Taxes

Ross Perot has a new (at least it's new to me) website with some educational information including a

slide show on federal revenues and spending and projections for the future.

"The democrats know what needs to be done..."

"I want to take those profits..." 

http://www.youtube.com/watch?v=j1PfE9K8j0g

The more I hear about ideas like a windfall taxes as the means to energy independence, the more optimistic I am that McCain has a chance in November.   According to 2005 Tax Foundation data, the oil companies over time have paid 3X more than their profits in taxes.  

To me, it looks like they already are taking those profits. 

http://www.taxfoundation.org/news/show/1168.html

Before rushing to create a new federal tax, lawmakers should ask two questions:

The answer to the second question, according to the Congressional Research Service (CRS), is that the 1980s windfall profits tax depressed the domestic production and extraction industry and furthered our dependence on foreign sources of oil.

I've obtained this memo sent to Champaign County Board members outlining the announced plans of each of the County's school districts if the proposed one percent sales tax increase for education facilities passes in November.

There's no real new information in this, but it is a very useful summary of plans.  You can read the whole thing yourself, but you'll note that every district which has existing debt is currently promising to use sales tax revenue to abate or eliminate that debt (and reduce property taxes as a consequence), although the amounts vary.

Key information to remember (taken from the memo):

Each of the Boards of Education of the 14 school districts in Champaign County has passed a resolution requesting that the Champaign County Board put the question of imposing a 1% sales tax for school facility purposes for submission to the voters of Champaign County at the November 4, 2008, election. If this resolution passes and the County Board implements the full 1% sales tax, the revenue can be used for the following purposes:

• Pay for projects as you go
• Leverage revenue for current needs (use revenue to pay for bonds)
• Retire existing debt issued for capital purposes (abate taxes)
• Any combination of the above

Discuss.

Random thoughts about the boondoggle state budget passed by the House and Senate Democrats over the weekend:

• The budget is so badly out of balance ($2 billion?!?) that someone - the Legislature expects it to be the Governor, and vice versa - will have to make severe cuts.  I hope it's the legislature, because I disagree with so many of the Governor's spending priorities.  And I still don't understand how the legislature can abdicate so much authority and discretion to a Governor whom none of them trust.
• You will see lots of stories claiming that the UI got such-and-such funding increase, and lots of mail and press releases from Rep. Naomi Jakobsson and Sen. Mike Frerichs claiming that they secured that increase.  But all they've really done is ask the Governor to make $2 billion in spending cuts, and they know that higher education will be one of his first targets.  So take all the bragging with a huge grain of salt until the UI actually receives the increased funds.
• Speaking of Sen. Frerichs, he voted against the gaming expansion and lottery sales which were to fund the $34 billion capital plan, but voted present on the spending portion of that plan.  That's a great example of consistent, principled, "tough and independent" leadership, eh?
• I'm glad that no Republicans voted for this budget, unlike last year, when so many were lured by the siren song of pork.

UPDATE:  Sen. Frerichs says that the deficit isn't that bad:

State Sen. Mike Frerichs (D - Champaign) said the governor has the power to balance the budget himself by vetoing the specific expenses he deems unnecessary and doubts the size of the deficit is as large as Blagojevich claimed Monday morning.

"According to our budget staff, it is not that large," Frerichs said.

How large is it?  And why did Sen. Frerichs vote for an unbalanced budget, trusting the Governor to make such important budgetary decisions?

Quo usque tandem abutere, Catalina, patientia nostra?

The Lieberman-Warner Climate Security Act (S. 3038) is going into discussion.  Doubly arrogant, they think that not only can they legislate against physics and geology, but also they believe they can hoodwink the public with this pretext for more devastating and stifling control and crippling taxation.  And they call it security?  How dare they!?  Are the people really so stupid as this to suck up this drivel?   This is the same Joe Lieberman who we saw on TV with his hand up Senator McCain working McCain's mouth.

