Suburban Lockup

The door handle was at eye level;
the deadbolts: where the doorknob
should have been.

The wrought-iron storm door

held in fears.
Everything was keyed from inside,
including the metal grates
across the basement windows.
 
They propped up a mannequin
on their vinyl couch
before they left the house –
a dummy in a black wig and kimono,
the National Enquirer folded on its lap.
 
The neighborhood voyeur
might have been aroused
had he peeked through the glass.
The night burglar might have thought
the occupants were kinky, or just lunatics
with a shotgun’s trigger
wired to spring from a moving hinge.
 
The German Shepherd growled
from its cage at every least sound.
She could grind bones down with animal ease.
Legs would have been no contest for her,
just pretzel sticks in a salivating vice grip,
had she escaped her paddock.
 
There was nothing here worth stealing:
the living room sparkled silver and gold
like a 60s’ Slingerland drum set:
a medley of Montgomery Ward’s furnishings –
plastic-covered couch and chairs,
a marble table, hurricane lamps,
and a statue of Moses
with his 10 commandments
were among bric-a-bracs
scattered in strata.
 
A five-foot garden statue
of Rebecca at the Well
stood at the main entrance.
The door was bolstered by a wooden cane
that buttressed the door handle,
just beneath two deadbolts  
and sliding chain lock.
The dining room reflected
flock wall-paper and brown wainscot
from the smoky mirrors.
 
The house was eclipsed by awnings

and a fortress of evergreens,
an invitation for the random thief
from the street
to test its labyrinth of alarms,
its ambush of latches 
constructed from fears
triggered by the Great Depression,
the Great War, and the nightly news –
a million hands warming over garbage cans,
hungry eyes in ski masks.

 

“Suburban Lockup” was originally published by Lake Shore Publishing, 1995.

Are We Going to Springfield?

We Are One in Wisconsin

It is a matter of moral and legal concern for every citizen of Illinois to pay attention to any proposed violations of rights and benefits of the state’s 693,000 public employees. It should be of vital concern for all citizens that the government of Illinois would want to prove its contracts are worthless, especially when the “most basic purposes of the impairment [of the contract] clause [Article XIII, Section 5] as well as notions of fairness that transcend the clause itself, point to a simple constitutional principle: government must keep its word” (Laurence H. Tribe, American Constitutional Law).

Nausea by Jean-Paul Sartre

from the diary of Antoine Roquentin or one man's confrontation with sheer existence

“Nausea: it spreads at the bottom of the viscous puddle, at the bottom of our time—the time of purple suspenders and broken chair seats; it is made up of wide, soft instants, spreading at the edge, like an oil stain…

“Nothing happens while you live. The scenery changes; people come in and go out, that’s all. There are no beginnings. Days are tacked on to days without rhyme or reason, an interminable, monotonous addition. From time to time you make a semi-total. You say: I’ve been travelling for three years… That’s living. But everything changes when you tell about life; it’s a change no one notices… You suddenly feel that time is passing, that each instant leads to another, this one to another one, and so on; that each instant is annihilated, and that it isn’t worthwhile to hold it back, etc., etc…

“Experienced professionals? They have dragged out their life in stupor and semi-sleep; they have married hastily, out of impatience; they have made children at random… Sometimes caught in the tide, they have struggled against it without understanding what was happening to them. All that has happened around them has eluded them…

“The true nature of the present revealed itself: it was what exists, and all that was not present did not exist. The past did not exist. Not at all. Not in things, not even in my thoughts… I knew things are entirely what they appear to be—and behind them . . . there is nothing…

“So I was in the park just now. The roots of the chestnut tree were sunk in the ground just under the bench… I was sitting, stooping forward, head bowed, alone in front of this black, knotty mass, entirely beastly, which frightened me… If anyone had asked me what existence was, I would have answered, in good faith, that it was nothing, simply an empty form which was added to external things without changing anything in their nature… their individuality were only an appearance, a veneer. This veneer had melted, leaving soft, monstrous masses, all in disorder—naked, in a frightful, obscene nakedness…

“I sank down on the bench, stupefied, stunned by this profusion of things without origin: everywhere blossomings, hatchings out, my ears buzzed with existence… I thought why so many existences… What good are so many duplicates of trees? So many existences missed, obstinately begun again and again missed—like awkward efforts of an insect fallen on its back? I was one of those efforts…

“Consciousness exists as a tree, as a blade of grass. It slumbers; it grows bored. Small fugitive presences populate it like birds in the branches. Populate it and disappear. Consciousness forgotten, forsaken between walls, under this grey sky…”

(1938)

Sartre, Jean-Paul. Nausea. New York: New Directions Publishing Corporation, 1964.

