AGAINST.
>> PARIS, THANK YOU.
>> AND TO CAROL MARIN AND A
CLOSER LOOK AT ONE GROUP'S IDEAS
TO TAX ILLINOIS TROUBLED FISCAL
STATE.
CAROL?
>> PHIL, THANK YOU.
>> $8 BILLION IN NEW REVENUE
THAT IS PART OF THE SOBERING AND
VERY SERIOUS PRESCRIPTION FOR
ILLINOIS' FISCAL TROUBLES.
IT'S OUTLINED IN A REPORT BY
SOME OF ILLINOIS' PREMIER
BUSINESS LEADERS A GROUP KNOWN
FOR FISCAL CONSERVATISM.
WE WILL HEAR FROM LESLIE MUNGER.
FIRST WITH THE DETAILS OF THE
REPORT FROM THE CIVIC COMMITTEE
OF THE COMMERCIAL CLUB OF
CHICAGO WE ARE JOINED BY AMANDA
VINICKY.
AMANDA, A QUICK REMINDER WHAT IS
THE CIVIC COMMITTEE AND THE
THRUST OF THIS REPORT?
>> THESE ARE PREMIER BUSINESS
LEADERS, BIGWIG HONCHOS AND THE
REPORT GOES BACK TO 2014.
BACK THEN PAT QUINN WAS GOVERNOR
AND ILLINOIS HAD A BUDGET AN
INCOMPLETE ONE AND THE TAX RATE
WAS HIGHER IN THIS CLIMATE THAT
THE CIVIC COMMITTEE SAID IT
SURVEYED MEMBERS AND FOUND THEY
WERE CONCERNED ABOUT ILLINOIS'
FISCAL FUTURE.
BUSINESS LEADERS WORRIED ABOUT
THE UNCERTAINTY THAT YEARS OF
POOR PLANNING WERE MAKING
ILLINOIS INHOSPITABLE.
>> LITTLE COULD THEY HAVE KNOWN
HOW UNCERTAIN THINGS WOULD GET.
TWO-AND-A-HALF YEARS LATER
WITHOUT A BUDGET IT'S THE
ULTIMATE IN UNCERTAINTY.
THAT IS THE BACKDROP FOR THIS
REPORT.
>> SO THE REPORT IS GETTING
ATTENTION BECAUSE THESE BUSINESS
LEADERS ARE NOT WHAT WE CALL THE
POSTER BOYS AND POSTER GIRLS OF
LIBERALISM OR GOVERNMENT
SPENDING OR TAX INCREASES.
SO IF ILLINOIS NEEDS TO RAISE AT
LEAST $8 BILLION A YEAR IN
REVENUE, WHERE IS IT COMING
FROM?
>> MOST OF THAT IS GOING TO BE
IN TAX INCREASES.
RIGHT NOW ILLINOIS' PERSONAL
INCOME TAX IS 3.75% AND THE
REPORT CALLS FOR BRINGING THE
PERSONAL INCOME TAX RATE BACKUP
TO 5%.
THE BUSINESS LEADERS RECOMMEND
RAISING THE CORPORATE RATE TO
PLUS ADDING A SALES TAX TO
SERVICES AND RETIREMENT TAX AND
GETTING RID OF CREDITS AND THAT
COULD BRING IN $9.7 BILLION.
>> SO AT THE SAME TIME THESE
EXECUTIVES ARE ARGUING THERE
HAVE TO BE CUTS AND THEY ARE
TALKING ABOUT $2 BILLION IN CUTS
AND CONTRAST TO $8 BILLION IN
TAX REVENUE WHERE IS ILLINOIS
GOING TO SCALE DOWN?
>> $2 BILLION AND THAT IS AT
MOST FROM WRA THEY GATHER FROM
TALKING TO BUDGET EXPERTS AND
THEY HAVE SOME IDEAS THERE
HOWEVER THAT COULD BE EASING UP
ON GOVERNMENT PURCHASING RULES
AND HAVING STATE EMPLOYEES PICK
UP MORE OF A TAB FOR HEALTH
INSURANCE AND RIDDING THE
SUBSIDIES FOR EMPLOYERS
HEALTHCARE, AND CUTS TO MEDICAID
AND ALSO THIS REPORT TALKS ABOUT
PENSIONS AND THOSE ARE MIRRORING
THE RECOMMENDATIONS FOR WHAT
GOVERNOR BRUCE RAUNER HAS BEEN
CALLING FOR.
