate from 3 percent to 5 percent, they stipulated that the rate should drop to 3.75 percent on Jan. 1, 2015…”

-The State Journal-Register (Springfield), March 26, 2014

There’s news coming out of Springfield that the Democrats are preparing an Illinois state budget that accounts for the expiration of the temporary income tax hike they approved in 2011. Doug Finke reported on The State Journal-Register website last night:

House Democrats are preparing a new state budget that allows most of the temporary income tax increase to expire on schedule at the end of the year.

“Today we’re going to have our (budget negotiators) working toward a middle-of-the-road budget that would be consistent with the revenue estimates which have been adopted by the House,” House Speaker Michael Madigan, D-Chicago, said Monday. “The income tax increase would not be extended.”

From an Associated Press piece earlier today:

House Speaker Michael Madigan emerged from a Memorial Day caucus meeting and told reporters he was dropping the idea of making the 5 percent income tax permanent — and crafting a budget blueprint that holds the line on spending but is not the “doomsday” plan the House overwhelmingly rejected Friday.

“We’re going to call upon the agencies and those that receive appropriations from the Legislature to live within their means,” said Madigan, a Chicago Democrat. “We understand the way this is… Let’s take a good hard look at it and get the job done.”

So does this mean Illinois Democrats have abandoned their push to make the temporary income tax hike permanent? I doubt it. This is “Madiganistan,” after all. And what Mike wants, Mike gets.

I wouldn’t be surprised to see some sort of maneuvering being carried out to eventually land these funds. Perhaps another “temporary” increase in such taxes sometime after the November 2014 election, with buzz words such as “fiscal emergency” and “for the children” being used to justify the measure?

Stay tuned…

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Finke, Doug. “House Democrats work on budget without tax increase.” The State Journal-Register. 26 May 2014. (http://www.sj-r.com/article/20140526/NEWS/140529531/). 27 May 2014.

“Illinois Democrats give up on tax-hike extension.” Associated Press. 27 May 2014. (http://www.chicagobusiness.com/article/20140527/NEWS02/140529846/illinois-democrats-give-up-on-tax-hike-extension#). 27 May 2014.

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Cook County Homeowners Could See Property Tax Hike To Pay For Pension ‘Reform’

Last week, I blogged about the possibility of property and/or sales taxes going up soon in Cook County, Illinois. Dave McKinney and Brian Slodysko reported on the Chicago Sun-Times website on May 13 the hikes might occur as part of a pension “reform” bill.

Hal Dardick and Monique Garcia added on the Chicago Tribune website tonight:

Cook County Board President Toni Preckwinkle hit Springfield Thursday to try to build support for changes to the county pension plan that she says would halt its ongoing decline toward insolvency.

She met with Senate President John Cullerton House Speaker Michael Madigan, both Chicago Democrats, and also Republican legislative leaders. “I think she’s got a good chance to pass this bill,” Madigan said afterward…

Although Preckwinkle has not identified how she would pay for her plan, it calls for the county to put $144 million a year into the pension fund. If funded with property taxes, that would cost the average homeowner up to $65 more a year, starting in 2017, according to one internal county document the Tribune obtained.

Preckwinkle, however, said Wednesday that she has closed even larger budget gaps through cuts and other, smaller scale tax and fee increases without raising property taxes — while also lowering the county sales tax by a half-cent on the dollar…

(Editor’s note: Bold added for emphasis)

Yet, McKinney and Slodysko wrote last week:

County officials do not believe they can cut enough from the budget to cover the cost, the source said…

(Editor’s note: Bold added for emphasis)

Stay tuned. It’s only a matter of time before Chicago and Cook County politicians get around to raising property taxes on a regular basis, if you ask me.

What’s that line I keep repeating on this blog?

Higher fees, fines, and taxes. Less government services.

As much as I hate saying it, that’s what Chicago and Cook County residents should be preparing themselves for down the road.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Dardick, Hal and Garcia, Monique. “Preckwinkle hits Springfield on pension plan.” Chicago Tribune. 22 May 2014. (http://www.chicagotribune.com/news/politics/clout/chi-preckwinkle-hits-springfield-on-pension-plan-20140522,0,4698464.story). 22 May 2014.

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Thursday, May 22nd, 2014 Entitlements, Fiscal Policy, Government, Taxes No Comments

Cook County Property, Sales Tax Hikes Coming Soon?

Property and/or sales taxes could be going up soon in Cook County, Illinois, as part of a pension “fix.” Dave McKinney and Brian Slodysko reported on the Chicago Sun-Times website last night:

Officials are putting the finishing touches on a Cook County worker pension reform bill that is soon expected to emerge in Springfield, the Chicago Sun-Times has learned.

