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Legislative Action Special Section


The tax hike: an'A' for effort; and 'F' for outcome



Photo by Ken Burnette
ii880846-1.jpg
Gov. James R. Thompson presents his tax package to a joint session of the General Assembly on June 9.

Architects of the effort to convince lawmakers to raise taxes mounted a concerted campaign this spring. Education and human service groups allied themselves with business and labor. They lined up editorial backing. But in the end they failed.

Robert Leininger, chief of staff for State Supt. of Education Ted Sanders, says the effort exceeded his expectations. He says the grass-roots effort that brought together teachers, parents, school board members and administrators was unprecedented. So was the joint effort with higher education that raised $300,000 spent on newspaper and television advertising. And most unique was business support that included individual chief executive officers.

"If you look at effort, we got an A or an A + ," Leininger says. "If you look at outcomes, in this era of outcomes, we get an F," he concedes.

Thompson had tapped education and other human service agencies to lead the charge when he drafted his original budget —a spending plan that kept elementary and secondary education and higher education at their 1988 levels. The governor said that spending was inadequate to meet the state's needs and promised a tax hike and spending plan.

He made his proposal on June 9 before a joint session of the General Assembly. The Thompson tax hike called for a 40 percent increase in income tax rates. The personal income tax rate would increase from 2.5 percent to 3.5 percent. The corporate income tax rate would rise from 4 percent to 5.6 percent. The increase would allow the state to spend $1.34 billion more. Of that, $798 million would go to education, $327 million to social service programs, and the rest for old bills.

In his speech Thompson named each of the four legislative leaders and reminded them of past promises. "Mr. Speaker, you said when you were sworn in that: 'We have seen ample evidence that funds invested in early learning programs pay a far greater return than dollars aimed at remedial education. I believe we need to increase our investment in that and other areas.' I agree."

Thompson's proposal was not small. The $1.34 million it would allow in new general funds spending was considerably larger than the $881 million that would have been raised for general funds spending in the first year of Thompson's failed 1987 income and service tax package. The biggest flaw was that the tax increase would have thrown the budget out of balance in fiscal year 1991. According to Thompson's budget projections, spending in fiscal year 1991 would total $14,562 million. Revenues would have been $14,478 million. Opponents seized on the $84 million fiscal year 1991 deficit.

A tax hike earned considerable support, although many questioned its size. Before Thompson made his proposal the Illinois Manufacturers' Association offered to support an income tax hike, if it went to education and if the sales tax on energy used in manufacturing was eliminated. Comptroller Roland W. Burris, a vocal opponent a year before, said he could support an increase smaller than Thompson's for education and human services. On June 15 Thompson brought seven businessmen to Springfield to push for the increase. "To separate the business community from the realities of the status of education in Illinois is to close one's eyes to the future," Cal Covert, chairman of the board of Woodward Governor, Rockford, said. On June 17 Douglas L. Whitley of the Taxpayers' Federation of Illinois announced his group's support of an increase of "at least half" what Thompson sought. "We think education has successfully made an appeal for additional revenue and we would echo that appeal," Whitley said.


August & September 1988 | Illinois Issues | 46


The tax hike effort also got a kick in the pants on June 15 — some would later say a fatal kick. The Chicago Board of Education decided that it needed no new money to open schools in September. What had been a $188 million projected deficit disappeared when the board reevaluated higher-than-expected property tax collections. Gone with the deficit was a powerful incentive to raise taxes — the threat of Chicago schools being unable to open.

The inevitable summit process ensued. Thompson and the four legislative leaders first met a week after Thompson's speech. They agreed to name a separate working group to consider Chicago school reform and to meet again. Thompson called it a good first meeting. House Speaker Michael J. Madigan (D-30, Chicago) said, "I'll look at the governor's plan; I'll consider how much money he would raise, where he would spend the money; I'll consult with House Democrats concerning both aspects." Many observers incorrectly read support into those comments.

By June 22 the hour was getting late and progress was slow. Still the only support for Thompson's plan came from Senate President Philip J. Rock (D-8, Oak Park). Madigan said he was still unconvinced of the need. The summiteers tried again on June 24, following a two-hour House Republican caucus at which House Minority Leader Lee A. Daniels (R-46, Elmhurst) told his members that he would personally support a tax hike. Madigan remained immovable and said he was prepared to move and live with the House Democratic budget: "When you raise taxes, you're taking money away from some people and giving it to others. And I think we ought to be cautious .about that."

Thompson banged at Madigan: "Well you've got three legislative leaders who are willing to respond to the needs of the people of this state, the governor willing to respond to the needs of the people of this state, and the speaker absolutely unwilling to respond to the needs of the people of this state." Newspaper editorials took up the cause over the weekend, but Madigan remained immovable. At his direction the conferees had already agreed to cuts that would produce almost $200 million in new money for education, and he was prepared to pass that budget. He did and the tax hike died.

Who lost? Education and human services were the big losers. Elementary and secondary education would have received $309 million more under the Thompson tax increase than the final budget. Other losses were $151 million for higher education, $360 million for Public Aid, $55 million for the Department of Mental Health and Developmental Disabilities, and $40 million for the Department of Children and Family Services.

Leininger says despite the considerable effort, the education community was unable to convey the sense of crisis needed to raise taxes. He says although those who see the need to expand and improve the school system see crisis, without the money schools will continue to operate. "I guess it depends on your interpretation of a crisis."

Next year the effort will continue. Leininger hopes for more involvement from the business community. And he thinks there will be more teacher layoffs to build the sense of crisis. And he has a new strategy, based on the White Sox effort. "Let's just tell the General Assembly we're going to move our schools to Florida unless we get more money," he quips. Make snorkeling and scuba diving required courses. The kids will love it.□

Michael D. Klemens


August & September 1988 | Illinois Issues | 47



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