Week in Review for 3/24/14 through 3/28/14

Governor Quinn’s Tax & Spend Budget

Quinn wants to make 2011 “temporary” income tax hike permanent.  Governor Pat Quinn outlined a tax-and-spend budget plan Wednesday during his annual budget address before a joint session of the Illinois General Assembly.

The Governor’s proposed Fiscal Year 2015 budget includes $38.1 billion in general fund expenditures, an increase of $3.6 billion over the $34.5 billion revenue estimate adopted by the General Assembly earlier this month.

House Republicans blasted Quinn’s proposal to make the temporary income tax increase permanent and spend billions more than agreed to by the House.

Governor Quinn and his Democrat allies sold the last tax hike as a way to pay off old bills and balance the budget.  The Governor himself said: “We have some temporary tax increases that are designed to pay our bills, get Illinois back on fiscal sound footing and make sure that our state has a strong economy.”

None of that happened.  In reality, the Democrats just kept on spending and now they want the taxpayers to once again bail out their reckless spending.

In 2011, Illinois had an $8.5 billion backlog of unpaid bills.  In the January 2011 lame-duck session, Democrats passed a 67% temporary income tax hike, costing Illinoisans an extra $31 billion.  But in 2014, Illinois still has $7 billion in unpaid bills and $127 billion in long-term debt.

The Democrats’ temporary tax increase failed.  It failed to curb out-of-control spending.  It failed to pay off the State’s bill backlog.  It failed to get Illinois’ economy back on track.  Instead of recognizing and correcting their failures, Illinois Democrats have proposed three different tax hikes in the past week.

High taxes are driving families and jobs out of Illinois.  We have the second-highest record of out-migration of any state.  Illinois has 68,400 fewer jobs than when Pat Quinn became governor.  The labor force has contracted and our unemployment rate is two points higher than the national average, the second-worst jobless rate in the country.  Nearly 570,000 Illinoisans are out of work.

The Democrats’ 2011 temporary income tax increase will take more than $31 billion from the pockets of working families and small businesses.  To these families there is nothing temporary about that money taken; but to Governor Quinn and the Democrat leaders in Springfield, it’s still not enough.

Illinois doesn’t need, and hardworking taxpayers can’t afford, another tax increase.

What we need is comprehensive tax reform that focuses on tax relief for working families and small businesses to help create jobs and get our economy back on track.

Taxes – Income Surtax
Committee divided on Speaker Madigan’s 3% income surtax proposal.  This was the second major Illinois tax increase proposal unveiled by the Democrats this week.  While the General Assembly debates enacting a universal income tax increase on all Illinoisans by erasing the “rollback” scheduled to take effect on January 1, 2015, a separate income surtax proposal moved forward on a divided partisan roll call.

The House Revenue Committee voted 6-4 to send HJRCA 51 (Madigan) to the floor for further discussion and debate.  The measure would impose an additional 3.0% income tax upon individual incomes of $1 million or more.  The surtax would be paid in addition to taxes otherwise payable.  The surtax tax rate, which could potentially be as high as 8.0%, would be the highest income tax rate ever charged in Illinois history.

House Republicans voted against HJRCA 51 in committee, due to concerns that it would kill small businesses, destroy jobs and funnel more money to Chicago.

The Daily Herald editorialized against Madigan’s tax hike, asking “What, after all, is the Michael Madigan millionaire surcharge idea but an assault on small business and a cynical attempt to exploit the divide between haves and have nots?”

Two states that have enacted income surtaxes in the recent past, Maryland and New Jersey, asked their state treasury departments to study the long-term fiscal impacts of these surtaxes.  Both studies indicated that these surtaxes actually reduced (rather than increased) state tax receipts in these two states.

Taxes – Graduated Income Tax
Third major tax increase proposal pushed by Democrats this week.  Senator Don Harmon, chairperson of the powerful Senate Executive Committee, swung out in favor of a graduated income tax on Tuesday.  The Harmon tax plan would amend the constitution to allow a graduated income tax rate structure which would permanently increase Illinois individual income taxes for taxpayers with incomes above $12,500/year from their pre-2011 base rate of 3.0% to 4.9% and up.

An additional rung of the Harmon tax plan would create a new rate of 6.9% for incomes above $180,000/year.  As with HJRCA 51 (Madigan), this would be a record-high income tax rate and would be substantially higher than the income tax rates charged in many neighboring states.

Graduated tax proposal defeated in committee.  HJRCA 33 (Jakobsson) would have placed a constitutional amendment on the November 2014 ballot to change Illinois’ income tax structure from a flat tax to a graduated tax.