How to Sing da "Pension House" Blues

I’m not sure who wrote the template for “How to Sing the Blues”; nevertheless, I had some fun revising what was attributed to Memphis Earlene Gray with help from Uncle Plunky, and now “P-Bluesman Brown”)








Most Blues songs begin with “Woke up dis morning…” and not “I got a good woman” (and I do). It’s a bad way to begin a Blues song, unless your next line is perhaps “with the meanest dog in town.”

Blues songs are actually simple to write. After you compose the first line, you can write something that announces the kind of Blues you’re feelin’, like “Woke up dis morning/with these pension House Blues …” Then tell why you have the Blues: “Woke up dis morning/with these pension House Blues/’cause I’m a pension blogger, baby/I’m a-singin’ da Blues.”

Of course, the Blues are not always about limitless choices. For instance, Blues cars are either hearses (like the Ghost-Busters’ Cadillac) or Chevy’s, not BMW’s or Lexus’s. Other acceptable modes of transportation include buses and (southbound) trains. To say you’re “Walkin” when you’re singin’ the Blues is perfectly acceptable; especially when you add the line you’re “Fixin’ to die” or “Goin’ to Kansas City.”

Young people can’t sing the Blues, unless they’re teachers of course, and not all adults can sing the Blues either, unless they’re in a chain gang waitin’ for the “Chair” because they killed somebody in Memphis or Chicago.

You can have the Blues in Chicago, but not if you’re livin’ in Kenilworth or Bannockburn. Hard times in Concord or Montpelier are just a temporary depression, not the Blues. Chicago, St. Louis and Kansas City are great places to have the Blues; if you’re a teacher, most anywhere in Illinois will do.

Never mention the colors violet, beige and mauve in your Blues song. Moreover, you can’t sing the Blues in a high-rise office in downtown Chicago or at the Woodfield mall – the lighting is wrong.

Good places to have the Blues are hitchin’ a ride down some dark, dirty road or walkin’ southbound along the railroad tracks, or sittin’ in the jailhouse or on a bed in a Motel 6. If you’re singin’ the Blues in Chicago, another good place is Wrigley Field.

Bad places to sing the Blues are in a cabin in upper Michigan, vacationing in the Cayman Islands, or partying at the Four Seasons Hotel.

No one will believe you got the Blues if you wear a Brooks Brothers suit—even if it’s wrinkled—unless you’re an old black man.

You have the right to sing the Blues if your name is a state way down south, like Georgia, Alabama or Mississippi; if you’re blind, or if you shot a man in Memphis or Chicago.

You can’t sing the Blues if you had laser surgery anywhere on your body, if you’re nearsighted, or if you have a trust fund with Vanguard or Fidelity Investments. Neither can Enya, Justin Bieber or Lady Gaga sing the Blues.

You can’t sing the Blues if you drink imported wines or beers. However, you can sing the Blues if you drink Ripple or Boone’s Farm, bad whiskey, Blatz, or rubbing alcohol.

If you were stabbed in the back by a jealous lover, you can sing the Blues; if your baby gives you gasoline when you ask for a can of Keystone, you can sing the Blues; if your baby’s name is Lil’ Woman, Sexy Sadie or Big Mama, you can also sing the Blues.

So let’s get started: in order to begin singing the Blues, you have to use either alliteration or assonance in your Blues name. Call yourself “Bluesman” or a version of the Blues, like “Delta,” “Piedmont” or “Chicago”…; you can call yourself what you used to call your mother or preacher; you can give yourself a name with a physical infirmary and a body type too, or call yourself a marvel of nature, the name of an animal or the sound that a wolf makes; you can call yourself a type of steak, or a fruit, or even a piece of wood; or you could just use your initials or last name with “Junior” after it.

Some good examples might be Lightnin’ Johnny D., KoKo Klonsky, Sunny-Boy Kenny P., Hound-Dog Zahniser, Blind Mad-Dog Madsen, T-Bone Tucker,  Louisiana Slim-Man Sanders, Mississippi Melon Mertz, Boogie Woogie Rebb, Howlin’ J. Lindgren, Pinetop Furman, Mama Chaya, Piedmont MiC, Smokey-Soul Sasso, or Reverend Richie P.

People with names like Pat, Lisa, Michael, Bruce, Rahm, Tom, Ron, Don, Dan, Darlene, Elaine, Heather, Christine, Kathleen, Michelle, Kwame, Patricia and Kirk... can’t sing the Blues no matter how many men they shot in Memphis or Chicago.


Got These Pension House Blues 
(or I ain’t fixin’ to die penniless no matter how much the IL GA tries)

Woke up dis morning
With these pension House blues,

’Cause I’m a pension blogger, baby,
I’m a-singin’ da blues.

Said, I’m a pension blogger, baby,
And I can’t sleep ‘til dawn.