"Global warming has little to do with the improving the environment or reducing pollution. The real agenda is taxation and further consolidation of authority into a powerful centralized and increasingly global government." 

more here.

The governor recently unveiled a $31 billion public works plan including, among other things, funding for school construction and road repairs. Republican leaders, including Tom Cross, have said that the state's infrastructure desperately needs the increased funding this bill will provide. The problem is that Cross (nor anyone else, for that matter) can really say exactly where the money to pay for this project is going to come from. The popular answer is from new gaming revenue and the possible sale of the Illinois lottery to a private vendor.

That is insulting. It doesn't take a rocket scientist to figure out that gaming can't bring in $31 billion for the state, no matter how much it is expanded. A University of Illinois economist estimated that the increased gaming revenue cited as a funding source for the bill's appropriations will probably only account for $7-10 billion of the $31 billion -- begging the question of where the missing $24 billion will come from.

Since the Dems control both houses of the legislature and figure to for a while yet, I have an educated answer to that question: tax increases.

As far as the actual bill is concerned, it is rather humorous that Hastert and Poshard are getting all of the credit for pushing it -- an idea that supposedly came straight from the governor's office. If that doesn't show how unpopular Governor Rod truly is, I don't know what does.

These cartoons are compliments of an Ohio friend.  Pattsi Petrie

Special interests lobby our state officials and the result is unfunded mandates where the many taxpayers get stuck paying while the few benefit. This is particularly devastating at the municipal level.

A possible solution is to consider total compensation as wages, medical, and retirement benefits combined. We could start negotiating total compensation and budget accordingly. This would effectively insulate the taxpayer from special interests and technically would not adversely affect anyone (from the standpoint of total compensation).

Just an idea that doesn't involve getting creative about how we impose more taxes and fees.

long post with with hopefully some answers...

I have been reading with interest the continual comments about the County Wide Schools Facility Tax. It has now been approved by every school district in the county by, I believe, a unanimous vote by each individual board. I certainly see that there are myriad questions about the tax and just as many perceptions good and bad about the potential for the tax.

Though I cannot speak for any other school district besides Unit 4, I will try to answer some of the comments that have been asked on this blog...

1. Why go for the Max 1%? 
   Frankly, I don't think the ILGA intended for the TAX to be used as a mechanism for Property Tax relief. I think they intended to try and help school districts by providing another mechanism to fund capital projects. I may be wrong in that belief, but that is what I think. That being said, when the districts in Champaign County got together at the Regional Office of Education to discuss this tax, the key thing that we in Unit 4 talked about was that we would not support this new tax without some kind of relief for property owners. We feel that it is imperative that any reductions that can be made are made. IF we were to ask for 1/4%, we would be able to abate the same 9-10 cents /100 EAV that we are allowed to with this tax (AGAIN IT IS ONLY FOR CONSTRUCTION DEBT AND FACILITIES ISSUES, NOT SALARIES). That abatement in Unit 4 is approximately $15M. That is all the debt we have out and al we can abate with this potential revenue source. People can say all they want that it is not enough and I would totally agree. However, it is all we can do.

   If our only goal was to abate property taxes, then we would simply go for 1/4%. actually it begs the question if we are not going to do anything new other than pay off one type of debt with a different revenue stream, why would any district do that. In order to have construction bond debt, a district had to ask the voters for approval for property tax increases to begin with. Why would a district go back to the voters to ask for approval to do the same thing with a different source of income. Doesn't make sense to go back ask for something you already have

   This revenue source can be used for additional stuff, hence the 1% request. In Unit 4, we can dramatically increase the efficiency of our bldgs and put in A/C. Everyone of us works in an air conditioned environment and I often wonder why teachers and students should be asked to do something different than what we all do... We can also satisfy the consent decree requirements for the additional seats north of university ( yes I know that not everyone agrees with this, BUT it is a legal settlement that past boards agreed to and it is not open for contestation in court). We can update the infrastructure to support the computers needed for today's learning environment. We could build a school south of University if needed. More to come later on this subject. 
   If another district wants to post about their plans, that would be great.

