January 18, 2006

Illinois: More Bold Tax Proposals from Blagojevich

A lot of water has gone under the bridge since Illinois Governor Rod Blagojevich got elected on a "no new taxes" pledge in 2002. Blagojevich has pushed through a variety of "fees" and raided the state's pension fund for a cool $2 billion rather than confronting the very real structural problems facing the Illinois tax system-- all the while touting his allegedly painless solutions to the state's fiscal woes. Observers of last year's pension debacle could be forgiven for thinking that after all these fiscal contortions, the governor might learn the error of his ways.

But so far, it sounds like 2006 will bring more of the same. Even before delivering his State of the State address, the guv was lobbying hard for his plan to pay for educational infrastructure improvements using keno revenues (a kind of video lottery). From Monday's Tribune, here's a Blagojevich deputy on why this is the perfect way to pay for schools:
"Gov. Blagojevich wants to build new schools, and I'm sure many legislators do too," said Blagojevich's deputy governor, Bradley Tusk. "This is a way to do it that doesn't raise costs or taxes for anyone."
Except gamblers, of course. But who's counting them?

The governor's State of the State speech earlier today played down the gambling proposal, but included a proposed $1,000-per-kid tax credit for students in Illinois public or private colleges. If you live in Illinois and your kid attends an Illinois college, you get a $1,000 tax credit for each of the kid's first two years-- if your kid maintains a B average. If the credit is structured like the K-12 education credit that already exists, it will be nonrefundable-- meaning that low-income Illinoisans who don't have $1,000 of income tax liability will be ineligible for the full credit. While these nitty-gritty details aren't hammered out in the gov's speech, it's worth keeping an eye on.

For adherents to the "glass half full" school, you should know that the governor boldly chose not to renew his no-new-taxes pledge in his speech. But that's a far cry from the openness that's been shown by Democratic candidate Edwin Eisendrath, who called Blagojevich's no-new-taxes pledge from 2002 a "shame for Illinois."

Maybe the DLC sent Blago and every other Democratic governor a memo explaining that even implicit support for tax hikes is political suicide for those aiming for the 2008 presidential nomination. If so, Iowa's Tom Vilsack and new Mexico's Bill Richardson clearly have taken this memo to heart. But it doesn't have to be that way. Outgoing Virginia governor Mark Warner saw the fiscal writing on the wall and made revenue-raising tax reform the hallmark of his administration-- and the Dems I know seem a lot more energized about a Warner presidency than about the interchangeably tax-averse gang from Illinois, Iowa and New Mexico. Let's hope that the Warner pattern-- if not a profile of courage, at least a display of fiscal integrity--is what Dem governors emulate between now and election day.


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