 It is undisputed that Illinois is on the brink of financial disaster. The state
currently has over $8 billion in unpaid bills. Illinois has the nation’s worst
credit rating. And the state’s pension debt has reached $111 billion – with
one-fourth of the state’s budget consumed by government-worker pensions.
And in the midst of this crisis, the American Federation of State, County and
Municipal Employees is adamant the state spend $3 billion more in pay raises and
benefit increases for AFSCME workers.
How can cash-strapped Illinois pay for $3 billion in extra salary and benefit
demands? AFSCME leadership has an answer: Raise taxes.
In her Sept. 2 decision on the status of contract negotiations between the state
and AFSCME, the administrative law judge, or ALJ, laid out the parties’ claims
and actions throughout the negotiations. The judge cites AFSCME’s statements
dismissing Illinois’ financial plight as the union rejected contract provisions
the governor proposed, such as a temporary wage freeze.
AFSCME insisted the state can’t refuse union demands so long as the possibility
of increasing taxes exists.
From the beginning of negotiations, the state’s negotiators emphasized the
precarious financial position of the state. In fact, as early as December 2014 –
before Gov. Bruce Rauner took office – the state told AFSCME there was a $6.4
billion bill backlog and a structural shortfall for fiscal year 2015 of
approximately $1.6 billion – causing seven state agencies to project running out
of funds by June 30, 2015.
The state pointed to health care and pension pressures as a basis for the
assertion that “the parties were working in a budget situation unlike one they
had ever seen before.” AFSCME, through Executive Director Roberta Lynch, said
the state should extend the 2011-2015 temporary income-tax hike, tax the
“wealthy” and support a progressive tax structure that imposes heavier taxes on
those who “can afford to pay more.”
The ALJ noted, “As bargaining [between AFSCME and the state] progressed, the
State’s fiscal situation worsened.”
And yet AFSCME continued to ignore the state’s concerns about finances,
indicating there was “no way” the state’s fiscal crisis would be solved at the
bargaining table, and the governor should go to the General Assembly to “raise
revenues.” In other words, because contract provisions addressing the state’s
fiscal crisis would not completely fix the problem, AFSCME would not compromise
its demands for salary and benefit increases to help save costs.
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In one of its first contract proposals to the state, the union
wanted the state’s “cooperation” in advancing “revenue generating
measures” – i.e., more taxes to pay for AFSCME’s demands. Those
measures included 1) expanding the state sales tax base to include
consumer services to “stabilize revenue generation and put sales tax
policy more in line with the modern economy,” and 2) a Fair Tax
constitutional amendment that would place a greater tax burden on
the “affluent.”
AFSCME also argued during the hearing that the state “cannot
legitimately contend that [it] is broke” because there are tax
avenues available – specifically, renewing the temporary income-tax
hike.
This push to raise taxes – in order to cover AFSCME’s unreasonable
contract demands – shows the union’s contempt for taxpayers and
obliviousness to economic realities. First, Illinoisans are already
overtaxed. A 2016 study showed Illinois has the highest median
property-tax rate in the nation. Since 1990, residential property
taxes have grown 3.3 times faster than median household incomes in
the state. Property taxes are going up, while Illinoisans’ incomes
remain virtually stagnant.
Lynch also turns a blind eye to the fact that jobs and people are
leaving Illinois. Just this week, the Illinois Department of
Employment Security announced that the workforce shrank by 22,000
people in August. And more people are leaving Illinois than are
leaving any other state in the region. In fact, Illinois is losing
one person to out-migration every five minutes. Fewer jobs and
increasing out-migration mean an even bigger tax burden on those who
remain working or living in the state.
And of course, Lynch ignores the fact that Illinois state workers
are already the nation’s highest paid state workers when adjusted
for cost of living. Yet, AFSCME leadership wants to raise taxes to
cover contract provisions beyond anything typically offered in the
private sector.
AFSCME isn’t recommending taxes be raised to cover important
government services. It wants taxes raised to fund the union’s
increasing salary and benefit demands.
Ironically, Lynch stated during negotiations that she thinks it is
“wrong to only think of people as taxpayers.” But of course, she
wants those taxpayers to cover the cost of AFSCME’s demands.
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