2. Why are you doing to reduce the cost of doing business?
   Since I have been on the board, we have delayed a textbook adoption by one year, saving the interest on $700,000. We have refinanced debt at a much lower rate saving several hundred thousand dollars in interest payments. The night I was elected the previous board cut $2M in annual expenditures, We have bought lower priced energy through co-op arrangements, we have not filled at least 15 positions that I am aware of off the top of my head that have been vacated and we decided not to fill them to save money. Just a name a few of the items...

   Each year staff throughout the district ask the board for programs to increase this or that. The vast majority have been met with good idea, but we can't afford it right now. Even this week we were presented with middle school athletic program additions, last month it was additional foreign language offerings.

   All of these ideas are terrific and the vast majority need to be added as soon as possible. However, they can only be looked at as part of a total budget package. An individual request for $100K in expenditures seems insignificant in a $95M operation, but we get 10 such requests/ideas a month. Those add up to a major deficit.

   2 months ago the board was asked to give a list of programs we would like to add because they are things that community members have asked us to do. That "dream sheet" combined with staff requests added up to close to $28 Million dollars for year!!!! Obviously there is no way we can or will approve that kind of increase.

   On another note, Schools are highly regulated about how we spend and collect taxes. The hold the line/reduce costs items are typically found in the Education fund/Transportation areas. Taxes are levied into individual funds and increases are limited by PTELL. Those hold the line/reduce costs are not generally found in the O and M and Health Life Safety areas. These are generally low Levy's and are not near enough to pay for recurring costs as facilities get older and older. Look at some of the facilities in Unit 4 and the county and you can see just how much cost reduction there is when it comes to stretching the maintenance dollar. Those folks are masters of stretching a dollar for building issues.

3. This is simple a "Bait and Switch"For some this is a tax increase. (those who don't own property in Champaign County)

   For others this will be a tax decrease (those who own property in a district that plans to abate some portion of the property tax bill related to construction debt and who don't spend as much on the retail goods) I suspect a good portion of the 'middle" class will fall in this area at least in Unit 4)

   For others it will be a wash. It will reduce property taxes and you will spend enough on taxable items to negate the property tax savings.

   If anyone is saying that some will not pay additional money in their total tax package (property, income, sales, etc) they are wrong. Some will pay more and some will pay less, most will probably pay about the same... those are the facts.

   However, for the same amount for the property owner, the schools throughout the county could be greatly improved.

   If facilities don't matter, than why do so many people ask me why we can't have facilities like Normal Unit 5? I am asked that often.

I am sure that I will have more later. Especially a detailed plan about how we in Unit 4 will spend this revenue if approved. Including a mechanism for accountability.

If you have any questions, you can feel free to contact me at tomlindw@comcast.net or 217-202-6841

Dave Tomlinson, President
Champaign Unit 4 Schools Board of Education

Both Champaign Unit 4 and Rantoul Township High School boards have voted to support a November ballot question asking voters for a one percent sales tax increase to support education.  Both Districts are using a miniscule amount of property tax relief to mask their request for the largest-possible tax increase, as have most other area school districts, and most media reports are emphasizing the property tax relief as if it somehow offsets the sales tax revenue which will be generated.

It will be interesting to see if the County Board puts the full one-percent increase on the ballot, or if they settle for a smaller amount.

And it will be interesting to see how long the "this is about property tax relief" storyline is allowed to play out before people realize that the sales tax revenues of a one percent increase are several times larger than the maximum amount of property tax relief allowable.

The Township Board (City Council) has granted Supervisor Linda Abernathy's request to put another tax increase for City of Champaign Township on the ballot.

Township Supervisor Linda Abernathy said the increased tax income would allow her to increase benefits to 50 disabled people receiving general assistance/transitional assistance from the current $150 per month to the state-recommended $223 per month. The additional funding would also allow her to create a $42,000 emergency assistance fund whereby extremely poor residents could receive a $225 grant once a year to deal with an economic crisis, effective July 1, 2009.

