“We cannot solve our problems with the same thinking we used when we created them.” – Albert Einstein

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Dance Band on the Titanic

Dance Band on the TitanicThere’s an old saying that bad news comes in threes. It’s certainly true today for Illinois.

First comes the news that Illinois’ insurance rates under Obamacare are set to skyrocket by 43%-55% at the end of the year. Nothing about the Affordable Care Act (insert your own punch line here) has worked as advertised. The biggest driver of higher costs for the ACA is the radical expansion of Medicaid. Illinois was projected to have had an expansion of Medicaid enrollment in 2014 of some 200,000 people, when in fact the number was more than three times that amount. Think that’s bad? It gets worse. For the first 3 years of the ACA, the Federal government picked up the cost of Medicaid expansion. Starting in 2017, Illinois will be obliged to pick up the tab on 3% of that expansion, capping (heh) at 10% in 2020. That’s going to cost us anywhere from $375-$400 million per year in money we don’t have.

The second bit of bad news is that the Teachers’ Retirement System is meeting today to discuss the possibility of lowering the projected rate of return on its portfolio from its current rate of 7.5%. I’ve written earlier why this will hurt Illinois taxpayers, and won’t repeat myself here. Let’s just say that while such a move would reflect economic reality, that horse left the barn years ago. Most of my clients are pilots for United Airlines, and I know first-hand what it looks like when a pension plan explodes, and it’s not pretty. The same thing’s happening here, only the numbers are bigger and you’re going to be left holding the bag.

Finally, of course, there’s yesterday’s decision by the Illinois Supreme Court ruling against placing an independent map amendment on the November ballot. In a 4-3 decision which followed party lines (who’da thunk?) the Court ruled that Illinois politicians could continue to choose their voters, rather than the other way around. It also shows that the rot and corruption that has infected the Legislature for so long has crept to the judicial branch. Justice Thomas in his dissent said it all:

“The Illinois constitution is meant to prevent tyranny, not to enshrine it… Today a muzzle has been placed on the people of this State, and their voices supplanted with judicial fiat. The whimper you hear is democracy stifled.”

It’s becoming more obvious every day that without wholesale change in the Illinois legislature, the Republican caucus will continue to be nothing more than the dance band on the Titanic.

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The Shell Game

**UPDATE** Last week Governor Rauner signed H.B. 5529 into law. I’m disappointed that the Governor didn’t veto this bill. These intra-fund transfers are little more than a shell game which allows school districts to over-levy in one fund knowing full well that the funds would be transferred to a fund that’s levy could not be increased.

H.B. 5529 is Exhibit A to the argument that we need a complete overhaul in the way we pay for education, putting the responsibility on the State for education funding, as prescribed in the Illinois Constitution.

On April 20, the McHenry County Blog posted a story about a bill (H.B. 5529) which, according to Tim Dwyer, an attorney who successfully brought a Shell Gametax protest suit against Harrison School District in Wonder Lake:

“This bill allows school districts to transfer money via intra-fund transfers between the Educational Fund, the Operations and Maintenance Fund and the Transportation Fund. It can be found at Section 5/17-2A of the School Code.

Originally adopted in the 1960’s, the Intra-fund Transfer Section originally provided for a one-time intra-fund transfer for unforeseen, non-recurring expenses.

In 2001, it was amended to allow any transfer for any reason until 2003. Since that time (2003), it has been extended five times. H.B. 5529 seeks another three-year extension and passed through Committee unanimously (22-0, with 7 members absent).”

Further quoting Attorney Dwyer:

“(T)his bill allows (taxing bodies), and has allowed for 16 years…to circumvent the taxing requirements of the School Code and PTELL. One perfect example in McHenry County is Harrison School District 36 in Wonder Lake.

School District 36 had amassed 3.6 million dollars in its Transportation Fund when its actual Transportation costs were $337,000 annually.

Under normal circumstances, District 36 would have so much left in its Transportation budget that it could not, legally, adopt a levy for its Transportation Fund until such time as that fund was reduced.

This, of course, would have saved all taxpayers in District 36’s tax code 20% of future tax bills.

But under Section 5/17-2A, District 36 transferred its excess transportation funds, an amount in excess of three million dollars, to its Education and Operations and Maintenance Funds.

In its 2015 levy, District 36 levied for Transportation funds.”

The bill passed overwhelmingly in the House (108-4). The Blog posted the roll-call of the vote, and Jack Franks was one of the 4 dissenting votes. Good for him.

However, since this provision has been routinely extended for a number of years, I thought it would be instructive to see if Franks has been a consistent “No” vote on this obvious attempt to keep our real estate taxes from ever coming down. And what do you think I found?

As far back as votes are registered on the Legislature’s website, Jack Franks has voted for the extension. He voted for it in 2003, 2005, 2007 and 2010. In 2013, he not only voted for it, he co-sponsored the bill!

I find it ironic that this is the same guy who couldn’t wait to post a press release about a bill he sponsored which he claims will stop PTELL increases. He actually had the gall to say: “[t]he system is broken. It means government doesn’t have to be efficient. When our citizens have less, our government gets more. And that’s not fair.”

