It’s hard to negotiate with someone who already has what he wants.
That’s the underlying but very real problem faced by Democrats in Springfield as they continue to bargain with Republican Gov. Bruce Rauner over the state budget.
Oh sure, for public consumption the new governor has his laundry list of “asks” that he calls a Turnaround Agenda. Rauner says he won’t consider raising taxes until the legislature comes through on his list. And it’s quite a list.
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He wants to let local governments create special zones where workers can partake of union-scale wages and benefits without having to join a union. He’d repeal regulations requiring union-scale pay on public works projects. He wants term limits for elected officials, more curbs on workers’ compensation claims and new limits on civil damage lawsuits. For good measure, he’d also like to freeze local property taxes.
Chances are he’s not going to get these things. Not from a Democrat-controlled legislature that has a veto-proof majority in both the House and Senate.
But consider this: A stalemate might suit Rauner’s purposes just fine. Achieving a standoff with lawmakers, even if it risks a government shutdown, is the surest way for him to head off a Democratic assault on the things Illinois’ wealthiest citizens really do need to protect.
So what’s on the must-protect list?
At the top is Illinois’ relatively low, flat-rate state income tax. A feature locked in by the 1970 constitution, the tax allows our highest-paid corporate executives to pay at the same rate — newly reduced to 3.75 percent — as the workers who scrub their floors and mow their lawns. Can’t beat that.
Then there’s the way Illinois funds its public schools — with a system that ties available funding to the assessed value of real estate in one’s school district. This way, in Winnetka, where the governor raised his kids, the high school district last year was able to spend $21,372 per student. How sweet is that?
Property taxes up there are a backdoor bargain, you see, because most homeowners can deduct them from their federally taxable incomes. The higher your property taxes and the higher your federal tax bracket, the bigger your discount. And you wondered why there’s rarely a tax revolt along the North Shore.
Then there’s the way Illinois taxes corporations. The corporate income tax used to be levied against company profits using a formula that also considered the value of its property and the number of its in-state employees — the better to gauge a company’s use of state services. But in 2001, to make Illinois “more competitive,” this was changed so as to tax only those profits gained from sales in Illinois. Our multinational firms cheered (think Caterpillar, Deere, Boeing, etc.) but our state annually loses multimillions.
That “reform” plus other handouts have lowered the share of state income taxes paid by corporations from about 20 percent in 1970 to about 15 percent last year. Actually the majority of Illinois corporations pay no income tax. Nada. Zero. Then again, many are small “Chapter S” corporations whose owners pay tax on their profits as individuals. They also tend to drive really nice, tax-deductible cars.
Point is, as the rhetoric heats up in Springfield, don’t get too stressed over whether Rauner gets, or doesn’t get, the items on his Turnaround Agenda. His public demands are mainly red meat for energizing his rabidly anti-union, anti-trial lawyer base. Likely they will be bargained away, one at a time, in return for the things our new governor and his allies really do want.
It is important, therefore, to understand what those things really are: no changes in the way Illinois treats its biggest corporations and its wealthiest citizens.
Shake up Springfield? Naah. For the fortunate few, things are pretty good the way they are. Just don’t spread it around.
John McCarron teaches, consults and writes on urban affairs.