The bill will cut retiree benefits and require workers to pay more toward their pension funds. But it will not address an estimated $144 million in new annual revenue that’s needed to fully fund the pension accounts in 20 years, a source with knowledge of plan said Tuesday.

That decision would be made by the Cook County Board following November’s gubernatorial election, officials with knowledge of the plan said.

But the money will likely be raised through a tax hike — either a sales tax hike, a property tax hike, or a combination of the two — in Cook County, the source said.

That’s because county officials do not believe they can cut enough from the budget to cover the cost, the source said…

(Editor’s note: Bold added for emphasis)

Survival And Prosperity readers shouldn’t be surprised to hear this. I blogged back on April 10:

For a while now (last time being earlier this week), I told my girlfriend we were lucky to have escaped the fiscal debacle and revenue grab going on in the city of Chicago.

At the same time, I pointed out that as Cook County residents we’re still on the hook for the same type of nonsense.

Brian Slodysko reported on the Chicago Sun-Times website yesterday afternoon:

Hoping to ward off another credit rating downgrade, Cook County Board President Toni Preckwinkle said Wednesday that she will soon present a plan to reform the county’s underfunded pension system.

And she’s leaving the door open to hiking property, sales and other taxes.

When asked repeatedly about the possibility of tax increases, Preckwinkle responded: “We’re looking at all the options. Everything is on the table.”

(Editor’s note: Bold added for emphasis)

Slodysko and McKinney were the only ones talking about the proposed pension “fix” on the local news sites I visited this morning.

Which is kind of sad, if you ask me.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

McKinney, Dave and Slodysko, Brian. “County pension reform headed to Springfield.” Chicago Sun-Times. 13 May 2014. (http://politics.suntimes.com/article/springfield/county-pension-reform-headed-springfield/tue-05132014-714pm). 14 May 2014.

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Wednesday, May 14th, 2014 Entitlements, Fiscal Policy, Government, Taxes No Comments

Illinois Millionaire Tax Halted For Now

Remember that “millionaire tax” Illinois House Speaker Michael Madigan (D-Chicago) had been pushing which would have affected an estimated 13,000 or so millionaires residing in the state?

It’s toast for now.

Doug Finke reported on The State Journal-Register (Springfield) website yesterday afternoon:

House Speaker Michael Madigan has pulled the plug on his proposed constitutional amendment to impose a surcharge on incomes over $1 million a year.

The Chicago Democrat made the move Wednesday after it became obvious the amendment couldn’t muster the 71 votes it needed in the House to pass.

Although Democrats hold 71 seats in the House, not all of them were on board with the amendment…

(Editor’s note: Bold added for emphasis)

Despite the setback, many Illinois Democrats in office will tell their supporters that they at least tried to “spread the wealth around” more in moving the legislation this far.

As the economic climate deteriorates nationally, I expect to see even more of these targeted income tax hikes being proposed- along with its reintroduction in “Madiganistan.”

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Finke, Doug. “Madigan dropping plan to tax Illinois millionaires.” The State Journal-Register. 9 Apr. 2014. (http://www.sj-r.com/article/20140409/NEWS/140409326/-1/json). 10 Apr. 2014.

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Cook County Residents To Get Hit With Tax Hikes Soon?

For a while now (last time being earlier this week), I told my girlfriend we were lucky to have escaped the fiscal debacle and revenue grab going on in the city of Chicago.

At the same time, I pointed out that as Cook County residents we’re still on the hook for the same type of nonsense.

Brian Slodysko reported on the Chicago Sun-Times website yesterday afternoon:

Hoping to ward off another credit rating downgrade, Cook County Board President Toni Preckwinkle said Wednesday that she will soon present a plan to reform the county’s underfunded pension system.

And she’s leaving the door open to hiking property, sales and other taxes.

When asked repeatedly about the possibility of tax increases, Preckwinkle responded: “We’re looking at all the options. Everything is on the table.”

(Editor’s note: Bold added for emphasis)

Slodysko added later in the piece:

Preckwinkle declined to discuss specifics, but she did say that any plan that goes before the Legislature will not have property tax increase language written into the bill

(Editor’s note: Bold added for emphasis)

Okaaay… so that means Preckwinkle’s not “leaving the door open” to hiking property taxes?

Regardless, based on what I see coming down the line for us, it’s only a matter of time.

Last summer, Cook County saw its bond rating lowered by one of the major credit rating agencies supposedly due to its public pension liabilities. I blogged on August 20, 2013:

In the wake of significantly downgrading the City of Chicago’s credit rating, bond credit rating giant Moody’s Investor Service lowered Cook County’s bond rating a notch last Friday. In a news release from the Moody’s website right before the weekend:

New York, August 16, 2013 — Moody’s Investors Service has downgraded the rating on Cook County’s (IL) general obligation (GO) debt to A1 from Aa3, affecting $3.7 billion of general obligation debt. The outlook remains negative.

