Oak Park D97 Committee Shuns Local Businesses

Local pro-tax hike group goes outside Illinois to purchase cheapest and tax-free items to support said tax hike.

We know where the Committee to Support Oak Park Schools stands on education…on top of a large pile of cash. The local organization behind the successful passage of both D97 referenda that will add $74 per $1000 in property taxes (most OP homes tax between $10-15,000) to every homeowners’ property tax bill was quite adamant how we should all support our schools and art and music programs with open arms, minds, and wallets. We were thoroughly warned of plummeting property values if we didn’t vote “Yes Yes” to raise both operating expenses and issue bonds. But when it came to sourcing the very items that promoted their progressive message, did the Committee support Oak Park businesses?

According to their report filed with Illinois State Board of Elections, the response you hear echoing in the Eisenhower Canyon is a resounding NO. While the Committee spent nearly $15,000 promoting their agenda, a large portion of their “Yes Yes” swag came from out-of-state vendors:

1) $5,016 for signs from New Hampshire. Those who denounce Illinois’ flat state income tax as “regressive” might be interested to know that New Hampshire doesn’t even have a state income tax*. Furthermore, Big Daddy’s Signs doesn’t charge sales tax.

2) $1,373 for from printing services from Queens, New York. Perhaps a referral from Run DMC?

3) $1,386 for promotional items from Ohio (another purchase exempt from sales tax) and Texas (a right to work state with no state income tax).

I find it hard to believe these items could not have been sourced within Illinois. Signs Express is 3 blocks away from Irving Elementary. Logan Square’s Busy Beaver Button Company is 4 miles away from Hatch Elementary. Considering all the rhetoric the pro-referenda crowd spread how Illinois is America’s deadbeat dad of school funding, it seems a bit callous to purposely eschew the very local businesses that employ the working families that provide the tax revenues that fund our schools. How delightfully ironic that the Committee basically took the “school voucher” approach to advocate for more education funding.

When the next inevitable school funding shortfall comes up again at ReferendaFest 2021, instead of marching the kids around Scoville Park, let’s lead them towards the Harrison Arts District and local music shops. Perhaps they deserve our arts and music funding more than D97. At least we’ll be shopping local.

* New Hampshire only taxes dividend income. 

The Not-So Center for Tax and Budget Accountability

Whoever loves the law and sausages should never watch either being made.

This quote crosses my mind when I think of Ralph Martire’s Center for Tax and Budget Accountability (henceforth referred to as the CTBA).  The CTBA has been peddling their sausage in Illinois for years. But once you discover the ingredients of that organization, it explains why all its offerings taste the same. And why, in this case, it’s good to know how the sausage is made.

First, a little background. The Center for Tax and Budget Accountability was “formed in 2000 to be a bipartisan, nonprofit research, and advocacy think tank that works across ideological lines to promote social and economic justice for everyone, from traditionally disadvantaged populations to the middle-class.” You’d be hard-pressed to find a nobler cause for a not-for-profit, right? Actually, not that hard-pressed, as most NFP’s have similar mission statements (advice: always mention “children”).  In a nutshell, they produce financial analysis and reports ranging from opinions on how taxes should be structured in this state to the reality of budgets proposed by the Legislature as they pertain to state law.

The CTBA is run by Ralph Martire, its President and Executive Director. You might have seen him on WTTW’s Chicago Tonight debating against the Illinois Policy Institute on various issues. He frequently appears as a guest columnist in various media outlets statewide. Mr. Martire even has appeared on the State House floor, offering his fiscal opinion to Legislature on various matters. He has the ear of many elected politicians. Needless to say, Ralph Martire knows his way around Illinois government.

So what’s the problem? As I highlighted above, the CTBA portrays itself to the public as “bipartisan”. Numerous media outlets will also introduce them as bipartisan. When folks hear “bipartisan”, they typically think objective, balanced, unbiased. And if Mr. Martire is going to be omnipresent in all tax-related discussions in this state, I think it’s important to know when CTBA allegiances stand. Is the CTBA unbiased? Are they balanced? Let’s find out…

Who’s at the top?