Abernathy asked voters in November 2006 to approve a 5-cent increase in the district's overall tax rate. But voters rejected that proposal by a 2-1 margin.

She said she proposed a smaller increase this time around because she recognizes that residents are feeling the economic pinch.

"People are feeling the burn, the pinch," she said. "I wanted to do something minimal enough to survive the shortfall, but not so extensive to turn the voters off."

At least she reduced the amount of increase she was requesting this time.

Unsurprising:

The Urbana school board passed a resolution Tuesday night calling for a 1 percent countywide sales tax to be put on the November ballot.

With its vote, 11 school districts in the county have now passed such a resolution. Those districts represent almost half of the county's school enrollment, said Jane Quinlan, superintendent of the regional office of education. State law provides that districts representing at least 51 percent of the county's school enrollment can place a tax question on the ballot by approving a resolution such as Urbana did.

A county policy committee will discuss the proposed sales tax at a meeting tonight.

The Urbana school board also passed a resolution Tuesday pledging to use a portion of the money it would receive if such a tax passes to abate property taxes. The resolution states that the district would use $1 million annually to pay off building bonds.

"It's the first step in moving away from a total reliance on property taxes," said Urbana school board President Mark Netter.

From today's News-Gazette:

Board member Valerie Woodruff said she's been approached by individuals who don't know much about the tax but are automatically opposed to new taxes.

But when board members explain that it could provide some property tax relief, "they're good with it" said board member Max McComb.

But one of the forum's attendees, Lea Ehrhardt, said she's not so sure that property tax relief will happen.

"The lottery was supposed to help pay for education. It didn't work," she said. "It looks like a good deal but it doesn't seem to happen that way."

She and two other attendees, Eric Thorsland and Joe Tandy, all said they'd like to see some sort of clause in the legislation that provides for an end to the tax unless it's reapproved by voters.

People are right to be skeptical.  Even in the best-case scenarios, residents of two school districts in Chamapign County would get absolutely no property tax relief, and residents of other districts would get much less property tax relief than this new tax would generate.

Urbana and Mahomet-Seymour school districts are also now supporting a countywide sales tax for education construction.

Urbana:

In Urbana, which would get an estimated $3 million from a 1 percent sales tax, school board members unanimously supported the sales tax in a recent straw poll.

"It's a move away from the property tax. This is what a lot of people who are involved in education have been asking for," said board President Mark Netter.

The Urbana board will consider a two-part resolution when it meets at 7:30 p.m. Tuesday at the Burkholder Administrative Service Center, 205 N. Race St., U.

The first would ask the county board to place a 1-cent sales tax on the November ballot. The second would stipulate that the first $1 million be used to reduce the district's bond and interest tax levy.

M-S:

The meeting will be at 7 p.m. Monday at Middletown Early Childhood Center, 101 N. Division St. in Mahomet.

The board will use its regular study session time to answer questions about what the tax, which would pay for building improvements, could mean for the district.

"We think it's kind of a big decision," said school board President Ned Hahn. "It's a decision that ultimately is going to come to the voters in the entire county and I think (the forum is) in the interest of transparency and trying to help the people in the community understand what it's all about."

...

The sales tax includes several options for financing and projects districts can spend it on.

Mahomet-Seymour school board officials intend to outline them during the forum.

Discuss.

The Unit 7 School Board has fallen in line behind a countywide sales tax for education capital projects.

Unit 7 school board President Fred Koss reported that he and Superintendent Michael Shonk had attended a meeting at the Regional Office of Education with representatives from districts throughout Champaign County.

"There was virtually unanimous support for the sales tax," Koss said.

Shonk said he has been asked what Unit 7 would do with the revenue.

"My intent would be to pay down our bonded indebtedness," Shonk said.

