General Assembly

  • Corporate subsidies shore up Cullerton's "no pension crisis" claim

    24 October 2013

    "I don't think you can use the word 'crisis' to describe" Illinois' pension-funding problem.

    So said Illinois Senate President John Cullerton on Sunday, Sept. 20, 2013, on WGN radio's "The Sunday Spin" show.

    Cullerton spoke of the pension fixes that the state legislature has considered this year, and still might pass. He estimated that those fixes, mostly in the form of cuts to pensioners' benefits, "will save annually anywhere from $750 million to $1.5 billion." However, Cullerton said, Illinois will lose about $5.4 billion in annual revenue when the state's personal and corporate income tax rates go down in 2015.

    A partial transcript of WGN's interview with Cullerton appears below.

    The Chicago Sun-Times, in an Oct. 23 editorial, called Cullerton's assessment "nonsense."

    If state legislators heed Cullerton, wrote the Sun-Times, Illinois will lose something "the state needs most—a bill that significantly reduces pension costs."

    In contrast, a recent report identifies a different source of states' budget woes: corporate tax subsidies.

    The report, written by David Sirota and published by the Institute for America's Future, says that "the amount states and cities spend on corporate subsidies and so-called tax expenditures is far more than the pension shortfalls they face."

    The report says that proponents of pension reductions claim "that cutting retiree benefits is the solution [to state revenue shortfalls] rather than simply rolling back the more expensive tax breaks and subsidies."

    According to data collected by The New York Times and cited in the report, Illinois governments spend at least $1.5 billion annually on tax subsidies, including:

       • $874 million in sales tax refunds, exemptions, or other sales tax discounts

       • $452 million in corporate income tax credits, rebates, or reductions

       • $11.9 million in personal income tax credits

    The Times analysis identified the four corporations receiving the largest subsidy amounts: Sears, Google, Archer Daniels Midland, and Chrysler.

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    Partial transcript of WGN Radio's interview of Illinois Senate President John Cullerton on Sept. 20, 2013

    [Sen. Cullerton said that he supported the pension reform bills passed earlier this year by the Illinois House and Senate, respectively. And he spoke optimistically of a proposed "compromise" bill currently under consideration by the legislature's bipartisan pension reform committee.]

    "It's not that we owe a hundred billion dollars to somebody right now. It's just that folks don't wanna put as much money into pensions. They'd rather spend it on something else. Or they'd rather have their taxes lowered.

    "And these pension bills that we're gonna vote on—and hopefully pass, and I'm supportive of it—the overall effect is gonna allow us to lower our income tax about a quarter of one percent. So if we pass the bill it'll be easier to lower our income tax by a quarter of one percent; if we don't, it'll be more difficult. And that's really what it's about.

    "Now, I wouldn't call that a crisis. I think that people should put that in perspective."

    "[The current income tax rate is] 5 percent for individuals, going to 3.75 [percent in 2015], and the corporate is 7, it goes to [5.25]. That, on an annual basis, is a drop in revenues of about $5.38 billion . . . and these pension bills that we've talked about will save annually anywhere from $750 million to [$1.5 billion]. So you're still gonna have real huge cuts we'll have to make if we don't raise that income tax higher than what they're scheduled to go down to.

    "The pension reform, then, is about tax reduction, not about the solvency of the pension fund or about diverting money to spend more money on education."

    "There's a great, strong feeling out there in the general public. Ya know, there's 720,000 folks that are affected by the pensions—both retirees [and] actives. That's all of the teachers outside Chicago, that's all the university employees and community college employees, and all the state employees and the judges and the General Assembly. But there's, ya know, almost 13 million people here [in Illinois]. And a lot of folks don't have a defined benefit plan as we do. And, by the way, the inflation rate now is [1.5] percent; these pension [benefits are increased annually by] 3 percent. So there's a strong argument to lower these benefits—that's why I've supported this legislation.