I got these blues, lately,
‘Cause of Squeezy the Quinn.

I got these blues Stately,
‘Cause of Mad-again.

Said, I got the Pension House blues,
And I can’t sleep at all;

‘Cause I’m a pension blogger, baby,
I’m ready to brawl.

"I’m goin’ to Springfield;
Springfield, here I come...

"Well, I might take a train;
I might take a plane.

If I gotta walk,
I’m goin’ just the same."

I’m goin’ down to Springfield
to protest these goons.

‘Cause I’m a pension blogger, baby;
I’m ready, Ty-phoon.

--P-Bluesman Brown

Now send me your Pension Blues song.

Cost-of Living Adjustment (COLA) of the Illinois Teachers’ Retirement System

Illinois Pension Code: 40 ILCS 5/16-133.1) (from Ch. 108 1/2, par. 16-133.1) Sec. 16-133. (Automatic annual increase in annuity):

(a) Each member with creditable service and retiring on or after August 26, 1969 is entitled to the automatic annual increases in annuity provided under this Section while receiving a retirement annuity or disability retirement annuity from the system. An annuitant shall first be entitled to an initial increase under this Section on the January 1 next following the first anniversary of retirement, or January 1 of the year next following attainment of age 61, whichever is later. At such time, the system shall pay an initial increase determined as follows:

(1) 1.5% of the originally granted retirement annuity or disability retirement annuity multiplied by the number of years elapsed, if any, from the date of retirement until January 1, 1972, plus

(2) 2% of the originally granted annuity multiplied by the number of years elapsed, if any, from the date of retirement or January 1, 1972, whichever is later, until January 1, 1978, plus

(3) 3% of the originally granted annuity multiplied by the number of years elapsed from the date of retirement or January 1, 1978, whichever is later, until the effective date of the initial increase. However, the initial annual increase calculated under this Section for the recipient of a disability retirement annuity granted under Section 16-149.2 shall be reduced by an amount equal to the total of all increases in that annuity received under Section 16-149.5 (but not exceeding 100% of the amount of the initial increase otherwise provided under this Section).

Following the initial increase, automatic annual increases in annuity shall be payable on each January 1 thereafter during the lifetime of the annuitant, determined as a percentage of the originally-granted retirement annuity or disability retirement annuity for increases granted prior to January 1, 1990, and calculated as a percentage of the total amount of annuity, including previous increases under this Section, for increases granted on or after January 1, 1990, as follows: 1.5% for periods prior to January 1, 1972, 2% for periods after December31, 1971 and prior to January 1, 1978, and 3% for periods after December 31, 1977.

(b) The automatic annual increases in annuity provided under this Section shall not be applicable unless a member has made contributions toward such increases for a period equivalent to one full year of creditable service. If a member contributes for service performed after August 26, 1969 but the member becomes an annuitant before such contributions amount to one full year's contributions based on the salary at the date of retirement, he or she may pay the necessary balance of the contributions to the system and be eligible for the automatic annual increases in annuity provided under this Section.

c) Each member shall make contributions toward the cost of the automatic annual increases in annuity as provided under Section 16-152.

(d) An annuitant receiving a retirement annuity or disability retirement annuity on July 1, 1969, who subsequently reenters service as a teacher is eligible for the automatic annual increases in annuity provided under this Section if he or she renders at least one year of creditable service following the latest re-entry.

(e) In addition to the automatic annual increases in annuity provided under this Section, an annuitant who meets the service requirements of this Section and whose retirement annuity or disability retirement annuity began on or before January 1, 1971 shall receive, on January 1, 1981, an increase in the annuity then being paid of one dollar per month for each year of creditable service. On January 1, 1982, an annuitant whose retirement annuity or disability retirement annuity began on or before January 1, 1977 shall receive an increase in the annuity then being paid of one dollar per month for each year of creditable service. On January 1, 1987, any annuitant whose retirement annuity began on or before January 1, 1977, shall receive an increase in the monthly retirement annuity equal to 8¢ per year of creditable service times the number of years that have elapsed since the annuity began.

Source: Illinois Pension Code

Commentary:

According to the National Council of State Legislatures (January 2011), “In 2011, 10 states revised their provisions for automatic cost-of-living adjustments, as eight other states had done in 2010. These states did not have a constitutionally-guaranteed protection for their current and retired public employees. An automatic COLA is one that is made annually, usually pinned to a measure of inflation like the Consumer Price Index. Its purpose is to reduce inflationary erosion of the purchasing power of retirement benefits.

“In all cases in 2011, as in 2010, state action reduced future commitments. State actions in 2011 affect current benefit recipients in three states, but [they] were designed to affect people who will retire in the future or, in six states, only people who will be hired in the future.”

