My Blog

Author: jbosco

  • State Dems Press Ahead on Tax Hikes

    Gov. Pat Quinn and top Democrats are pressing forward on a major income-tax increase and a $1-a-pack hike in cigarette taxes.

    The personal income tax rate would rise from 3 percent to 5.25 percent, Senate President John Cullerton said this evening. The amount tracks with what the Tribune reported today. After four years, it would fall to 3.75 percent, he said.

    The corporate tax rate on businesses would rise from 4.8 percent to 8.4 percent.

    (Full story here.)

    This will kill growth, jobs, and will hurt all of us in Chicago.  The recession is going to last longer in Illinois than elsewhere because of measures like this.

    Two weeks ago I wrote about how people are fleeing high tax states for low tax states.  Say what you will about Prof. Laffer, but his analysis of tax elasticity appears to be dead on.  The Laffer Curve is real and accurate.

    The problem is two fold: not only will businesses leave, but companies that were thinking of relocating to Illinois will chose someplace else instead.  The loss to the state as a result of this will be billions.

    Interestingly, Democrats seem to love to talk about how our friends in Europe govern.  Recently in the UK, the bi-partisan government agreed to both modest tax increases (not nearly double) and also extensive cuts in spending.  Seems that Dems on this side of the pond only want to tax and tax and tax and not cut a single nickel.

    If Chicago goes down the same path were doomed.

  • Media Drops Ball on Taste Proposal

    Chicago aldermen responded coolly Tuesday to a lone bidder’s proposal to charge Taste of Chicago patrons a $20 admission fee — and up to $65 for tickets to a music stage that draws the biggest-name talent to the lakefront festival.

    (Full story here.)

    This is the whole story; $20 admission & $65 concert tickets.  Completely missing is the length of the proposal, the up-front payment to the city, any other details of the deal, and financial records from previous years’ Tastes.  As such, the deal is impossible to evaluate.

    When the media can’t even get the simplest of details out to the public it’s no wonder that public expectations are so low.

    Someone should get the entire proposal and make it available with a nice 150 word executive summary.  That would be some fine journalism.

  • Truism

    Someone sent me this quote today as part of a longer email:

    It is incumbent on every generation to pay its own debts as it goes.
    A principle which if acted on would save one-half the wars of the world.
    —  Thomas Jefferson

    I can’t help but thinking that the debt we have created for our children will be the cause of their wars.

  • Gratuitous Spending at CPS

    An independent investigation into spending by Chicago Public Schools’ board presidents has uncovered more than $800,000 in questionable expenses in recent years, including thousands spent at lavish restaurants and hotels at a time when teachers and the district’s rank-and-file were being asked to cut expenses.

    (Full story here.)

    It’s worth the click to read this brief story at Chicago Breaking News.

    So someone tell me, how much more money should we be spending on CPS?

  • Unions vs. Taxpayers – Part 2 of 2

    Also from the New York Times:

    Faced with growing budget deficits and restive taxpayers, elected officials from Maine to Alabama, Ohio to Arizona, are pushing new legislation to limit the power of labor unions, particularly those representing government workers, in collective bargaining and politics. …

    But in some cases — mostly in states with Republican governors and Republican statehouse majorities — officials are seeking more far-reaching, structural changes that would weaken the bargaining power and political influence of unions, including private sector ones.(Full story here.)

    This is interesting because it’s the second NYT story on public unions in three days.  Also, because it’s something that’s been on my mind over the last few weeks.

    I got to thinking about what happens when union workers strike at a manufacturing plant like Ford or GM.  The citizens have alternate sources for these goods.  People can buy a Jeep, or a Toyota, or some other car.  People can also buy a used car.

    So the conclusion is that labor unrest at a manufacturing company may restrict consumer options, but it does not deny the consumer of the goods.

    This is very different with labor unrest in a public employees union.  In Illinois police are not permitted to strike.  The reason is obvious.  But school teachers are permitted to strike.  That completely denies the taxpayer, the consumer, of the services.  That seems unjust to me.

    It seems that some other people, albeit in other states, were having similar thoughts.

    For example, Republican lawmakers in Indiana, Maine, Missouri and seven other states plan to introduce legislation that would bar private sector unions from forcing workers they represent to pay dues or fees, reducing the flow of funds into union treasuries. In Ohio, the new Republican governor, following the precedent of many other states, wants to ban strikes by public school teachers.

    Some new governors, most notably Scott Walker of Wisconsin, are even threatening to take away government workers’ right to form unions and bargain contracts.

    “We can no longer live in a society where the public employees are the haves and taxpayers who foot the bills are the have-nots,” Mr. Walker, a Republican, said in a speech. “The bottom line is that we are going to look at every legal means we have to try to put that balance more on the side of taxpayers.

    I’m not suggesting that we restrict collective bargaining, but we should certainly have the conversation about who should have what rights.

    We should at least be allowed to have the conversation.