A good indicator of a balanced organization is often reflected in their Board of Directors. Upon review, you’ll see the CTBA Board reads as a who’s who of public sector influence:

There are others, but I’m spent, and I haven’t even gotten to the CTBA’s funding yet. But you get the idea, right? These folks are members of organizations that are all long-time cogs of the failed political machine in this state. They all have a vested interest in keeping the status quo that got Illinois into this fiscal vortex. Diversity of thought, as far as CTBA leadership goes, is definitely lacking here.

Biparti-whaa?!?!

So how bipartisan are the organizations that fund the CTBA? According to OpenSecrets.org, Democrats rule the day in the public sector union support, and it ain’t even close. And if the ISBE database had a decent query function, I could show you just how one-sided the local affiliates truly are. But it appears as though the only time the IEA, IFT, AFSCME, or SEIU has ever shown significant support for a Republican candidate in recent times was when they dumped over $1,000,000 in less than one month into the ‘Dillard for Governor’ primary campaign in 2014. But that was a thinly veiled attempt to hijack the election by picking both candidates, not an exercise of bipartisanship. If anything, it was an attempt to stack the deck against independent voters who deserved a choice in their government.

So the organizations represented on the CTBA Executive Board almost exclusively support the Democratic Party. Can an organization overcome this extreme partisanship and bias of thought? Do they have motivation to break out on their own? Let’s find out…

Who’s really paying CTBA’s bills…

Most of CTBA’s funding can be accounted for using the following sources:

What was revealed was a long paper trail of public sector funding at both the state and national level:

  • American Federation of Teachers (AFT) and 3 of its Illinois affiliate’s (IFT) PAC funds (COPE)
  • National Education Association (NEA) and its Illinois affiliate’s (IEA) PAC fund (IPACE)
  • AFSCME Local 31 (their national apparently doesn’t give a crap)
  • SEIU National HQ and 3 state affiliates – Healthcare IL/IN, International Illinois Council (WTF is that? “International” as in worldwide or House of Pancakes?), Local Union 73

In fact, from 2008-2013, nearly two-thirds of all CTBA revenue was derived from just the “Big Four” public sector unions: NEA, AFT, SEIU, and AFSCME:

CTBA contribution summary

Also, one of the detailed transactions reveals the following:

CTBA ISBE 2

Financial contract?! With the teacher’s union? Pray tell what unbiased and “bipartisan” findings may we expect to find in a financial report derived from a contractual commitment with an extremely partisan organization, paid for by that extremely partisan organization, all while that extremely partisan organization is entirely dependent on tax revenue?! I’m wagering the IEA does not enter into “financial contracts” with think-tanks that promote prudent spending or fiscal restraint. This line item alone reveals extreme bias and pressure on the CTBA to produce contractually-bound, union-friendly results.

The only major non-union contributor is the Woods Fund of Chicago, whom I would consider the most bipartisan supporter of CTBA activities. Although, for you conspiracy theorists out there (of which I am not one), you might remember this was the organization with the Obama-Ayers-Weather Underground-terrorist connection. Regardless of your political beliefs on that topic, Woods appears to do a good job of spreading its wealth amongst many needy organizations. However, the CTBA did receive $130,000 over the years from Woods as the “fiscal agent” for A+ Illinois (see sample below). But A+ Illinois was nothing more than a cheap knock-off union storefront, much like its incestuous offspring A Better Illinois, in which the public sector unions attempt time and time and time <deep inhale> and time and time again to hide behind an altruistic name in the pursuit of tax hikes on working families or to deny taxpayers freedom of choice. So if Woods is funding union shell corporations, can we view them as bipartisan? Maybe not.