BUT THIS IS A BIG BUT AND IN
CONTRAST TO THE GOVERNOR'S
BUDGET PROPOSAL, THE REPORT SAYS
THAT ILLINOIS CANNOT BANK ON
MANY OF THE SAVINGS PENSIONS
RIGHT NOW.
BECAUSE PENSIONS ARE SURELY
GOING TO BE SUBJECT TO A
LAWSUIT.
>> AND CONSTITUTIONAL QUESTIONS
HAVE LOOMED ON THOSE ALREADY.
SO THE CIVIC COMMITTEE IN
ADDITION TO ALL OF THIS, IS
CALLING FOR THE STATE TO SPEND
SOME MORE MONEY?
>> RIGHT.
IT'S MOSTLY AGAIN, THE REVENUE
INCREASES AND THEY TALK ABOUT
SCALING BACK AND THEN THEY WANT
TO SPEND MORE AND SOME OF THOSE
RECOMMENDATIONS INCLUDE ON THE
REVENUE SIDE PART OF THAT WOULD
BE TAKING A HIT.
IT WOULD BE ADDING NEW TAX
CREDITS AS THEY GET OF SOME AND
THAT IS GIVING BIGGER TAX
CREDITS TO LOW INCOME EARNERS
AND TEACHERS WHO BUY SUPPLIES
THEY WOULD GET A TAX CREDIT AND
REDUCING THE FEE FOR LIMITED
LIABILITY CORPORATIONS.
AND LIKELY TO ADVANTAGE THE
WEALTHY, ELIMINATING THE ESTATE
TAX.
THOSE, HOWEVER AMOUNT TO A SMALL
CIVIC COMMITTEE SAYS THERE IS NO
WAY ILLINOIS CAN REDUCE SPENDING
ON EDUCATION.
RATHER IT CALLS FOR PUMPING MORE
MONEY INTO SCHOOLS.
AND THE REPORT DOES NOT GET INTO
THIS BUT IT SAYS THAT ILLINOIS
IS GOING TO NEED TO PUT BIG
MONEY INTO INFRASTRUCTURE
REPAIRS.
>> WHERE DOES THIS FIT IN WITH
THE NEGOTIATIONS IN SPRINGFIELD?
TIME IS RUNNING OUT.
MAY 31 IS THE END OF THE
LEGISLATIVE SESSION?
SO?
>> SO PROBABLY LATE FOR
POLITICIANS TO COMMON TEMPLATE
THIS --
CONTEMPLATE THIS REPORT I WILL
BE IN SPRINGFIELD TO REPORT ON
THE LATEST BUT SOME DOES MATCH
WHAT IS BEING TALKED ABOUT IN
THE GRAND BARGAIN.
THEY ARE FOCUSED ON CHANGING HOW
THE STATE FUNDS SCHOOLS AND HOW
IS UP FOR DISCUSSION.
AND BOTH CONTEMPLATE THE PENSION
CHANGES, PROCUREMENT RULES AND
MAKING IT EASIER FOR
MUNICIPALITIES TO CONSOLIDATE
AND EXPAND THE SALES TAX ON
SERVICES.
THE GRAND BARGAIN EXPECTS TO
RAISE REVENUE BUT ADDING SIX
CASINOS AND LEGISLATORS ARE NOT
CONTEMPLATING A RETIREMENT TAX.
THE REPORT SAYS THE
RECOMMENDATIONS ARE INTENDED TO
MAKE ILLINOIS' TAX CLIMATE MORE
ATTRACTIVE TO AVOID MAKING IT
LESS ATTRACTIVE.
THE RETIREMENT TAX FITS THAT
MOLD BECAUSE ALL STATES TAX
RETIREMENT INCOME AND GOVERNOR
BRUCE RAUNER NIXED THAT IDEA.
>> WHERE DOES THE REPORT FIT IN
WITH THE GOVERNOR'S TURN AROUND
AGENDA?
