Editor Veronica Anderson

What does Texas have that Illinois does not? Several freshly signed tax and school finance reform laws that will inject billions of dollars into the state’s public education system. The long-overdue solution relies on a tax-swap—more taxes on business and less on property—and an increase in cigarette taxes.

Some of the money is earmarked to pay for raising teachers’ salaries and policy initiatives such as higher graduation requirements that Illinoisans put in place long ago.

Politicians in Austin are patting themselves on the back, elated that their lengthy battle to find an equitable way to fund schools, sparked by a court-imposed deadline and ultimatum, is done. For now. The solution they found is not a perfect one, of course.

While the business tax is broad based, it will not generate enough revenue to cover the cost of new programs, according to the Center for Public Policy Priorities, a nonpartisan research group focused on the needs of low- and moderate-income Texans. Nor will it grow as fast every year as the forgone property tax revenue would have. In just a few years, the state may face a school funding deficit in the billions, says researcher Dick Lavine in a report.

Meanwhile, back in Springfield, Gov. Rod Blagojevich was feeling the pressure to do something about funding education, too, but for very different reasons. Breathing down his neck was state Sen. James Meeks, who had threatened to run against Blagojevich unless the state coughed up more money for schools. Having already painted himself into a corner by renewing a read-my-lips pledge not to raise taxes in his bid for re-election, Blagojevich hatched a shocking school funding plan.

He would sell the lottery and use the billions of expected proceeds to pay for a cornucopia of new and necessary programs, from further expansion of preschool and full-day kindergarten to teacher mentoring and creating new schools. There would even be enough for construction projects. But from the moment the plan was announced, questions have been raised, and recently, Illinois House Speaker Michael Madigan, who’s also a co-chair of Blagojevich’s campaign, posed some tough ones in a letter to the governor.

* How will school districts and the state cope with financial craters left after the initial $4 billion windfall has been spent and annuities from the remaining $6 billion investment have expired?

* How did the state arrive at its $10 billion estimate for proceeds from the lottery’s lease or sale?

* Have other states considered similar deals, and if so, how much did they determine their lottery was worth?

* If the pitch to sell the lottery to private operators assumes higher revenues, is there a way for the state to “unlock that value by keeping the asset and doing a better job managing it?”

“Your multifaceted, far-reaching plan would have profound long term consequences for state finances and schools,” Madigan writes. “It deserves serious consideration.”

About year ago, I suggested that a statewide bingo game would do as good a job funding schools as any of the gaming proposals the governor kept coming up with. This time, he’s offering a twist: Cash out of gaming altogether, and spend it all on schools.

In dramatic fashion, Blagojevich will create the kind of crisis in Illinois that the courts created in Texas. Sell a revenue source that generates $600 million a year for schools, start a bunch of new programs that cost a lot more money and use the windfall to pay for them. In a few years, Illinois schools would be facing a bleaker financial picture than they do now. Mayor Richard Daley is biting the bullet once again locally, allowing the School Board to raise property taxes to the limit for the next fiscal year.

Will Springfield ever learn?

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