As stated by Illinois Issues Statehouse Bureau (January 2012), “according to the National Council of State Legislatures, 17 states have taken actions in the last two years that would reduce COLA benefits. Most states making such changes, including Illinois, have reduced COLAs for future employees. However, in 2010, Colorado, Minnesota and South Dakota all reduced the cost-of-living increases given to current retirees, and other states are taking notice… Since then, New Jersey and Rhode Island have both put a freeze on COLA benefits until their pension systems get on sound financial footing.

“Last summer [2011], judges in Colorado and Minnesota tossed out court challenges from retired state workers, allowing the COLA reductions to stand. The states said that the COLAs were not part of contractually-guaranteed benefits, while workers argued that reducing them would violate both state and federal protections for contracts. ‘The big legal question that has resulted in these court cases is to what extent are future COLAs … promised and protected benefits,’ said David Draine, senior researcher for Pew Center on the States…

“The rulings in Colorado and Minnesota do not apply to other states and judges elsewhere, including California and West Virginia [where they] have ruled that COLAs cannot be reduced. However, Keith Brainard [Research Director for the National Association of State Retirement Administrators] said the rulings do indicate that some judges are willing to take into consideration the dire situation that some pension systems are in and may allow lawmakers to use more discretion if they are ‘making a reasonable effort to share the burden equally – that is [they are] not taking it out on only one group.’ In the case of Denver, [for example], the money saved from COLA reductions is slated to go back into the pension system to help shore it up, instead of being spent in areas that lawmakers might consider more popular with voters.”

In Illinois, these questions and others are being discussed: Can legislators legally change the COLA for both current and retired teachers? Is there a contractual right to a teacher’s COLA based upon statutory language? Would the compounded TRS COLA be constitutionally protected because eliminating or reducing this COLA would diminish "vested" pension benefits for an active teacher and retiree?

According to Rich Frankenfeld, TRS Director of Outreach, “the attorneys of the IEA, IFT and school management have said for years that pension benefits for current and retired teachers cannot be changed. For them, this includes the 3% post-retirement increase (what most members call the COLA). Last year, the chief legal counsel [Eric Madiar, Is Welching on Public Pension Promises an Option for Illinois?] to the Illinois Senate Democrats issued a comprehensive analysis of these issues, basically supporting their position.”

To reduce the teachers’ COLA will undeniably diminish the teachers’ constitutionally-guaranteed, earned benefits. Creating and passing any bill that diminishes any constitutionally-guaranteed earned benefits, such as the compounded COLA that is already in place for retired and current teachers (because they have acquired a “vested” right when they enter the pension system and are guaranteed this benefit by Illinois statute) is illegal and immoral, especially considering this egregious negligence: the state’s unfunded liability increased $90 billion since 1983.  Forty-six percent of that figure ($41.4 billion) was machinated by legislators of the State of Illinois. To respect contractual promises as legitimate rights and moral concerns is at stake for EVERY citizen in Illinois because Cheating ANY citizen’s guaranteed rights and benefits violates moral, ethical and legal principles explicitly avowed in the State and U.S. Constitutions.

The We Are One Illinois Coalition’s Counter Proposal to HB 6258 and Quinn’s Plan

…Instead of unlawful, harmful and ineffective cuts, our proposal is built on the principle of shared sacrifice by all groups with a stake in protecting Illinois’ public services. Public employees have said time and again that we are willing to do our part to aid in the stabilization of pension funding. We will only do so, however, if there is an ironclad guarantee that the state will fulfill its funding responsibilities. Moreover, our coalition will join with other concerned parties to ensure that sufficient revenues can be found to fund vital services that have in the past relied on using the pension systems as a credit card to receive funding. To those ends, the We Are One Illinois coalition proposes the following:

1. The state should adopt statutory language establishing for employees an unimpairable and enforceable contractual right to timely and sufficient employer pension contributions.

2. With that ironclad guarantee, employees could be asked to pay an additional contribution of 2% of their pensionable salary.

3. In order to sustain education, health care and other vital public services, all concerned parties should work together to close tax loopholes that benefit special interests and raise needed revenue, from among the $2 billion in revenue options outlined in this report.

The We Are One Illinois coalition remains open to other ideas and proposals that truly solve our pension funding issues and that are consistent with the principle of shared sacrifice…

1. Statutory Funding Guarantee
The State of Illinois must ensure that pension contributions from the employer are made on an actuarially sound basis. In this regard, we note that although the Illinois Constitution guarantees employee pension benefits, there is no guarantee that the employer will properly fund such benefits…

2. Employee Contributions
If sacrifice is truly shared and appropriate safeguards are established regarding employer contributions, employees eligible for Tier I benefits in the five affected systems – SERS, SURS, TRS, JRS, and GARS – could also be asked to contribute another 2% of pensionable pay over and above current contribution rates, phased in over two fiscal years. We estimate that such contribution increases will yield over $350 million annually by the end of the phase in. Public employees have said time and again that we are willing to do our part to aid in the stabilization of pension funding. We will do so if there is an ironclad guarantee that the state will fulfill its funding responsibilities. Moreover, we will join with all other concerned parties to ensure that sufficient revenues can be raised to fund all of the vital services that have in the past relied for their funding in part from pension borrowing.