>> AGAIN, YOU SEE A LOT OF THIS
MIRRORING AND MATCHING WHAT THE
GOVERNOR CALLED FOR WHEN IT
COMES TO WORKERS COMPENSATION
AND PENSIONS.
GOVERNMENT CONSOLIDATION RED
TAPE BUT RAUNER SAID HE WILL
ONLY AGREE TO A TAX INCREASE IF
ILLINOIS GETS STRUCTURAL REFORMS
AND TERM LIMITS, THIS REPORT
SEPARATES THEM.
IT VERY CLEARLY SAYS A BUDGET IS
THE PRIORITY AND A BUDGET WITH A
WHOLE LOT $8 BILLION OF NEW
REVENUE.
>> AMANDA VINICKY THANK YOU.
YOU CAN FIND A LINK TO THE CIVIC
COMMITTEE'S REPORT ON OUR
WEBSITE.
>> REPRESENTATIVES OF THE CIVIC
COMMITTEE AGREED TO JOIN US THIS
EVENING BUT BACKED OUT WHEN WE
TOLD THEM WE WOULD BE JOINED BY
OUR NEXT GUEST THAT GUEST IS
LESLIE MUNGER, ONE OF THE
ILLINOIS' DEPUTY GOVERNORS.
WELCOME.
>> THANK YOU FOR HAVING ME.
>> YOU'VE HEARD AMANDA'S
RENDERING AND READ THE CIVIC
COMMITTEE'S REPORT.
THEY ARE SAYING BUDGET, BUDGET,
BUDGET, TURN AROUND AGENDA
CANNOT BE FIRST IN LINE OR
SECOND IN LINE.
THE BUDGET IS FIRST, SECOND AND
THIRD IN LINE.
IS IT TIME TO TAKE THE TURN
AROUND AGENDA AND LEAVE IT FOR
ANOTHER DAY?
>> I THINK EVERYONE WOULD AGREE
THAT WE NEED TO GET A BUDGET IN
THE STATE.
BUT I THINK IT'S IMPORTANT TO
REMEMBER IT HAS TO BE THE RIGHT
BUDGET.
A BUDGET THAT IS BALANCED AND A
BUDGET THAT WILL PUT US ON A
TRACK FOR THE STATE FOR A STRONG
FISCAL FUTURE.
WE HAVE FOR MANY YEARS IN THE
STATE OPTED FOR SHORT-TERM,
REVENUE, TAX ONLY OPTIONS THAT
IN A FEW YEARS LEAVE US WITH A
LOWER TAX BASE, AND MAKE IT
HARDER FOR US TO GENERATE THE
REVENUES AND DO NOT ADDRESS THE
DRIVERS FOR THE PROBLEMS WE
HAVE.
THE GOVERNOR HAS BEEN WORKING
WITH MEMBERS OF THE SENATE AND A
LOT OF THINGS IN THE REPORT THAT
DO MIRROR AND I THINK THINGS
LIKE WORKERS COMP AND THE
CHANGES TO MAKE THE BUSINESS
CLIMATE MORE COMPETITIVE.
THERE ARE A LOT OF GOOD THINGS
THAT THE GOVERNOR WOULD AGREE
WITH.
AND WE HAVE TO CHANGE THE
DRIVERS OF THE SPENDING.
AND HAVING $8 BILLION OF NEW
TAXES ON ILLINOISANS WITH ONLY
$2 BILLION OF SPENDING
REDUCTIONS?
IS NOT A WAY TO GO FORWARD THIS
IS HOW WE HAVE GOTTEN INTO THE
MESS.
>> YOU KNOW THE MEMBERS OF THE
CIVIC COMMITTEE THEY HAVE BEEN
FUNDERS OF THE REPUBLICAN PARTY
FOR DECADES IN ILLINOIS.
THESE ARE SERIOUS FISCALLY
CONSERVATIVE MEN AND WOMEN.
SO WHEN THEY PROPOSE SOMETHING
LIKE THIS IT IS WITH A SOBER
EXAMINATION OF THE BOTTOM LINE,
DON'T YOU THINK?
>> I THINK SO.