SUMMARY RATING RATIONALE

The downgrade of the GO rating reflects Cook County’s growing pension liabilities…

(Editor’s note: Bold added for emphasis)

Stay tuned…

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Slodysko, Brian. “Preckwinkle won’t rule out tax increase to strike pension deal.” Chicago Sun-Times. 9 Apr. 2014. (http://politics.suntimes.com/article/chicago/preckwinkle-wont-rule-out-tax-increase-strike-pension-deal/wed-04092014-523pm). 10 Apr. 2014.

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Chicago Public Pension Crisis Latest

Last Tuesday, I blogged about Chicago Mayor Rahm Emanuel’s attempt to address some of the City’s public pension woes via larger contributions by City employees and $50 million tax increases for five straight years- beginning next year and continuing through 2019- for Chicago property owners.

There’s been a lot of chatter regarding this proposal and other pension “reform” activity today. Karen Pierog reported on the Reuters website:

Legislation to ease funding shortfalls in two of Chicago’s four retirement systems is a modestly positive credit step but not a permanent fix, Moody’s Investors Service said on Monday

Moody’s said that if enacted into law, the measure would immediately reduce the unfunded liabilities in the two funds.

“However, we expect that the (liability) would then escalate for a number of years before declining. Accrued liabilities would exceed plan assets for years to come, and if annual investment returns fall short of the assumed 7.5 percent, the risk of plan insolvency may well reappear,” the credit rating agency said in a report…

After breezing through an Illinois House committee on April 2, the bill has stalled. Moody’s said that even if the bill makes it out of the legislature, Governor Pat Quinn must sign it. The law would then face potential challenges to its legality under the Illinois constitution, which prohibits the impairment of retirement benefits for public sector workers…

(Editor’s note: Bold added for emphasis)

So will the Illinois Governor and fellow Chicago Democrat sign off on Mayor Emanuel’s proposed legislation?

John Byrne and Monique Garcia reported on the Chicago Tribune website this afternoon:

Gov. Pat Quinn today came out against Mayor Rahm Emanuel’s plan to raise Chicago property taxes and cut retirement benefits as a way to shore up some of Chicago’s government worker pension systems.

The re-election seeking Democratic governor called the bill floating around Springfield “a sketch” that “kept changing by the hour” and blasted the property tax as a “lousy tax” because it is not based on the ability to pay…

“I don’t think that’s a good way to go,” Quinn said of hiking property taxes. “And I say it today and I’ll say it tomorrow, they’ve got to come up with a much better comprehensive approach to deal with this issue. But if they just think they are going to gouge property tax owners, no can do. We’re not going to go that way.”

(Editor’s note: Bold added for emphasis)

Now, as I pointed out in last week’s post about Chicago’s public pension crisis:

There’s still a state-required $600 million contribution due next year from the City to stabilize police and fire pension funds that this proposed property tax hike doesn’t address and has to be dealt with…

(Editor’s note: Bold added for emphasis)

Plus, I read the following this morning by Chacour Koop on the website of The State Journal-Register (Springfield):

After addressing Illinois’ own employee pension crisis, lawmakers now face an equally challenging task with the state’s cities, as mayors demand help with underfunded police and firefighter pensions before the growing cost “chokes” budgets and forces local tax increases.

The nine largest cities in Illinois after Chicago have a combined $1.5 billion in unfunded debt to public safety workers’ pension systems. Police and fire retirement funds for cities statewide have an average of just 55 percent of the money needed to meet current obligations to workers and retirees…

The problems — a history of underfunding, the expansion of job benefits and the prospect of crushing future payments — mirror those that Chicago Mayor Rahm Emanuel warned about when he asked the legislature for relief last week.

In 2016, state law requires cities to make required contribution increases — in some cases, more than an additional $1 million annually — so they’ll reach 90 percent funding by 2040. If they don’t, the state will begin doing it for them, diverting grant money now used by cities elsewhere directly into the pension funds…

(Editor’s note: Bold added for emphasis)

Just like the Illinois General Assembly- dominated by Democrats- barely passed legislation on December 3, 2013, that was touted as a “fix” for the state’s $100 billion public pension crisis (it isn’t), something tells me an accommodation may be reached with fellow Democrats running the City of Chicago so they don’t have to pay the full amount of the state-required $600 million contribution due next year to stabilize police and fire pension funds.

That goes for those large Illinois communities as well.

Watch all the back-patting go on should that “fix” materialize as well.

And the inevitable “blowback” down the road.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

UPDATE: From Fran Spielman over on the Chicago Sun-Times website early Tuesday morning:

Mayor Rahm Emanuel and House Speaker Michael Madigan Monday stripped out controversial language from city pension legislation that had authorized the City Council to impose a property-tax hike, putting the stalled measure back on the fast-track at the state Capitol.