3. Close Special Tax Breaks to Fund Vital Services
If Illinois is to stop relying on its pension systems as a credit card to pay for education, health care and other vital public services, all concerned parties must work together to close wasteful special tax breaks to raise needed revenue. The We Are One Illinois coalition strongly recommends that we look first at special tax breaks that benefit those who have gained the most from the Illinois economy and are in the best financial position to support public services. This section contains about $2 billion in revenue options. We also remain open to other ideas and proposals for revenue.

Illinois’ Revenue Challenges
Illinois is a low-tax state. Total state taxes amounted to just 5.5 percent of total in-state personal income in 2011, falling well behind the 6.2 percent fifty-state median and placing Illinois 37th in a ranking of state tax burden. This remains the case even after the income tax increase that took effect in 2011. (The most recent figures for combined state and local revenue date to 2010, before the January 2011 income tax increase. That data also shows a very low comparative tax burden, with Illinois ranking 42^nd among the states in the share of personal income levied in all state and local revenues.)2 

Such low taxes have proven inadequate to the state’s needs. Illinois has a longstanding history of structural budget deficits and underinvestment in core public services. Despite its higher-than average per-capita income, Illinois spends at below-average per-capita levels on education, human services, Medicaid, and public safety. The state also has carried out a deliberate, long-term policy of underfunding its public employee pensions. This has allowed the unfunded pension liability to grow despite the state’s low state employee headcount per capita (49th in the nation), low ranking among the states in education funding, and relatively modest pension benefits.3 The state’s neglect of its public commitments in all of these areas stems from an unwillingness to raise adequate revenues. Illinois has the potential to meet its revenue challenge by adopting reforms that will modernize the tax system, eliminate special tax breaks for corporations and the wealthy, and protect the state from the negative impacts of federal tax changes…

Reform Corporate Tax Expenditures
Illinois’ tax system is less productive than it could be given its statutory tax rates, because its “Swiss-cheese” structure allows numerous loopholes, credits, and exemptions. These tax expenditures constitute state spending just as much as budget appropriations, but they are carried out through the tax code. And, unlike budget appropriations, these tax breaks traditionally carry on from year to year with little evaluation as to their effectiveness – and without undergoing any competition for scarce resources that typifies the annual budgeting process. Tax expenditures get their funding first, before public safety, human services, education, or any other public priority. Although the General Assembly has begun to pay more attention to tax expenditures in recent sessions, it is unclear if this tradition will take hold absent a formal, systematic review process…  

Traded-In Value Sales Tax Exemption
Illinois exempts the sales price of a vehicle, watercraft or other tangible property when the buyer trades in a used item of the same type in partial payment. This exemption cost the state $309 million in FY 2011, an astounding $200 million increase from 2010. It is debatable whether consumers receive any benefit from this exemption, which nevertheless serves to treat purchasers without trade-ins inequitably. California, the District of Columbia, Hawaii, Maryland and Michigan do not offer this exclusion. Illinois should eliminate the exclusion.

Biofuels Subsidies
Illinois spent $234 million in tax subsidies on gasohol, biofuels, and ethanol tax preferences in FY 2011, an increase of $48 million from 2010. Taxpayer subsidies for these fuels, derived primarily from corn, soybeans and other agricultural products, are fiscally and environmentally wasteful, fail to promote sustainable energy production, and even drive up prices for food, and should be eliminated.

Economic Development Tax Incentives
The economic development tax incentives for businesses below cost $374 million in FY 2011, an increase of $18 million or 5 percent from FY 2010… A 2009 Illinois Department of Revenue review of the state’s business incentives concluded, “There is scant evidence that economic development programs and incentives have significant impact on economic growth.”5 This conclusion is echoed by the state legislature’s Commission on Government Forecasting and Accountability, which said a literature review found “state and local tax cuts and incentives are not effective for stimulating economic activity or creating jobs in a cost-efficient manner.” Business owners and site selection decision makers have consistently said factors other than state taxes or tax incentives, especially highway accessibility, labor costs, and the availability of skilled labor, play a larger role in investment and location decisions.6 This is consistent with the overwhelming body of research on business tax incentives, which shows that such incentives are ineffective at raising the level of a state’s economic development.7