BUT ONE THING THEY DID NOT
ADDRESS IN THIS REPORT IS THE
ISSUE OF PROPERTY TAXES.
AND THEY REFERENCED THEY THINK
ILLINOIS IS AN OUTLIER ON THE
LOW-END OF BEING TAXED.
BUT THEY NEVER REFERENCED
PROPERTY TAXES.
WHEN YOU LOOK AT THE COMBINATION
OF PROPERTY TAXES, INCOME TAXES
WHICH ARE ADMITTEDLY A MODEST
LEVEL IN THE STATE WITH THE
ROLLBACK, SALES TAXES WHICH ARE,
I THINK THE FIFTH TO 8TH HIGHEST
DEPENDING WHERE YOU LOOK, AND WE
HAVE THE HIGHEST PROPERTY TAXES
IN THE COUNTRY.
WHEN YOU AGRIGATE THOSE
ILLINOISANS ARE BETWEEN THE
5-9TH HIGHEST TAXED IN THE
COUNTRY WHY WE ARE LOSING
PEOPLE.
IF WE WERE THE LOWEST TAXED WE
WOULD HAVE PEOPLE MOVING IN
INSTEAD OF OUT.
>> PROPERTY TAXES HAVE NOTHING
TO DO WITH THE STATE BUDGET.
PROPERTY TAXES FUND SCHOOL
DISTRICTS.
PROPERTY TAXES DON'T PAY ALL THE
UNPAID BILLS YOU HAD TO GRAPPLE
WITH AS STATE COMPTROLLER.
SO IF PROPERTY TAXES ARE FROZEN,
AND SCHOOL DISTRICTS CANNOT GET
THE MONEY THEY NEED AND HAS
NOTHING TO DO WITH OUR UNPAID
BILLS WHY WOULD THE CIVIC
COMMITTEE REFERENCE THEM
SPECIFICALLY?
>> WELL, BECAUSE IT'S ONE
TAXPAYER.
THE PROPERTY TAXES COME OUT OF
ONE SIDE OF THE POCKET.
AND THE ILLINOIS INCOME TAX IS
ANOTHER ON THE OTHER SIDE AND
WHEN YOU TAX PEOPLE TOO MUCH
THEY HAVE OPTIONS.
THEY MOVE OUT OF STATE.
SO DO BUSINESSES AND THAT IS WHY
WE HAVE SEEN BUSINESSES AND
PEOPLE LEAVING THE STATE ALL
OVER THE PLACE.
AND ACTUALLY THE PROPERTY TAXES
ARE HIGH BECAUSE IT PICKS UP A
PREDOMINANCE OF EDUCATION
EXPENSES THAT THE STATE CANNOT
FUND BECAUSE THE DRIVER OF OUR
EXPENSE PROBLEMS ARE FINANCIAL
PROBLEMS IN THE STATE ARE THE
EVER GROWING COSTS OF OUR
PENSIONS WHICH IS SOMETHING THAT
ARE NOT ADDRESSED.
>> AND THE CIVIC COMMITTEE DOES
ADDRESS THEM IN THE SENSE IT
RAISES THE SAME CONSTITUTIONAL
ISSUES.
BUT THESE ARE PEOPLE, I KEEP
GOING BACK TO WHO THE CIVIC
COMMITTEE IS.
THESE ARE EVERY DUNN AND BRAD
STREET COMPANY THAT WE COULD
NAME AND THEY WANT TO SAVE
ILLINOIS AND THEY HATE TAXES.
AND THEY DON'T LIKE GOVERNMENT
SPENDING.
AND YET, THEY SEEM TO THINK THAT
ONLY SOMETHING THIS RADICAL IS
GOING TO STOP OUR BLEEDING.
ARE THEY WRONG?
>> WELL, I DON'T THINK THEY HAVE
THOUGHT ABOUT THE IMPACT ON THE
INDIVIDUAL TAXPAYER IN THE
STATE.
BECAUSE WHEN YOU LOOK AT THE
TOTAL TAX BURDEN WE ARE
EXTRAORDINARILY HIGH AND WE'VE
SEEN WHAT HAPPENS.
WE HAVE RAISED TAXES AND TOOK
THE RATE UP TO 5% IN 2011.