CBTA Woods

So by adding the contributions from these 5 organizations, plus smaller contributions from the Chicago Community Trust and Economic Policy Institute (another AFSCME/SEIU funded venture), I’m able to account for 75% of CTBA’s reported revenue for 2008-13. Conspicuously missing are any contributions from the AFL-CIO. Perhaps this is due to their affiliate, the AFT (I know, those union tentacles spread everywhere, don’t they? It never ends. Seriously, their PAC tentacles are clutched to just about every well-moneyed political movement in IL as well. Just like those evil corporations, no?), donating large sums over the years. Or perhaps there is some other AFL-CIO not-for-profit that I haven’t uncovered yet that contributes directly.

Clearly, without public sector funding and their just as important political clout, CTBA would be severely hampered if their efforts to compile and communicate their message. Whatever the CTBA is selling, only a handful of folks appear to be buying, and those folks are in a bathroom stall at Club Blago snorting up lines of your savings with rolled up tax dollars.

Putting the pieces together

The dependence on union funding makes the CTBA the de-facto financial think-tank of the public sector unions and reveals a undeniably heavy bias towards policies that benefit those unions. In a nutshell, these unions, entirely dependent on tax revenue for their survival, pay Mr. Martire to produce reports calling for higher taxes. The CTBA “bipartisan-ship”, if it ever existed to begin with, officially sunk long ago. How can someone claim to be bipartisan when the outfits paying their bills are completely partisan? I would give them more credit if they just were more upfront on their true stance. But I’m guessing “Union Financial Arm Says Higher Taxes Only Way Out” or “‘Higher Taxes Necessary’ States Group Paid by Taxes” headlines are lacking the subtlety the unions are accustomed to. The CTBA wants a balanced, unbiased status yet has done nothing to earn it. Their portrayal of their own views and motivations are disingenuous. Recently WTTW’s Chicago Tonight went as far as to refer to the CTBA as “left-leaning” (did Phil Ponce really read my tweet?). I counter the CTBA is not merely leaning left, but completely horizontal…in bed with the union johns that pay them.

And where is the expense analysis in all this? The CTBA sure has plenty of opinions on how to increase taxes, but very little recommendations on how to reduce expenses. Where are the proposed process improvements across various levels of government? Cost savings and efficiencies? Elimination of duplicative services? And Mr. Martire’s solution for the pension mess? Merely amortize the debt over a longer period of time so that yet another generation or two that did not consume these services have to pay for them! Yes, by all means, stretch those payments into an extremely flawed system even further into the murky future. What better way to hide the true cost of both past and future services while simultaneously covering your benefactors’ collective asses. Suze Orman would throw a fit if she heard that plan (WWSOD bracelets, green: $3). I believe this is the same business model used in the rent-to-own furniture industry. The sheer pomposity of such a CTBA FMJ Donutstatement should send a shiver down any Millennial’s spine. Once again, they eat it, we pay for it.

Forget state expenses for a moment…how about speaking up for the union members whose dues are paying CTBA salaries? Where’s the analysis for progressive union dues where new members at lower salaries pay less than their end of career salary-spiking and seniority-protected brothers and sisters? How about redistributing higher pensions towards lower pensions, just like Social Security does? Wouldn’t that align with the CTBA’s “social and economic justice for everyone” creed? <crickets chirping> Sorry, how foolish of me, that’s not Other People’s Money.

The Center for Tax and Budget Accountability is all T with sprinkles of B and little regard for A. And the C should be dropped entirely.

But aren’t their numbers right?

This is the pre-recorded response to all criticism of CTBA analysis. But aren’t their numbers right?! Tell me where their numbers are wrong! But that is the wrong question to ask because that is not the exercise here. Their task is to back into a pre-determined revenue level that will support their patrons’ laundry list of financial requirements. To the CTBA, the average taxpayer is nothing more than a cell in a spreadsheet, the veritable ghost in the Illinois tax machine with bottomless pockets. There is no revenue problem the CTBA has encountered that cannot be solved by increasing a percentage amount in Column E in their ‘RaiseTaxes.xlsx’ file. What’s that you say? There are less people in the $75,000-$100,000 tax brackets in the proposed progressive tax plan, so IL might miss the revenue target next year? No matter, just raise that tax rate <seven…decimal…five…ENTER…problem solved!>.  There are countless ways to back into a projected revenue number. That’s all that’s happening here.