Corporate tax subsidies also invite other problems, including inequities between industries and even between competitors within an industry, particularly favoring the largest, most profitable corporations. The Illinois Department of Revenue review found that the bulk of the subsidies benefited just a handful of companies.8…

Too often, states agree to weaken their revenue systems based on vague corporate claims of “job killing taxes” or a state’s lack of “business-friendliness” without any evidence of the actual tax burdens of companies. This overemphasis on lowering taxes ignores the relatively small role impact taxes have on states’ economic development climates and neglects the very important role those taxes play in funding the services and infrastructure that actually do attract investment and jobs. Once written into law, these tax breaks are rarely if ever reviewed to see if they fulfilled their intentions…

The economic development tax expenditures… will cost an estimated $374 million absent any other change in the claiming of credits or exemptions and before accounting for the impact of higher corporate income tax rates. It would be a reasonable goal to reduce economic development tax expenditures by half from that level, saving $187 million per year and offering the opportunity to reform the state’s economic development incentive efforts to focus on programs that best achieve the state’s highest priorities. In particular, since Illinois has multiple tax credit programs (such as the Enterprise Zone and High Impact Business programs) that are frequently bundled into a single incentive offer, it would be particularly beneficial for state policymakers to look comprehensively at these programs and redesign them to lower taxpayer costs while maximizing economic development benefits…

Sales Tax Vendor Discounts
Illinois rebates a portion of sales taxes that retail vendors collect, as compensation for the time and cost involved in collecting and remitting the tax. Illinois’ vendor discount program is the most generous in the nation, giving back 40 percent more than the next-largest state (Texas) as of 2008. Illinois’ program is generous to retailers for two reasons: first, the 1.75 percent discount rate is relatively high; second, and more importantly, the compensation is not capped. Sales tax vendor compensation is not universal among the states. For example, Iowa and Minnesota do not provide any vendor compensation for sales tax collection. Illinois is among just 26 states that provide it, and it is one of only 13 with no cap on the amount any individual store or chain can receive. This policy can be lucrative for large retailers. In 2008, a report by the taxpayer subsidy watchdog group Good Jobs First calculated that Wal-Mart alone received more than $8.3 million per year in vendor compensation.21 Illinois could generate $116 million in additional revenue by scrapping its sales tax vendor discounts. Alternatively, capping the discount to the first $1 million in sales would save approximately $100 million per year.22

Farm Chemical Exemption
The cost of this tax exemption was $241 million in FY 2011, an increase of 26 percent over the previous year. Rapidly growing tax breaks should be scrutinized to determine if they are being exploited to inappropriately lower tax liabilities and whether they continue to serve a worthwhile purpose cost effectively. Illinois should take steps to roll back the cost of this tax exemption at least to 2010 levels, which would save $50 million.

Non-Sales Tax Cost-of-Collection Compensation
In addition to the sales tax vendor discount (discussed above), Illinois also compensates the businesses that collect taxes other than the sales tax. In FY 2011, the state spent $47 million on cost-of-collection compensation and prompt payment discounts for motor fuel, telecommunications, cigarettes, hotel, liquor, underground storage tank, gas use and auto rental taxes.23

Newsprint and Ink Exemption
The state’s newspaper and magazine industry has enjoyed a special, industry-specific sales tax exemption on the newsprint (paper) and ink they purchase. This tax break cost Illinois $33 million in FY 2011.

Rolling Stock Exemption
The sales and vehicle use tax includes an exemption for business purchases of rolling stock (including motor vehicles, aircraft, watercraft or railroad vehicles) used in interstate commerce. The cost of this exemption grew by $25 million in FY 2011, a 77 percent increase from 2010. As with other rapidly-growing tax expenditures, this raises a question of whether tax provisions are being used to inappropriately lower tax liabilities and whether the exemption continues to serve a worthwhile purpose cost effectively.

Tax Foreign Dividends
Illinois exempts the dividend income of foreign affiliates from companies’ in-state income, even though such income is taxable at the federal level. Taxing foreign dividend income in Illinois would raise $386 million per year.

Repeal the Single Sales Factor
The Single Sales Factor determines a multistate corporation’s in-state income based only on instate sales rather than the traditional combination of sales, employees and property in the state. Since it was enacted in 1998, Single Sales Factor has benefited a handful of large multistate and multinational corporations, but has done nothing to benefit Illinois small businesses, and has failed spectacularly in boosting manufacturing employment as its promoters promised.24 The tax break was estimated to cost the state close to $100 million per year at the previous corporate income tax rate,25 equivalent to $146 million today.