IT BROUGHT IN $7 BILLION A YEAR,
$32 BILLION IN TOTAL.
WHERE DID THE MONEY GO?
IT DID NOT GO TO PAY DOWN OUR
DEBT OR BILL BACKLOG IT WENT TO
FUND PENSIONS.
THE COST OF PENSIONS IN THE
STATE OF ILLINOIS HAVE GONE FROM
3% OF GENERAL REVENUE IN 2000 TO
25% OF OUR EXPENSE AND IT'S ON A
PATH TO GET TO 28% IN A COUPLE
OF YEARS.
>> WHAT IS GOVERNOR BRUCE
RAUNER'S SOLUTION TO THAT?
>> THE GOVERNOR HAS TALKED VERY
CONSISTENTLY ABOUT THE NEED FOR
A MULTIPRONG APPROACH.
LOOKING AT CONSTITUTIONAL WAYS
TO REFORM PENSIONS ONE OF THE
TOPICS INCLUDED IN THE CIVIC
COMMITTEE REPORT.
BUT THE ECONOMIC GROWTH IS THE
KEY.
BECAUSE TAXES ALONE CANNOT GET
US OUT OF THIS MESS.
I WILL TELL YOU THAT OF THE
STATE'S CURRENT GENERAL REVENUE
PRETTY FLAT FOR THE PAST SEVERAL
YEARS $31 BILLION, 75% OF THAT
IS IN SPENDING THAT IS LOCKED
INTO LAW TO FUND PENSIONS,
MEDICAID, INTEREST ON THE DEBT,
EMPLOYEE GROUP HEALTHCARE.
THIS IS SOMETHING THE
LEGISLATURE CAN ADDRESS BY
LOOKING AT THE LAWS AND CHANGING
WHAT THEY HAVE PROTECTED
LEGISLATIVELY TO HELP REDUCE
COSTS THERE.
THAT WOULD FREE UP FUNDING TO GO
TO FUND EDUCATION, HUMAN
SERVICES, PUBLIC SAFETY ET
CETERA.
>> BUT AS THE GOVERNOR TALKS
ABOUT IMPROVING THE BUSINESS
CLIMATE WITH WORKERS COMP AND
TERM LIMITS HE THINKS WILL
STIMULATE THINGS THOSE ARE NOT
IMMEDIATE REVENUE PRODUCING
MOMENTS.
AND WHAT THE CIVIC COMMITTEE AT
LEAST FROM MY READING OF IT
SEEMS SO SAY THERE NEEDS TO BE
INDUSTRIAGE IN THE STATE --
TRIAGE, REVENUE TRIAGE AND IT
NEEDS TO HAPPEN NOW.
THE LEGISLATURE AND THE GOVERNOR
EVERYONE CARRIES THE BURDEN.
>> WE NEED REVENUE INTO THE
STATE.
BUT YOU CAN GET REVENUE FROM
TAXING AND THEIR REPORT PRODUCES
IT ALL FROM TAX INCREASES.
OR YOU CAN GET IT FROM A
COMBINATION OF TAXING AND A
GROWING ECONOMY.
I VISITED A COMPANY JUST LAST
FRIDAY WHO IS LOOKING AT
EXPANDING THEY ARE A $100
MILLION COMPANY AND THEY HAVE
OPTIONS IN ILLINOIS AND INDIANA
AND THEY ARE NOT FAR FROM THE
INDIANA BORDER AND THE COST
DIFFERENCE TO THEM FOR PROPERTY
TAXES AND WORKER COMP IS
$600,000 TO STAY IN ILLINOIS.
THAT IS HUGE.
SO WHY IS THAT IMPORTANT?
BECAUSE WE NEED TO MAINTAIN OUR
TAX BASE AND NOT SHRINK IT AND
WE WILL SHRINK OUR TAX BASE.
>> AND THE PEOPLE WHO MAKEUP THE
CIVIC COMMITTEE ARE PEOPLE WITH
ENORMOUS BUSINESSES WHO ARE
STAYING IN ILLINOIS.
THEY ARE NOT MOVING THE
MERCANTILE EXCHANGE AND NOT
MOVING MAJOR BANKS.