Madigan, D-Chicago, filed an amendment to Senate Bill 1922 after the House adjourned Monday without taking any action on the stalled legislation. Sources now expect the legislation to be voted upon as early as Tuesday.

(Editor’s note: Bold added for emphasis)

Sources:

Pierog, Karen. “UPDATE 1-Proposed Chicago pension changes positive step but no fix -Moody’s.” Reuters. 7 Apr. 2014. (http://www.reuters.com/article/2014/04/07/usa-chicago-moodys-idUSL2N0MZ1AP20140407). 7 Apr. 2014.

Byrne, John and Garcia, Monique. “Quinn blasts Emanuel’s property tax hike for pensions.” Chicago Tribune. 7 Apr. 2014. (http://www.chicagotribune.com/news/politics/clout/chi-quinn-blasts-emanuels-property-tax-hike-for-pensions-20140407,0,5432729.story). 7 Apr. 2014.

Koop, Chacour. “Illinois’ next pension issue: Police, firefighter funds.” Associated Press. 6 Apr. 2014. (http://www.sj-r.com/article/20140406/NEWS/140409562/-1/json/?tag=1). 7 Apr. 2014.

Spielman, Fran. “Analysis: Rahm’s pension bill revisions solve—and create—problems.” Chicago Sun-Times. 8 Apr. 2014. (http://politics.suntimes.com/article/chicago/analysis-rahm%E2%80%99s-pension-bill-revisions-solve%E2%80%94and-create%E2%80%94problems/mon-04072014-728pm). 8 Apr. 2014.

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Chicago Wakes To Proposed Property Tax Hike On April Fool’s Day

Many Chicagoans probably wish what’s being widely-reported in the local news this morning about a proposed property tax hike is just a silly April Fool’s joke.

It’s not.

Fran Spielman wrote on the Chicago Sun-Times website last night:

Chicago property owners will face $250 million in property tax increases over five years while city employees make increased pension contributions that will cost them at least $300 more a year, under landmark reforms unveiled Monday…

The new revenue the mayor had promised only after pension reform will come in the form of $50 million property tax increases for five straight years, beginning next year and continuing through 2019.

Top mayoral aides estimate that would cost the owner of a home valued at $250,000 with an annual property tax bill of $4,000 roughly $58 more or $290 over the five-year period. That’s on top of expected increases for the Chicago Board of Education and Chicago Park District…

(Editor’s note: Bold added for emphasis)

A couple of thoughts here:

First off, is anyone really surprised this is happening?

Regular readers of this blog shouldn’t be.

Higher fees, fines, and taxes. Less government services.

I’ve been squawking this for quite some time now.


“Black Dynamite- Who saw that coming?”
YouTube Video

Second, a $250,000 home? When discussing a Chicago Board of Education property tax hike last August, I blogged:

$230,000? You’d be hard-pressed to find a home for that little money in my former stomping grounds on the Northwest Side.

The same holds true for a $250,000 one (especially if it’s a property big enough for a family and doesn’t require a ton of work).

Which means many of my old neighbors will be coughing up significantly more than just $58 annually/$290 over five years as a result of this proposed hike.

And they already pay a big chunk of change to the City’s coffers.

Third, Spielman added last night:

The bottom line, according to Emanuel, is a plan that spreads the burden between employees, retirees and homeowners without raising property taxes so high that it triggers a mass exodus to the suburbs…

“Mass” being the key word here, because an exodus has already started. Former Chicago residents who have awakened to the “writing on the wall” are moving to the suburbs (yours truly included), leaving Cook County, and departing the state.

The push to make “temporary” personal and corporate income tax hikes permanent and the pursuit of class warfare in the form of a proposed millionaire tax hike by the ruling political party in the city, county, and state certainly don’t help the situation either.

Fourth, I can’t stand when tax hikes are proposed despite the lack of significant belt-tightening. Think the City of Chicago is as lean-and-mean as it possibly can be with its operations and set-up?

As long as 50 aldermanic wards exist, I’d argue no.

Fifth, as it stands right now, there’s still a state-required $600 million contribution due next year from the City to stabilize police and fire pension funds that this proposed property tax hike doesn’t address and has to be dealt with. Hal Dardick an Bill Ruthhart reported on the Chicago Tribune website this morning:

But the proposal the mayor and his top aides outlined late Monday would not address huge pension shortfalls for Chicago police, firefighters and teachers. Nor would it deal with the city’s most immediate, pressing financial problem: a state requirement to pay a whopping $600 million more toward police and fire pensions next year, a provision that could lead to a combination of tax increases, service cuts and borrowing

(Editor’s note: Bold added for emphasis)

You read right. Possibly more “tax increases, service cuts and borrowing” coming down the line shortly for Chicago residents.

