Madigan’s Chicago bailout
Illinois House Speaker Michael Madigan is calling for another big tax hike – one that conveniently funnels hundreds of millions of dollars each year to his home district of Chicago. He and his legislative colleagues will have collected more than $31 billion in new tax revenues by the time the temporary tax hike sunsets in...
Illinois House Speaker Michael Madigan is calling for another big tax hike – one that conveniently funnels hundreds of millions of dollars each year to his home district of Chicago.
He and his legislative colleagues will have collected more than $31 billion in new tax revenues by the time the temporary tax hike sunsets in January 2015, and now they want more.
Madigan’s plan is to raise $1 billion annually through a 3 percent “surcharge” on individuals with income greater than $1 million, ignoring the fact that many of these individuals can avoid the tax by simply leaving the state.
Madigan’s sales pitch?
“It’s for the kids.”
The Speaker says he wants the money to go to school districts throughout the state on a per-capita basis.
How convenient. It just so happens that his home school district is suffering from a collapsing pension fund and pension contributions that are set to triple in 2014.
Chicago Public Schools’ pension contribution spiked to $613 million in 2014, up from $208 million in 2013, and CPS doesn’t have the money to pay for it.
With $8 billion in debt, the pension fund is on a path toward insolvency.
But rather than call for sensible pension reforms, Madigan would rather pour more state tax dollars into CPS’s pensions.
Nearly 20 percent of Madigan’s proposed tax, or $200 million per year, would go to CPS. With nearly 400,000 students, CPS makes up about one-fifth of the entire student population in Illinois.
Sure, all school districts in the state stand to receive more money from Madigan’s short-sighted plan (how much they’ll get depends on how many millionaires decide to leave); but it’s only CPS that’s dealing with such a large contribution spike.
Madigan’s plan makes his tax increase retroactive to January 2014. That means CPS would stand to gain a combined $400 million in new revenues for 2014 and 2015.
That money would help pay CPS’s increased pension contribution, but the district’s pension system is past the point of a quick fix. Which is what Madigan’s plan really is – a bailout with state tax dollars.
And that’s not all.
It’s also a farewell to some of Illinois’ most important job creators.