Make no mistake, CTBA knows the funding laws (such as minimal required funding for healthcare by the federal govt), contractual commitments to labor unions, and constitutional guarantees (pensions). But the labor laws were written with a heavy-hand from union lobbyists as to provide little-to-no flexibility to responsibly manage finances under those funding rules. Add political giveaways over the years such as pension system enhancements (compounded COLA, ERO…PS – If everyone is knocking each other down while running towards the exits to take your early retirement package, you might have set the price a wee bit too low, eh?) whose financial impacts were never properly vetted and, once offered, could not be scaled back. Then once everything is all “legal”, the unions send in their financial think-tanks to propose new tax rules that conveniently tie to the labor laws they and their political “partners” drafted. Conforming your numbers to statute, especially when you have a hand in crafting the laws, is easy. Growing an economy to support those numbers is not.

Of course the numbers are right, when given without context. When your solution is to raise the price of a service in which the consumers have no choice but to pay for that service, and you bear no responsibility to improve that service, it’s hard not to be right. That works on a technical level, not so much a practical one.

So don’t address the numbers. Address the context in which they are given. Therein lies the truth.

The end game

The play here is obvious: Hide under the guise of “working families” to promote a heavy union agenda with the illusion of bipartisanship. (And while we’re on the topic of working families, unless you’re on the bottom rungs of the earnings ladder or a union member, you’re not what the CTBA considers a “working family”. Busting your butt resolving network issues at your company at 4am? Small-yet-slightly successful small business owner working 18 hour days? Just graduated med school with a mountain of student debt? Working in a pharmaceutical lab? Tough crackers…none of those qualify as “working families” in the eyes of the CTBA or the public sector. It’s time to take back ownership of the “working” narrative these organizations usurped from the individual taxpayer. But that’s a topic for another time…)

Every tax proposal the CTBA comes up with is a tax hike. Sure, they’ll market it as a deduction, but only because their plans are based on higher tax rates that have since expired. Even its kissin’ cousin, the “fair tax” pitched by A Better Illinois and its puppet Senator Harmon, was a complete sham. That too was pitched as a “tax cut on 94% of taxpayers”. But if you read the fine print – the fine print the unions and their puppet politicians hawking this plan never called out in the media – it revealed that the plan was based on the expiring 5% tax rate. When you compare that tax plan to the current 3.75% tax rate, their plan amounts to a tax hike on nearly every single taxpayer in the state. That’s not what I would call fair. Or transparent. Or ethical. Notice how we have yet to see a revised progressive tax plan from any of these union progeny scaled to the current 3.75%, one which could indeed provide a tax cut on the 94%. That’s because it doesn’t fit the union narrative.

The end game is all too clear…the unions, and their paid-for politicians, want the ability to continually raise taxes on what they deem higher income tax brackets to back into their yearly budget numbers in a constant expansion of spending with minimal accountability. It’s all too obvious. The way they’ve structured it makes it easy to do. Look at page 10 of the CTBA plan again: merely 20% of the individual tax returns filed would account for 80% of the state individual income tax revenue (That scary stat alone shows you just how much of the tax burden can and will fall on most mid-to-mid/upper class folks. And congrats to those making over $50K as you’ve a proud member of the ‘33% of the IL taxpayers paying 90% of the state income taxes’ club.). So it would be relatively easy to continually raise taxes in these brackets – essentially smaller segments of the voting public – and have little impact on election results.  Well, the ultimate impact might be a decline in the population that’s already paying most of the bills followed by the inevitable “trickle down” of higher taxes on lower incomes. But that is not the unions’ concern, nor the CTBA’s. Not when they can back into your their target numbers. Not when the taxpayers can be reduced to a number or a financial experiment in the unions’ dirty petri dish. Isolating and suppressing individual rights is what is really at stake here.