Stay tuned…

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Spielman, Fran. “Pension deal pinches city workers and taxpayers.” Chicago Sun-Times. 31 Mar. 2014. (http://politics.suntimes.com/article/chicago/exclusive-pension-deal-pinches-city-workers-and-taxpayers/mon-03312014-821pm). 1 Apr. 2014.

Dardick, Hal and Ruthhart, Bill. “Emanuel’s pension fix: Shrink benefits, raise taxes.” Chicago Tribune. 1 Apr. 2014. (http://www.chicagotribune.com/news/local/ct-rahm-emanuel-pension-property-tax-increase-met–20140401,0,1662095,full.story). 1 Apr. 2014.

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Illinois Millionaire Tax Moves Out Of Committee, Goes To House For Vote

This Monday, I blogged about Illinois House Speaker Michael Madigan (D-Chicago) pushing for an income tax hike on the estimated 13,000 or so millionaires residing in the state.

The proposed legislation is making progress in the Democrat-controlled Illinois General Assembly. Doug Finke reported on The State Journal-Register (Springfield) website last night:

An Illinois House committee Thursday signed off on a measure that would allow voters to decide if millionaires should pay more in state income taxes…

The committee voted along party lines to approve the proposed constitutional amendment by House Speaker Michael Madigan, D-Chicago, that would impose a 3 percent surtax on incomes above $1 million. Income up to $1 million would continue to be taxed at the state’s personal income tax rate, currently set at 5 percent…

The proposed amendment now goes to the full House, which must approve it by a three-fifths vote. The Senate will then have to approve it by the same margin for the issue to appear on the November ballot

(Editor’s note: Bold added for emphasis)

Opponents of the tax hike claim it not only unfairly penalizes successful residents of the state, but hurts everyone else in that it may drive away wealth from Illinois.

Speaker Madigan’s response? He was quoted by the Chicago Tribune last Friday as saying:

Well, if they’re in Illinois today, they’re probably so much in love with Illinois that they’re not going to leave.

Eye-roll please…

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Finke, Doug. “Millionaire tax amendment advances to House; progressive income tax rejected.” The State Journal-Register. 27 Mar. 2014. (http://www.sj-r.com/article/20140327/NEWS/140329457/-1/json/?tag=2). 28 Mar. 2014.

Garcia, Monique, Long, Ray, and Zurich, Maura. “Illinois Democrats go all-in on class warfare theme.” Chicago Tribune. 21 Mar. 2014. (http://articles.chicagotribune.com/2014-03-21/news/chi-speaker-madigan-proposes-asking-voters-to-raise-taxes-on-wealthy-20140320_1_tax-hike-bruce-rauner-income). 24 Mar. 2014.

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Misled: Illinois Governor Pat Quinn Wants 2011 ‘Temporary’ Income Tax Hikes Made Permanent

“He said he would, and now that the election is over, Governor Quinn is ready to raise the state income tax.

The governor says he intends to propose increasing the state income tax by 33 percent

The governor said he views his defeat of Republican Bill Brady, who opposed a tax hike as a vote to deal with the state budget and raise taxes.”

-FOX 32 (Chicago) website, November 8, 2010

“Gov. Pat Quinn said today he will sign a major income tax increase as soon as it hits his desk and rejected criticism that he had misled taxpayers by saying during his campaign he would only sign a smaller increase…

Quinn said ‘no’ when asked if he had been dishonest with taxpayers for campaigning during the 2010 election on a 1 percentage point increase in the income tax rate but now agreeing to sign the 2 percentage point hike.

The governor sought to justify the larger increase in part by saying fiscal experts had told leaders the state’s financial problems were escalating in the last two months.

‘Our house was burning,’ Quinn said. ‘Our fiscal house was burning.’”

-Chicago Tribune website, January 12, 2011

“Gov. Pat Quinn today signed a major income tax increase the Legislature passed earlier this week.

The Democratic governor’s signature on the legislation means the 67 percent increase in the personal income tax increase takes effect immediately. Corporate income taxes also rose 46 percent…”

-Chicago Tribune website, January 13, 2011

“The legislation that was pushed through by Democratic lawmakers, who have controlled Illinois state government since 2003, hikes the 3 percent personal income tax rate to 5 percent until 2015, when the rate is supposed to drop to 3.75 percent. However, the last time income tax rates in the ‘Land of Lincoln’ went up in 1989, politicians also claimed it was as a temporary increase to combat a financial ‘rough patch.’ But the rates never came down and by 1993 were designated permanent. Until now, that is…”

-Survival And Prosperity post, January 13, 2011

“In his election-year budget speech Wednesday, Gov. Pat Quinn called on lawmakers to make permanent the 67 percent temporary income tax increase they approved in 2011

Quinn’s budget speech was the first time he directly addressed what should be done about the pending expiration of much of the temporary tax increase. When lawmakers approved raising the state’s personal income tax rate from 3 percent to 5 percent, they stipulated that the rate should drop to 3.75 percent on Jan. 1, 2015…”

-The State Journal-Register (Springfield), March 26, 2014

(Editor’s note: Italics added for emphasis)

Let me guess. “Our fiscal house is burning.”