    "But just keep in mind: It's not going bankrupt. The money that we save by lowering those benefits is gonna be used to lower the tax rates.

    "This would surprise people, I guess: We have a balanced budget in Illinois. Nobody would know that, right? We are not spending more money during this budget than we have taken in. We passed a budget that says you can only spend this much money and this is the amount of money that we take in."

    "Let's talk about [the state's unpaid bills.] Within that budget we include money to pay down old bills, including pension obligation bonds that we borrowed—and thank god we did—for the two years we were in the recession. Because we borrowed money, we put it in the pension fund, we've earned 800 million more than what the interest rate has been.

    "But we're also paying down bills to vendors. We've paid down [$3.5 billion] in the last three years, and by the time we get to the end of this fiscal year, we'll have about [$2.5 billion] in bills over 60 days out of a $71 billion budget. So we've made tremendous progress in that.

    "Remember, just like anybody's home budget, they have to pay mortgage, they have to pay student loans . . . they don't pay 'em all off in the first year. But they keep on including in their budget enough to pay what they owe. That's what we've been doing."

    "Businesses are not fleeing Illinois because our taxes are so high. The fact is that our state tax rate is lower than all the other states that surround us, and almost about the same as Indiana."

  • Just how many Metra investigations are we paying for?

    26 August 2013
    Leading up to and in the wake of Metra executive director Alex Clifford's resignation in June of 2013, a number of public and private bodies investigated or are investigating Metra. All of these efforts are being paid for by taxpayers and Metra riders. Here's a rundown.
  • Rahm's new TIF program looks a lot like the old TIF program

    30 May 2013

    Interview with the Chicago Reader's Ben Joravsky on how the General Assembly's "ladies of the lake" resisted pork, and more.

  • Welcome to U.S. Cellular Field, home of the sweetheart deal

    25 April 2013

    Interview with the Chicago Reader's Ben Joravsky on whether the White Sox could survive financially without taxpayer subsidies, and more.

  • Proposed law would limit TIF take from schools

    28 February 2013

    Interview with the Chicago Reader's Ben Joravsky on why the public should allow taxing bodies to increase their tax take each year, and more.

  • How the Democrats Let Derrick Smith Shoot Them in the Foot

    11 October 2012

    Interview with the Chicago Reader's Ben Joravsky on how poorly the West Side's political leaders serve it, and more.

  • Akins in Our Midst?

    30 August 2012

    Interview with the Chicago Reader's Ben Joravsky on the surprising requirements of state law for sex education, and more.

  • Rickey Hendon: A Loud Act to Follow

    10 March 2011

    Chas. Comiskey with aldermenInterview in which the Chicago Reader's Ben Joravsky explains why people outside the 5th Illinois senate district should care about Rickey Hendon, and more.

  • And the Award for Achievement in Local Politics Goes to . . .

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    imagenameInterview with the Chicago Reader's Ben Joravsky on the awards that didn't make the cut, and more.

  • The Untouchables

    18 March 2010

    Interview with the Chicago Reader's Ben Joravsky on how state Rep. Debra Mell resembles former Pres. Reagan, and more.

  • The Mark of Madigan?

    23 October 2008

    Interview with the Chicago Reader's Ben Joravsky on whether term-limited office-holders would've leased Midway, and more.

  • Easy Money

    16 October 2008

    Interview with the Chicago Reader's Ben Joravsky on what makes 99 a magic number, and more.

  • October Surprise

    9 October 2008

    Interview with the Chicago Reader's Ben Joravsky on how and why you might become a Constitutional Convention delegate, and more.

  • Daley Doesn't Need Him

    18 September 2008

    Interview with the Chicago Reader's Ben Joravsky on a re-do on Rep. Skip Saviano, and more.

  • The Madigan effect

    29 November 2007

    Interview with the Chicago Reader's Ben Joravsky on demystifying the process for appealing property-tax assessments, and more.

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