Look, you don’t have to be pro-union to be for a progressive tax structure. But shouldn’t you at least practice what you preach? The outfits funding the CTBA and shoving their progressive tax plans down our throats are regressive with their own funds – from their flat dues to their flat pensions to their flat COLA’s. The unions complain that Tier 2 of the pension system is a drastic reduction of retirement benefits when compared to Tier 1, yet those same unions charge those Tier 2 members the same amount in dues as Tier 1 members! So they admit to a large compensation discrepancy for their members, yet refuse to change their own regressive dues structure to mitigate its impact. Is that equitable? Is that fair? If the CTBA and its patrons contradict the very rules they stand for when it’s their own money, why should we listen to anything they have to say about how to spend ours?! What’s good for the goose…screw the gander.

So now you have a better idea as to what motivates the CTBA: partisanship via patronage. And now you know how the Center for Tax and Budget Accountability makes its sausage.

No one said you have to buy it.

As tax hike fades, public unions rage

Ah, New Years Day. I feel 1.25% more wealthy this year. And bloated. 1.25% more wealthy and bloated. Usually after the holidays, it’s just bloated. But not this year.

Cold. Hard. Cash. That’s not the sound of pennies janglin’ in my pocket. No siree. Those are actual quarters. Look out NBA Jam, I’m coming for you, and this time, I’m the Indiana Pacers. Detlef All Day.

detlef

The <taxpaying> citizens of IL received a New Years Day gift this year. Well, I guess when something is supposed to happen as scheduled, planned, and promised – even though some people fight vigorously to back out of said schedule, plan, and promise –  is it still really a gift? Maybe this is how Sweetest Day came to be?

The IL state income tax hike was PARTIALLY rolled back to 3.75% from 5% on January 1. This would not have happened if the voters of this state didn’t tell Quinn to pack up his rusty reel lawn mower and go home. You see, Gov. Temp-to-Perm-to-JustGoAwayAlready wanted to make the tax hike permanent, but the citizens said “how about NO.” It was a minor win for the working folks of this state. But I’ll take minor wins. I’m used to it…I lived through the Dave Wannstedt years.

You and I may be happy, but our favorite local public unions and their retirees are surely not. They are aghast…AGHAST, I SAY…that the tax rate went down. Especially the retirees, who continue to back tax policies that keep rates 67-100% higher than when they worked. Or they’re all for a progressive income tax that violates the document they hold so sacred…the Illinois Constitution. And with this rollback, all those progressive tax rates floated out there pretty much amount to tax hikes for everyone (funny how no new alternate progressive tax plans based on the current tax rates have been proposed, huh?). Well, almost everyone…

You see, our state pensioners are NOT taxed by the state. Illinois is in such financial peril, yet not one single plan endorsed by any public union calls for taxing retirement income of ANY form. When I say retirement income, I really mean THEIR pension income. According to the BGA, there are 30,000 pensioners are pulling in over $80,000 in pension benefits this year. Still, the public unions can’t find a way to have THEM contribute ANYTHING? Not even progressively? Not even at all? Nope, still a big, fat, flat Z-E-R-O. Forever and ever. As a Harvard Professor is to Obamacare, our public sector unions are to fair taxes.

I have no idea how long this tax rollback will last. The over/under is 6 months. But even if that’s the case, I’ll take what I can get for as long as I can get it. Queue up the music, John Tesh. It’s been a few years, but I’m ready to play.

Introduction

Rushmore 2

2011 hit with a thud. A hard, dull thud. On my yearly salary, that is. And my wife’s yearly salary. And probably yours too. That was the time when IL raised the income tax rate 67% from 3% to 5%. We all knew how painful it would be back then, but deep down we thought, “Well, if this is going to actually help get us out of that deep hole our politicians dug for us, maybe it’s not that bad. And it’s only for a few years. After all, it’s a temporary tax hike, right? Right?!”