THEY ARE HERE AND THEY ARGUE
THERE ARE OFFSETS IN ILLINOIS
THAT YOU ARE NOT GOING TO BE
ABLE TO GET IF YOU MOVE TO
ANOTHER STATE.
RIGHT NOW, DO YOU THINK WE ARE
GOING TO HAVE A BUDGET BY MAY
31?
>> I HOPE SO.
WE NEED A BUDGET.
IT'S THE MOST IMPORTANT THING WE
CAN DO BECAUSE WE NEED
CERTAINTY.
WE NEED TO LET OUR ORGANIZATIONS
AROUND THE STATE THAT RELY ON
FUNDING HUMAN SERVICES, SCHOOLS,
HIGHER EDUCATION ET CETERA AND
NEED TO LET OUR BUSINESSES KNOW
WHAT TAX STRUCTURE THEY CAN
EXPECT.
BUT BANKS CANNOT PICK UP AND
MOVE EASILY.
BUT THE BUSINESSES CAN.
SMALL BUSINESSES ARE
MANUFACTURERS AND THEY HAVE.
AND THERE ARE EMPTY STOREFRONTS
ALL OVER COMMUNITIES ALL
SURROUNDING THE PERIMETER OF THE
STATE BECAUSE THEY HAVE CHOSEN
TO MOVE OUT OF STATE.
SO WE CAN CONTINUE DOWN THIS
PATH OF SOLVING THIS ONLY VIA
TAXING OUR BUSINESSES --
>> BUT IF WE DON'T FUND
EDUCATION.
IF WE DON'T HAVE HAVE HIGHER
EDUCATION SUPPORTED AND
SECONDARY AND PRIMARY SUPPORT IN
THIS REPORT, SUGGESTS SPENDING
MORE ON PRIMARY EDUCATION, WE
DON'T HAVE THE ATTRACTIVENESS IN
THE STATE TO KEEP PEOPLE IN IT.
IS THE GOVERNOR WILLING TO LET
CHICAGO PUBLIC SCHOOLS CLOSE
EARLY AT THE END OF THIS YEAR?
>> SO THE GOVERNOR HAS MADE IT
CLEAR THAT EDUCATION FUND
SOMETHING ONE OF HIS PRIORITIES
AND HIGHER EDUCATION IS A PIECE
OF THAT.
BECAUSE WE NEED TO BE ABLE TO
MOVE OUR YOUTH INTO HIGHER ED IN
OUR OWN STATE.
SO WE CAN KEEP THEM IN THE STATE
OF ILLINOIS.
AGAIN, THE DRIVERS OF OUR
PROBLEMS ARE NOT THAT WE DON'T
TAX ENOUGH.
IT IS THAT WE HAVE SPENDING THAT
OUT OF CONTROL AND IF WE DO NOT
TACKLE PENSION REFORM AND THE
DRIVERS, PENSIONS HAVE GONE UP
THEY HAVE DOUBLED.
>> BUT YOU HAVE A CONSTITUTIONAL
PROBLEM ON PENSIONS YOU KNOW
THIS IS COMPTROLLER ALL RED INK
ON THE LEDGER SHEETS.
>> SO I GUESS THE MAIN QUESTION
IS ARE WE GOING TO CONTINUE TO
RAISE TAXES ON THE BUSINESSES
AND PEOPLE TO FUND PUBLIC
EMPLOYEE PENSIONS THAT THE ARE
OUT OF CONTROL AND TAKING UP 25,
ON THEIR WAY TO 28% OF OUR
STATE'S REVENUE?
OR ARE WE GOING TO REFORM THEM.
>> CAN YOU REFORM THEM IN TWO
WEEKS?
>> WELL, THEY CAN PUT IN PLACE
PLANS AND THEN I BELIEVE THE
GOVERNOR HAS SAID THAT A BUDGET
WITH SOME OF THE REFORMS THAT
WILL HELP US GET ON A GOOD TRACK
FOR BUSINESSES IN THE STATE HE
WOULD SIGN.
>> IS HE MEETING WITH THE
LEGISLATIVE LEADERS NOW?
>> I BELIEVE THAT WHY I'M HERE
BECAUSE HE HAS NOT LEFT
SPRINGFIELD.