Something’s burning alright. And Governor Quinn’s wearing them below his waist.

“Facts are stubborn things, and it’s time to set the record straight…”

-Illinois Governor Pat Quinn, Chicago Tribune opinion piece, January 19, 2011

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

“Pat Quinn Plans Income Tax Increase After Elected Governor.” FOX 32. 8 Nov. 2010. (http://www.myfoxchicago.com/story/17817497/pat-quinn-plans-income-tax-increase-after-elected-governor). 26 Mar. 2014.

Long, Ray and Pearson, Rick. “How Democrats wrangled the tax votes in
Springfield.” Chicago Tribune. 12 Jan. 2011. (http://articles.chicagotribune.com/2011-01-12/news/ct-met-tax-hike-how-did-it-pass-20110112_1_income-tax-tax-votes-senate-president-john-cullerton). 13 Jan. 2011.

Long, Ray. “Governor signs income tax increase.” Chicago Tribune. 13 Jan. 2011. (http://newsblogs.chicagotribune.com/clout_st/2011/01/governor-signs-income-tax-increase.html). 13 Jan. 2011.

Finke, Doug. “Quinn makes case to leave state income tax increase in place.” The State Journal-Register. 26 Mar. 2014. (http://www.sj-r.com/article/20140326/NEWS/140329542). 26 Mar. 2014.

Quinn, Pat. “Border Wars.” Chicago Tribune. 19 Jan. 2011. (http://articles.chicagotribune.com/2011-01-19/opinion/ct-oped-0119-illinois-20110119_1_world-class-universities-and-research-budget-reforms-border-wars). 26 Mar. 2014.

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Thursday, March 27th, 2014 Government, Income, Political Parties, Taxes No Comments

Wisconsin Cuts Taxes While Illinois Looks To Make 2011 ‘Temporary’ Tax Hikes Permanent

Throughout the years, I’ve known/met a number of Illinois residents who can’t stand Wisconsin. Mostly from the Chicago area, they equate Wisconsin and its residents as being unsophisticated clowns.

I wonder if they haven’t noticed by now that the only circus around is in the “Land of Lincoln.”

While Illinois falls deeper into an economic abyss (public pension fix my butt), Wisconsin seems to have gotten their finances under control and look to be on the path to prosperity.

So much so they’re cutting taxes. Again.

Patrick Marley and Jason Stein reported on the Milwaukee Journal Sentinel website Monday afternoon:

Lowering taxes for the third time in less than a year, Gov. Scott Walker signed his $541 million tax cut bill in a ceremony Monday at a farm in Cecil as he travels through central and northern Wisconsin touting it.

Speaking at Horsens Homestead Farms, about 35 miles northwest of Green Bay, Walker called it a great day for Wisconsin taxpayers and a sign of the state’s shifting financial fortunes in recent years.

“Now, instead of billion dollar budget deficits, we have a surplus — and today that money is on its way to the workers, parents, seniors, property owners, veterans, job creators and others. You deserve to keep as much of your hard-earned money as possible — because after all, it is your money,” Walker said.

With growing tax collections now expected to give the state a $1 billion budget surplus in June 2015, Walker’s tax proposal will cut property and income taxes for families and businesses, and zero out all income taxes for manufacturers in the state.

Though the state’s tax revenue is increasing, GOP lawmakers and Walker are trimming state spending slightly for the next three years rather than increasing it

(Editor’s note: Italics added for emphasis)

Meanwhile, across the Cheddar Curtain in Illinois there’s this on the website of The State Journal-Register (Springfield). Doug Finke reported Friday:

Hundreds of employees would be laid off, state facilities would be closed and thousands of prison inmates released without supervision, state agency directors told senators Friday during a hearing to gauge the effect of possibly severe spending cuts next year.

During a more than three-hour joint hearing of the two Senate Appropriations committees, agency after agency warned of drastic consequences should they be forced to cut their current budgets by 20 percent.

“There would be extreme consequences for the economy across Illinois,” warned Ben Winick of Gov. Pat Quinn’s budget office. “Over a dozen state facilities would have to close. Thousands of state employees would have to be laid off.”

The hearing occurred just days before Quinn is scheduled to finally deliver his budget outline for the fiscal year that starts July 1…

Translated? Illinois residents, this is what will happen if you don’t support making the Democrat-led temporary 67 percent personal income tax hike and 46 percent corporate income tax hike implemented in January 2011 permanent next year.