What’s not fair is to have a representative who votes 5 times for an extension of a bill that allows taxing districts to rob Peter to pay Paul, allowing them to stockpile hordes of cash, allows it to be used for unintended purposes and then sponsors a “freeze” bill intended to both hide his past votes and to keep that system in place. That’s hypocrisy, pure and simple.

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Game On

Smoke Filled RoomLast weekend, McHenry County Democrats came out from behind closed doors to announce that they’d unanimously selected John Bartman to run as the party’s candidate for Illinois’ 63rd House district, replacing Jack Franks on the November ballot. So much for openness, transparency and letting the voters decide.

Bartman’s appointment adds yet another chapter to the sordid tale of intrigue that began when Mike Madigan and/or Jack Franks (probably both) enlisted Jeff Lichte, a reliable Democrat, to run in the Republican primary. Their obvious intention was to get him on the ballot so they could block the Republicans from later slating a candidate, thus saving them from having to go through the charade of pretending they were opening up the appointment process to anyone interested in running for the job.

Instead, they could have simply announced in April that they had their guy, a protégé of Jack Franks who got a $45,000 per year patronage job at IDOT at Franks’ request, and who now works for an outfit that claims it was established to support, promote, and encourage fair contracting (translation: prevailing wage contracts). Bartman is a “monitor” for McHenry and Lake Counties.

OK, now that the Democrats have their candidate, it’s time to find out just what how independent he’ll be if he’s elected:

  • Will he vote for Mike Madigan as Speaker of the House?
  • Will he vote for Mike Madigan’s House Rules?
  • Will he pledge to vote to term limit his party’s leadership?
  • Will he disavow Mike Madigan’s lawsuit to get redistricting reform thrown off the November ballot?

When asked by the McHenry County Blog why he was running, Bartman said:

“I’m running to make Springfield work again. It’s an absolute travesty. I’m running to bring tax relief to the middle class of McHenry County.”

The travesty in Springfield is of his own party’s making. I, along with the people of this District would like to know why it is that he thinks that another vote on Madigan’s side of the aisle will change that.

It’s time to start debating the issues. Game on.

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Providing Some Breathing Room to Seniors

Property Tax Credit

Click Image to Enlarge

As we search for ways to lower property taxes for everyone, there’s a simple remedy to allow those who live on fixed retirement incomes to gain some relief.

If you take a look at your Illinois income tax return, you’ll see that there’s a credit (a dollar-for-dollar reduction of tax) equal to 5% of your home’s property tax bill that you can claim to reduce your income tax liability. For instance, if your property tax bill is $5,000, you can claim a $250 credit against that liability.

However, the credit is “non-refundable”, which, as is stated in Publication 108 from the Illinois Department of Revenue:

“If your property tax credit exceeds the tax you owe, you may not receive a refund for that amount, and you may not carry unused credit to other years. Your property tax credit may only reduce the tax you owe to zero.”

The problem for most retirees, however, is that since Illinois doesn’t tax retirement income or social security, they don’t pay any state income tax. All retirement income taxed on their Federal returns is shown as a subtraction on their Illinois returns, often leaving them with zero taxable state income. Thus, the credit offers no relief to offset their ever-escalating property tax bill.

I would propose allowing the credit to become refundable for anyone over age 65 whose income Federal adjusted gross income (the starting point for calculating Illinois taxable income) is below $50,000, and when reduced by the subtraction for retirement income results in no state income tax. This would allow those seniors most affected by rising property taxes to gain some measure of relief.

The image at the top of this post is from the tax return of a client of mine whose adjusted gross income in 2015 was a little under $50,000, consisting mostly of a private pension, IRA distributions and social security and who paid over $9,500 in property taxes here in McHenry County. Had the credit been refundable, my client would’ve gotten a state tax refund of $477. Not a lot, but better than a poke in the eye with a sharp stick.

Until we have real property tax relief for everyone, which can only come when we change the way we pay for education in this state, measures such as this will at least help those most in peril of losing their homes some small respite.

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“Mort de la Guerre”

GraveForty years ago while bicycling through eastern France, I took a break and walked into a small grove of trees which grew in the middle of a wheat field. There, sitting in a small clearing was a simple stone, inscribed with the phrase “mort de la guerre”.

There was no name, no date and no means of identification, just a simple stone marking the final resting place of someone who had fallen in defense of Liberty.

Since then, the men and women of the United States armed forces have been sent to the far corners of the world to defend the Liberty that we so often take for granted. It’s only appropriate that we dedicate at least one day a year in remembrance of those who didn’t come back.

This weekend there will be remembrances, parades, and family gatherings. To those of you for whom that family gathering will be to honor one of their own who, in words attributed to Lincoln: “laid so costly a sacrifice upon the altar of Freedom”, we should all offer a silent moment of thanks.

Secretary of State Colin Powell said in 2003:

“Over the years, the United States has sent many of its fine young men and women into great peril to fight for freedom beyond our borders. The only amount of land we have ever asked for in return is enough to bury those that did not return.”

Cemeteries around the world stand as testimony to the price our country has been willing to pay for our freedom. But whether it’s the beautifully manicured grounds at Arlington or Normandy or an anonymous grave in eastern France, our obligation is the same: to remember the cost of freedom and to honor all who were “mort de la guerre”.

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