Shonk added that could be combined with a new construction project such as renovating, expanding or replacing the 50-year-old Unity High School.

"I thought we were 12 years down the road with this (high school project), but it could be as little as eight, depending on what happens with this," Shonk said.

Shonk plans to send information about the proposed sales tax to both county board members and members of the Champaign County Farm Bureau.

"The key to the whole thing is property tax relief," Shonk said.

Actually, the key is promising a tiny amount of tax relief in the hopes that voters will support a much larger increase in sales taxes.

A constitutional amendment proposed by Sen. Mike Frerichs got pretty well killed on the floor of the Senate today, receiving just 19 of the 36 votes necessary for passage.  While there is no direct tie in to education in amendment, it's hard to imagine that this is a good sign for people who want to raise the income tax on everyone to fund education and property tax relief.

From yesterday's News-Gazette:

Sales tax represents almost half the city's operating money, and Champaign has come to expect a 4 percent increase in sales tax revenue every year, Schnuer said.

"This year, it's coming in at 2 percent," he added.

And:

Schnuer said the upcoming year's budget proposal doesn't call for any new taxes or fee increases, but it does recommend two new fees – one a fee on builders for erosion control and the other to cover the cost of inspecting multifamily residence common areas, Schnuer said.

Discuss.

Your property tax bill is being sent out on May 2nd.  But you can see the damage now.

Another school board supports a countywide sales tax for school construction and capital projects.

The Rantoul Township High School board would like to reduce school real estate taxes next year. And the board would like to have folks shopping at the big box stores on North Prospect in Champaign to pick up the tab.

The high school board voted 7-0 Monday to approve an initiative to establish a 1 percent county school facility occupation sales tax in Champaign County.

Notice that the resolution specifically requests one percent, rather than a smaller increase.

Property tax relief is explicitly promised:

If the sales tax goes into effect, the school district would abate its bond property tax, according to school board President Marla Deem.

"This is actually going to mean a decrease in your property taxes," Deem said.

The bond pays off the debt to construct the school's west wing, Requa said. The bond would be paid off instead from sales tax revenue.

According to school records, the bond fund tax rate is 18.12 cents per $100 equalized assessed valuation.

So if the sales tax is approved and the school board agrees to abate the bond tax, the owner of a $100,000 home in Rantoul with standard exemptions theoretically could see his or her real estate tax bill decrease by $36.15 a year.

Another step forward.  At this point, the only question is how large of a sales tax increase will the County Board put on the ballot.

The Champaign school board will vote Monday on a resolution stating its commitment to lowering property taxes by way of the countywide sales tax. It meets at 7 p.m. at the Mellon Administrative Center, 703 S. New St., C.

The resolution does not ask for the sales tax question to be placed on the November ballot. That action will come in May, said school board President Dave Tomlinson.

"Our No. 1 priority is property tax relief," Tomlinson said.

If the tax is put on the November ballot and passes, the Champaign district would use some of the revenue to pay off the bonds used to finance building Barkstall and Stratton elementary schools, renovating the building that houses the Early Childhood Center, and making improvements at Central High School. The district owes about $15 million on the bonds, Tomlinson said.

A state law passed last fall allows school districts representing 51 percent of the school enrollment in a county to request a ballot question. If voters approve the sales tax, the revenue is divided among school districts according to enrollment. They can use the money to build new buildings, renovate existing ones, do safety or energy conservation work, or pay off building bond debt.

If a 1 percent sales tax were passed in Champaign County, and spending remained the same as in the last fiscal year, the tax would bring in about $17 million, of which $6.8 million would go to the Champaign district. That means it could issue about $70 million in bonds. The district might use the tax revenue to build new elementary schools, renovate buildings to add air-conditioning, add technology infrastructure and make them more energy-efficient, or do life-safety work, Tomlinson said.

At least they're talking about property tax relief, but the amount for Unit 4, for example, is miniscule compared to the amount that sales taxes will be increased.