I hear Governor Quinn will be delivering his budget plan tomorrow.

Instead of ridiculing Wisconsin, us FIBs (F***ing Illinois Bastards as we’re known by up there) might want to start emulating our neighbors to the north in certain respects before we completely destroy Illinois.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Marley, Patrick and Stein, Jacob. “Scott Walker signs tax cut legislation.” Milwaukee Journal Sentinel. 24 Mar. 2014. (http://www.jsonline.com/news/statepolitics/scott-walker-set-to-sign-tax-cut-legislation-b99231851z1-251936261.html). 24 Mar. 2014.

Finke, Doug. “State agencies outline cuts if forced to make 20% reductions.” The State Journal-Register. 21 Mar. 2014. (http://www.sj-r.com/article/20140321/NEWS/140329821). 24 Mar. 2014.

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Illinois Millionaire Tax Hike Could Pass As Part Of Class Warfare Push By Democrats

While I’ve been putting a lot of time lately into my offshore Web projects, Illinois Democrats have been grabbing the local headlines as they replicate President Obama’s class warfare strategy to win votes in November. Monique Garcia, Ray Long, and Maura Zurick reported on the Chicago Tribune website last Friday:

Illinois Democrats went all-in Thursday with their election-year class warfare theme as Speaker Michael Madigan pitched the idea of asking voters to raise taxes on millionaires, Senate President John Cullerton advanced a minimum-wage increase and Gov. Pat Quinn compared wealthy opponent Bruce Rauner to TV villain Mr. Burns…

The newest front in the campaign battle came as Madigan held a rare news conference to announce he wants lawmakers to put a question on the Nov. 4 ballot asking voters whether the state should raise the income tax by 3 percentage points on those who make more than $1 million a year.

The powerful Democratic speaker said the tax hike on millionaires is a way to generate more than $1 billion for elementary and high schools. Madigan based his calculations on what he said are roughly 13,675 millionaires that lived in Illinois in 2011, brushing aside a question about whether such a tax hike might drive them out of the state.

“Well, if they’re in Illinois today, they’re probably so much in love with Illinois that they’re not going to leave,” Madigan said

(Editor’s note: Italics added for emphasis)

I’m not as optimistic as the 71-year-old Speaker of the House is about Illinois millionaires sticking around if they’re targeted with a tax hike.

After all, money typically gravitates to where it’s being treated the best.

And recent demographic data suggests Chicagoland and Illinois residents may not be “so much in love” with the area as Mr. Madigan claims.

That includes the rich as well.

“Cook County’s population grew by 17,000 people in 2012, about .3 percent- but much of that gain came from immigrants, according to Census Bureau estimates released Thursday.

The figures showed that about 32,000 more domestic residents moved out of Cook County than moved in. But a net increase of 17,000 immigrants, along with a high ratio of births over deaths, contributed to an overall gain for the county…”

-Chicago Sun-Times website, March 13, 2013

Moving Out
The top outbound states for 2013 were:

1. New Jersey
2. Illinois
3. New York
4. West Virginia
5. Connecticut
6. Utah
7. Kentucky
8. Massachusetts
9. New Mexico”

-United Van Lines press release, January 2, 2014

“As the Great Recession churned job prospects for many, Cook County lost about 13,000 residents with six-figure household incomes to other places, despite the widely hyped revival of downtown housing and jobs…”

-Crain’s Chicago Business website, February 14, 2014

“Roughly 13,675 millionaires that lived in Illinois in 2011”

Should Illinois Democrats jack up their income taxes, I suspect the number of Illinois millionaires right before the tax hike is implemented will plummet. Revenue will follow. Out-of-state vacation homes in Indiana and Wisconsin will be declared as primary residences.

“A way to generate more than $1 billion for elementary and high schools”

I highly doubt that.

So does the proposed millionaire tax hike have a chance of becoming reality?

Consider what Greg Hinz blogged on the Crain’s Chicago Business website Friday:

Springfield Democrats have such big legislative majorities that they won’t need any Republican votes to pass the measure if they hang together. And Springfield insiders are saying that odds are much better that Democrats will unify behind the speaker’s proposal- which, after all, would affect only millionaires like Bruce Rauner- than behind another plan being pushed by Senate Democrats to implement a graduated income tax, which would affect far more voters.

Stay tuned. If you can stomach it.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Garcia, Monique, Long, Ray, and Zurich, Maura. “Illinois Democrats go all-in on class warfare theme.” Chicago Tribune. 21 Mar. 2014. (http://articles.chicagotribune.com/2014-03-21/news/chi-speaker-madigan-proposes-asking-voters-to-raise-taxes-on-wealthy-20140320_1_tax-hike-bruce-rauner-income). 24 Mar. 2014.