  • Unions vs. Taxpayers – Part 1 of 2

    From the NYT a few days ago:

    Across the nation, a rising irritation with public employee unions is palpable, as a wounded economy has blown gaping holes in state, city and town budgets, and revealed that some public pension funds dangle perilously close to bankruptcy. In California, New York, Michigan and New Jersey, states where public unions wield much power and the culture historically tends to be pro-labor, even longtime liberal political leaders have demanded concessions — wage freezes, benefit cuts and tougher work rules.

    (Full story here.)

    Wow!  That the NY Times would write such a story means you know things are tough for unions.

    I’m not anti-union, I’m pro-taxpayer.  We need an environment that is pro-growth in order to overcome the massive debt we’ve accumulated over the years.  Pro-growth means pro-business.  Pro-growth means low taxes.  Pro-growth means balanced budgets, a talented labor pool, good infrastructure, and easy access to capital.

    If we’re not pro-growth then we will NOT survive.

  • Illinois’ $13 Billion Deficit Took Years to Produce

    The legislative session that began today as the House convened will take aim at a budget deficit of at least $13 billion, including a backlog of more than $6 billion in unpaid bills and almost $4 billion in missed payments to underfunded state pensions.

    The fiscal mess is largely of the lawmakers’ own making, and failure to address the shortages threatens public schools, local governments and other public services, said Dan Hynes, the state’s outgoing comptroller.

    “We’ve reached a very critical and concerning point,” Hynes said in an interview in his Chicago office, with packing boxes stacked in the corner. “What’s missing right now is a general understanding by the public of where we are, of how bad it is, and what the fallout would be if we don’t deal with it properly.”

    (Full story here.)

    Hey Dan, I agree with you.  But where have you been for the last four years?  Now that you’re out you’re going to claim that “lawmakers” are responsible?  Let’s just call them “politicians” because that’s what they are.

    The full story is worth reading.

    What the public may not appreciate, Wall Street does. Illinois shares with California the lowest U.S. state credit rating from Moody’s Investors Service, which in September forecast possible “further financial deterioration.” Unlike California, Moody’s assigned Illinois a negative outlook.

    Illinois’s deficit, about half its $26 billion general-fund budget, puts it among the U.S. states confronting $140 billion in shortfalls in the coming fiscal year after closing $160 billion in gaps this year, according to the Center on Budget and Policy Priorities, a Washington research group.

    In other words, we’re in real trouble.  Sufficient trouble that people in the know, like maybe the State’s comptroller, should have been screaming bloody murder years ago.

    Hynes’ puffing now is just too little too late if you asked me.

  • Abu Dhabi Shares Profits From Parking Meters

    In fact, a Chicago News Cooperative investigation has found that investment arms of the oil-rich Abu Dhabi government hold more than a 25 percent stake in the company that privatized the city’s 36,000 parking meters. German financial company Allianz also has a large minority interest, and the remaining 50.1 percent is held by partnerships assembled by Morgan Stanley.

    The participation of Abu Dhabi’s sovereign wealth funds and other international investors exposes the level of sophistication of the money behind the city’s parking meter deal. Mayor Daley and other proponents of the contract argue that it is too soon to know if the parking investors will enjoy solid returns, but the players in the Chicago parking company are known for their acumen for profitable long-term deals.

    (Full story here.)

    Kudos to the Chicago New Coop in breaking this story wide open.

    This deal just keeps getting worse and worse.  It’s clear that no one in city government knows anything about putting deal together.  Da Mare and the city counsel simply got played by professionals on this one.

    This is a continuing example of why the city should not lease assets.  There is no one capable of doing the background work necessary to make sure these are good deals.  As such, all should be avoided.

  • Parking Meter Rates Going Up

    The rates will soon go up for people parking in the city.  Electric pay boxes will begin charging $5 an hour in the downtown area, up from $4.25.And it will cost $3 an hour to park on streets outside the downtown area.  The rate increase will go into effect Jan. 1.  As part of the controversial deal to lease the parking meters, LAZ Parking were given permission to increase rates every year for the first five years of the arrangement.

    (Source.)

    This is a nice New Year’s reminder that everyone who voted for this is an incompetent buffoon.

    The more the rates go up — the worse this deal is for the city.

    It’s just that simple.  Not one person did the math on this.  My belief is that not one — not a single alderman — understands the concept of time value of money.

  • Your in Debt, Your Children are in Debt

    Tribune ran a great story this week about how the city is hopelessly in debt.  The story is worth reading and can be found here; but what’s really interesting is a chart (actually a series of charts) attached to the story.  Here’s what you need to know:

    • Chicago’s cash debt is about $6,87 Billion or around $2,371 per person.
    • We know from previous stories that our past due pension obligations are apx. $7,000 per person

    So your total CITY obligations are about $9,371 per person.  This naturally does not take into account continuing interest on the debt, the 2010 city budget, or ongoing pension obligations.

    The people of this city have a choice, they can bury their head in the sand and continue to elect these numb-skulls or do what’s necessary to turn this place around.

    We know from today’s previous story, that raising taxes will only scare people and job creating businesses away.  We need pro-business, pro-middle class tax policies and we need them now.