Decouple from Federal Domestic Production Deduction
Section 199 of the federal Internal Revenue Code allows companies to claim a tax deduction based on profits from “qualified production activities,” a sweeping category that goes well beyond manufacturing to include such diverse activities as food production, mining, filmmaking, and utilities. The deduction is unlikely to protect or create jobs within the state, because multistate corporations can claim the deduction for out-of-state “production activity” just as they can for in-state activity. Twenty-two states, including Indiana, Wisconsin and Minnesota, have decoupled from this federal deduction in order to preserve state revenue. Illinois could recoup more than $146 million (based on the new corporate tax rate) by decoupling from this provision.26

Repeal the CME-CBOE Special Tax Break
After threatening to leave the state, the Chicago Mercantile Exchange and the Chicago Board Options Exchange won an expensive new tax break last year that lowers the share of electronic trading income apportioned to the state from 100 percent in 2011 to 27.54 percent by 2013. This tax giveaway for just two financial institutions will cost the state $85 million per year by FY 2014.27
Special tax breaks for well-connected corporations are not a solid foundation for economic equity and prosperity and should be repealed.

Tax Offshore Oil Drilling
A loophole in Illinois’ tax code allows profits from oil production activities in the outer continental shelf to go untaxed. Other states, including Iowa, do consider profits from such activities in their calculations of tax liabilities for in-state companies. The state Senate in May passed a measure (House Bill 5342) to close this loophole, which would prevent the loss of $75 million per year.28

Equalize Satellite and Cable TV Taxes
Satellite TV companies currently are exempt from the 5 percent franchise tax that cable TV companies pay to municipalities. The state Senate in May passed a bill (House Bill 5440) to levy a 5 percent tax on satellite companies, raising $75 million per year.29

Repeal the Estate Tax Exemption Increase
Illinois increased its estate tax exemption from $2 million in 2011 to $3.5 million in 2012 and $4 million thereafter. Expanding a tax benefit to such a small portion of the very wealthiest residents will cost $41 million in FY 2013 and $64 million in FY 201430 – lost revenue that cannot be justified on economic development or equity grounds. The state should repeal this expanded exemption and restore the $2 million exemption.

End the For-Profit Hospital Tax Break
Illinois for-profit hospitals won a big tax break in a little-noticed provision of the Medicaid bill last spring. This law gives for-profit hospitals a tax credit for the lesser of their charity care, or their property tax bill. So it does nothing to incentivize charity care spending beyond the cost of their property taxes. Worse, unlike residential property tax credits, the hospitals can sell their unused credits or carry them forward for up to five years.31 The savings would be $10 million to $15 million per year, with $5.5 million of that going to one company, Vanguard Health Systems of Nashville, Tennessee.

Tax Digital Goods
Illinois could gain an estimated $10 million per year by extending the sales tax to digital goods like books, magazines, music, movies and games that are delivered electronically to consumers. The state already taxes such purchases when they are delivered in tangible form. At least 23 states already tax such goods delivered electronically, including nearby states Indiana, Kentucky and Wisconsin, as well as many states with “low-tax” reputations including Alabama, Arizona, Idaho, Mississippi, Nebraska, South Dakota, Tennessee, and Utah.32

Conclusion
Payments to the pension funds are not only a constitutional necessity but the fulfillment of the state’s ethical obligation to the people who teach our children, keep our communities safe, and provide assistance to those in need. The public workers Illinoisans rely on – teachers, caregivers, firefighters, nurses, police officers, and corrections officers, to name a few – have been promised that they will have a secure retirement in return for their service. The state must stop using its pension funds as a credit card to pay for education, public safety, health care, and other core services, and it must repay the money it has borrowed from those funds. At the same time, it is critical that Illinois has replacement revenue to fund the vitally important public services that have historically been sustained by pension borrowing. The We Are One Illinois coalition has put forward a proposal that achieves that goal, and that recognizes that benefit cuts are neither legally permissible, equitable, nor economically sound. Instead, we present a plan based on the principle of shared sacrifice that requires the state to fund its retirement systems, asks more from employees, and protects funding for vital public services by raising needed revenue.

for the 30-page document: Analysis of Worker and Retiree Pension Benefit Cuts under the Quinn Plan and HB 6258

A brief response:

An “Ironclad guarantee that the state will fulfill its funding responsibilities": since Illinois Democrats want to shift the state’s payment for the pension systems to school districts and universities, besides reforming the "pension ramp," I believe that a graduated income tax is the most important proposal to consider for raising revenue in Illinois.

"A Well-Designed Graduated Income Tax Rate Structure Could Reduce Taxes for 94 Percent of Illinois Taxpayers and Raise at Least $2.4 Billion more in Revenue than the Current Five Percent Flat Tax.