Now is the time where I’d inform the reader to fast-forward to today, but since we’re already here, I’ll spare you the logistical niceties. And unless you’ve carved some drawings into those dirt walls around you, you’ve probably noticed the view hasn’t changed all that much. Yes, we’re still in that hole. But at least it was a cool summer, right?

At the time when the income tax hike first took effect, IL had some unpaid bills to take care of. About $9 billion worth, give or take a few hundred million.  Luckily, we had that windfall of 30-some-odd billion dollars of additional revenue coming in from that income tax hike for the past 4 years. Whew! Problem solved…and even some cash left over for an honorary banquet for all the taxpayers of Illinois where everyone gets a cup of cream of rice soup and one scoop of vanilla ice cream in a tin cup. I mean, according to the calculator Microsoft provided with my computer, thirty billion minus nine billion equals no unpaid bills, at least as far as I’m concerned.

Well, depending on what accounting trickery you subscribe to, the amount of unpaid bills today is around $4 billion. To no one’s surprise, nearly four years later, even with billions in “found money”, the state still hasn’t figured out how to pay its bills. If Illinois was a deadbeat gambler in the movie Goodfellas, it never would have made it past Henry Hill’s childhood flashback.

What sane, responsible person budgets this way? A prudent person would have paid the old bills, balanced the budget on a rate slightly lower than the new higher rate (since it was going to expire soon anyway), then make gradual cuts to the budget to ease everyone into the new fiscal world. Lather, rinse,repeat. But that’s not how things work in the Land of Lincoln.

Now, many our politicians want to make the temporary tax hike – that same tax hike that was supposed to pay those unpaid bills – permanent.  Others want to institute a progressive state income tax on your income (well, unless you’re retired, then it still remains the very progressive big fat 0%). And on top of that, certain Chicago aldermen are recommending a municipal income tax on all the folks who live in the suburbs yet have the audacity to work in the city. Imagine if the Illinois government were a business (indulge me here). It offers the same products and services every year at drastically increased prices to fewer customers. The only new product its R&D department can develop is a new tax. And it’s all conveniently located under one, monopolistic roof. While supplies last!

For a while, I sat back and watched the carnage unfold. Then, in an attempt to educate myself on one of the biggest problems facing Illinois, the dreaded pension crisis, I came across this helpful nugget on the TRS website:

“Currently, teachers pay 9.4 percent of their salary and school districts pay 0.58 percent of its teachers’ salaries to TRS. The federal Social Security tax is 12.4 percent, split evenly between the employee and the employer. For school districts, placing teachers in Social Security would result in a 968 percent increase in taxes and contributions devoted to retirement.”

Forget the questionable math for the moment. “NINE-HUNDRED-AND-SIXTY-EIGHT PERCENT”. Who talks that way?! Wouldn’t you say “10 times” or “nearly 10 times more”? Heck, why not just round up to 1000% and cross your arms in a feigned gesture of accomplishment? And the fact I used a condescending voice in my head when I read that statement probably didn’t help the union’s case here either. This is what we’re dealing with in Illinois? They are all but begging to be challenged…

So where do we go from here? Let’s see the numbers for what they truly are. Let’s personalize the data so that the average taxpayer can easily understand the situation and relate it back to their own lives. Let’s see what vested interests want to keep the status quo and why. Let’s call out the absurdities in our state’s government in general. Let’s take a deeper dive into some concepts already being discussed and others not yet explored, such as…

  • The true cost of the income tax hike to you, the individual taxpayer
  • What our politicians are really trying to accomplish with a “millionaire’s tax”
  • How a pension stacks up $ for $ against your retirement
  • What the true employee portion of the pension contribution should be
  • The under-funding of pensions vs. the under-taxing of retirees
  • Why taxpayers assume all the risk in the pension system and don’t charge for it
  • Changing union contracts vs. changing the Illinois Constitution

And let’s try to make this fun and interesting, because our politicians are intent on keeping this boring and confusing. And they know boring and confusing leads to complacency. And complacency leads to Illinois.