Advocates for the Jakobsson tax proposal circulated a variety of potential income tax rate structures.  This so-called “fair tax” proposal was meant to raise the total amount of state income tax receipts and could have opened the door to higher graduated tax rates for almost all taxpayers.  The House Revenue Committee defeated this proposal by a vote of 3-6-1, with four of the six “no” votes being cast by the committee’s four House Republican members.

Concealed Carry
Despite burdens, concealed carry law finds wide support throughout Illinois.  Owners of gun ranges report heavy demand by certified concealed carry license (CCL) trainers for the live-fire portions of the 16 hours of training most applicants will be required to undertake before being authorized to carry a concealable firearm in public in Illinois.  CCL licenses began to be distributed by the Illinois State Police on Friday, February 28, and more than 13,000 licenses have since been distributed.

Concealed carry supporters assembled at the Illinois Capital complex this week to strongly advocate for changes to the law.  Many physical locations and facilities throughout Illinois are authorized to blanket-ban concealed weapons, creating problems for gun owners who are likely to spend an average day passing in and out of gun-free zones; examples include mass transit systems.  Many bills have been introduced this spring in the Illinois House and Senate to either strengthen or further restrict gun rights.

In 2013, Illinois became the 50th and final state to authorize its properly-trained residents to carry a concealed weapon.  The State Police CCL application website is here: https://ccl4illinois.com/ccw/public/home.aspx.

Criminal Law – Eavesdropping
Illinois will have to rewrite its eavesdropping law.  The Prairie State, once the holder of one of the most airtight laws against eavesdropping on the statute books of the 50 states, will have to rewrite this law after a decision by the state Supreme Court announced on Thursday, March 20.  In “People v. Melongo,” the court found that the current law violates free speech and due process protections of the Illinois and U.S. Constitutions.

“Eavesdropping” is the act of monitoring and listening to another person’s communications without their consent.  Illinois law, until March 2014, flatly forbade most acts of eavesdropping carried out by private individuals.  Constitutional lawyers had rung alarm bells about the language and case law of the Illinois statute because, unlike the eavesdropping prohibitions enacted in most other U.S. states, it did not contain an exception for interactions in which the participants could be deemed to have “ no reasonable expectation of privacy.”

“Expectation of privacy” is a term used extensively in federal case law and the laws of most other U.S. states to carve out an area where a blanket prohibition against eavesdropping could be seen as generating poor outcomes.  For example, under a blanket prohibition of eavesdropping without this carve-out, if a person were to videotape an athletic event and a person could be heard cursing in the background, the act of making the video could hypothetically be treated as a felony offense because the curse words were being recorded without the consent of the speaker.

Following the high court’s decision, Illinois has no eavesdropping law at all.  The House and Senate Judiciary Committees may be asked to take fast-track action to work with interested parties, including law enforcement, to develop a constitutional eavesdropping law.

Illinois jobs
8.7% jobless rate remains among highest in nation.  The Illinois Department of Employment Security announced on Thursday, March 20 that nearly 570,000 Illinois residents were unemployed.  Illinois’ jobless rate remained significantly higher than the nationwide U.S. rate of 6.7%, with the total number of employed Illinois residents (5,999,300) actually lower than the number of Illinoisans collecting a paycheck early in the recession at the start of 2009 (6,067,700).

Democrats block attempt to keep teeth in key facet of Medicaid reform.  The Illinois General Assembly, faced with soaring health care costs and flat tax revenues, has enacted a string of Medicaid reform proposals in the past few years.  Although all of these proposals were approved on a bipartisan basis, key Democrat leaders, including officials in the Quinn administration, have failed to implement several key reforms.

One of the most important of these reforms, “redetermination,” the effort to scrutinize patients enrolled in Medicaid to see if they are still eligible, has been completely stalled in Springfield.   Many Medicaid patients who undergo a change in their household circumstances that reduces or ends their eligibility for Medicaid do not take the initiative to notify their caseworker of their changed status and continue to collect nearly-free and heavily-subsidized medical care services at taxpayers’ expense.

Senate Democrats blocked legislation during a March 19 Senate Human Services Committee hearing that would have reversed the Quinn Administration’s actions undermining the key aspect of the state’s bipartisan Medicaid reform law aimed at reducing fraud.  An arbitrator has ordered the services of the private-sector firm performing the redetermination audit to be phased out, and bills such as HB 4489 (Bellock) and SB 3415 (Righter) to pursue the arbitration process, reinstate the audit process, and maintain the integrity of the Medicaid system have been blocked by Democrats, further threatening the State’s overall FY15 budget, already assaulted by fast-rising Medicaid costs.