Hinz, Greg. “GOP leaders blast Madigan’s millionaires tax, but idea likely has legs.” Greg Hinz On Politics.” Crain’s Chicago Business. 21 Mar. 2014. (http://www.chicagobusiness.com/article/20140321/BLOGS02/140329950/gop-leaders-blast-madigans-millionaires-tax-but-idea-likely-has-legs). 24 Mar. 2014.

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BIS: Global Debt Markets Grow To Estimated $100 Trillion In 2013, Up From $70 Trillion In 2007

Last night, I read about global debt markets hitting the $100 trillion-mark.

One word came to my mind at that moment:

Unsustainable.

Branimir Gruić and Andreas Schrimpf wrote “Cross-border investments in global debt markets since the crisis” in the latest BIS Quarterly Review- a report from the Bank of International Settlements (the central bank of central banks). From the publication released Sunday:

Global debt markets have grown to an estimated $100 trillion (in amounts outstanding) in mid-2013 (Graph C, left-hand panel), up from $70 trillion in mid-2007. Growth has been uneven across the main market segments. Active issuance by governments and non-financial corporations has lifted the share of domestically issued bonds, whereas more restrained activity by financial institutions has held back international issuance (Graph C, left-hand panel).

Not surprisingly, given the significant expansion in government spending in recent years, governments (including central, state and local governments) have been the largest debt issuers (Graph C, left-hand panel). They mostly issue debt in domestic markets, where amounts outstanding reached $43 trillion in June 2013, about 80% higher than in mid-2007 (as indicated by the yellow area in Graph C, left-hand panel)…

(Editor’s note: Italics added for emphasis)

“Not surprisingly, given the significant expansion in government spending in recent years, governments (including central, state and local governments) have been the largest debt issuers”

Gruić and Schrimpf are correct- I’m not surprised.

And regular Survival And Prosperity readers shouldn’t be either, as warnings about reduced government services and new/higher taxes and fees (to deal with all this new debt) have been issued time and time again.

You can read the entire BIS report here (page 22 of the .pdf file/page 18 of the publication contains Gruić and Schrimpf’s findings).

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Chicago Residents Hit With Fee, Fine, And Tax Hikes In 2014

Chicagoans- get ready for a bunch of new fee, fine, and tax hikes starting January 1.

Fees for certain parking and speeding infractions, impounded vehicle storage, and construction permit filings are going up.

“Amusement” taxes on cable television will jump 50 percent.

Beginning January 10, yet another cigarette tax hike of 50 cents per pack takes effect. Adding federal, state, and county taxes will leave Chicago with the highest taxes ($7.17) on cigarettes in the country.

None of this applicable to you? There’s more. I read an article by Hal Dardick in my Sunday paper (Chicago Tribune) this morning which warned:

The widest-felt effects will stem from the property tax increase enacted in August by the Chicago Board of Education and higher water and sewer fees set in motion during Emanuel’s first year in office as a way to pay for the replacement of aging mains.

The owner of a home valued at $213,000 can expect to pay about $51 more in school property taxes next year. It’s the third year in a row that Chicago property owners will get hit with higher school taxes.

City property owners and suburban governments that buy city water face a 15 percent increase in water rates. In some cases, suburban utilities will pass the increases on to people who buy their water. Sewer charges, added to city property owners’ bimonthly bills, will be 96 percent of their water tab, an increase of 4 percentage points…

“The owner of a home valued at $213,000.”

Not many decent houses down around that price level in my old neighborhood on the Northwest Side. Even in adjacent neighborhoods.

$51 would be just the starting point in that part of Chicago.

Dardick added later:

All of the new city fines and fees are expected to pump about $32.4 million into city coffers next year…

“$32.4 million.” Yeah, we’ll see.

Why such a “Doubting Thomas”? If anything, smokers who aren’t already doing it might be even more motivated in the new year to purchase their cigarettes outside of the Chicago city limits, depriving the City of Chicago of much needed and anticipated revenue.

Then there’s the possibility that a significant number of Chicagoans might become extra-wary going forward about being slapped with the well-publicized and more expensive parking and moving violations. More anticipated money gone.

And down the road, there’s already talk among certain suburbs of bypassing Lake Michigan water collected and distributed by the City of Chicago.

Regardless, Chicago residents- should they choose to remain in the “Windy City”- should keep on expecting higher fees, fines, and taxes in the years to come.

Then again, the same might be said for a lot of places across the United States.

But to the degree that I expect Chicagoans to get hit with? Not really.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Dardick, Hal. “Higher Chicago taxes, fines and fees for 2014.” Chicago Tribune. 20 Dec. 2013. (http://www.chicagotribune.com/news/local/ct-chicago-new-taxes-fees-met-20131222,0,6847986.story). 22 Dec. 2013.

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