"If Illinois passed a constitutional amendment permitting the creation of a graduated income tax rate it could structure those rates in a number of different ways. For instance, if Illinois were to adopt the same graduated income tax rate structure as Iowa, Illinois would raise $6.3 billion more in revenue than it does from its current five percent flat rate, while 54 percent—over half—of all taxpayers would pay less in state income taxes."41

for the complete analysis: the Center for Tax and Budget Accountability

Two questions public employees need to ask:

1) Even if legislators invited union leaders to the table, why bargain away any of the public employees’ “constitutionally-guaranteed” rights and earned benefits? “A public employee obtains ‘vested rights’ in the Pension Code provisions relevant to pension benefits when the employee becomes a member of a pension system by making his or her initial employee contribution to the system. In addition, the Pension Clause protects pension benefit rights as an enforceable contractual relationship” (Eric M. Madiar, “Is Welching on Public Pension Promises an Option for Illinois” p. 36).

2) Why modify the “constitutionally-guaranteed” Pension Clause “through contract principles” when Speaker of the House Madigan has made this quite clear: “Let the courts decide”?
 

 

"Public-service workers and their unions are standing up for the values on which the American middle class was built" by Henry Bayer

Wherever we live and whatever political party we identify with, most Americans agree on a few basic things. We believe that those who work hard should have decent pay, affordable health care, security in retirement and respect on the job — and that government should provide essential services, like good schools for our children, safe streets for our families and a safety net for the most vulnerable, including the elderly, disabled, at-risk kids and unemployed workers.

Despite this common-sense consensus in support of vital public services and the men and women who provide them, choruses of corporate special interests are echoing extreme attacks on workers and their rights. And far too many politicians are listening.

We've seen it in states like Ohio, Wisconsin and New Jersey, where Republican governors backed by corporate CEOs have conspired to slash jobs and wages, cut or privatize public services, and curtail workers' rights.

Now some are trying to use our state's budget crisis as an excuse to bring the same extreme agenda to Illinois. They want to stoke public resentment against government in general, public services in particular and the unions that represent the hard-working people who provide those services most of all.

Why? Because public-service workers and their unions are standing up for the values on which the American middle class was built: that hard work should be rewarded with respect, dignity, a decent wage and a fair shot to get ahead, and that our economy works best when prosperity is broadly shared.

The labor movement's vision of America is in direct conflict with the top-down agenda of the big corporations, their CEOs and other millionaires and billionaires. It's not only that they want to force public servants to accept the same low wages, few benefits and no voice on the job they have imposed on far too many workers in the private sector; the corporate elite want to take even more wealth for themselves by expanding their special favors in the tax code, reducing the regulatory oversight that holds them accountable and enabling the privatization schemes that have turned our public infrastructure and schools into profit centers.

To prevail, the elites must discredit, weaken or wipe out the labor movement. At this point in history, that means the unions that represent the teachers, librarians, firefighters, caregivers and other public employees whose wages, benefits and workplace rights the CEO crowd ceaselessly attacks.

Thus the rhetoric from politicians and financiers: …campaigns on cutting teachers, police officers and firefighters, and cheerleading for anti-worker governors like Wisconsin's Scott Walker and vowing to bust unions from coast to coast.

Here in Illinois, public employees and our unions are standing up for a better future for all — and citizens are joining us. When Chicago teachers were forced out on strike for respect and a fair contract, two-thirds of Chicago Public Schools parents sided with the union. When Gov. Pat Quinn set out to slash jobs and vital services while demonizing public workers, their pay and their pensions, he soon found himself among the least popular governors in the nation. And a recent Tribune poll showed that, despite two years of ceaseless misinformation by Big Business chieftains and pols of both parties, Illinois voters rightly hold politicians, not workers, responsible for the state's pension debt by an eye-popping ratio of 51 to 2.

In short, most people understand that public workers and union rights aren't what ail Illinois. They recognize that librarians, child-protection workers, nurses and other public employees are helpers, problem solvers, those we turn to in times of need. They know that politicians don't keep us safe, and CEOs don't teach our kids.

Americans understand that the right to bargain collectively is built on the fundamental freedoms that made our country great. They recognize that unions exist to enforce some basic rules of the road, like an honest day's work for an honest day's pay. Like the confidence that an unexpected illness won't bankrupt you; that a capricious boss won't fire you, and that a run-amok corporate class won't drive our economy off a cliff.

While the corporate crowd tries to undermine the middle class that's essential to rebuilding strong communities, the rest of us can work together to address the real causes of our state budget problems. We can reform the broken, unfair tax structure that squeezes working families while rewarding millionaires. We can end egregious tax giveaways to profitable corporations that hold taxpayers hostage and answer to no one. And we can make progress for the priorities we share: creating jobs, reversing cuts to education and health care, keeping promises to retirees and growing prosperity for all.

Henry Bayer is executive director of American Federation of State, County and Municipal Employees Council 31.

from the Chicago Tribune November 1, 2012