 In his Feb. 15 budget address, Gov. Bruce Rauner called for $32.7 billion in
revenues versus $37.3 billion in total spending for fiscal year 2018. The
shortfall, totaling $4.6 billion, is to be filled through negotiations on a
“grand bargain.” The governor wants to reach a compromise with the General
Assembly on a combination of cuts and revenues that equals $4.6 billion. If they
can’t reach a compromise, Rauner wants the General Assembly to give him the
authority to directly cut the budget.
But while the governor spoke against relying solely on tax hikes to balance the
budget, demanded a permanent property tax freeze, and supported a strict
spending cap, his proposal still falls short of providing the spending reforms
necessary to avoid a tax hike altogether.
The governor delivered his speech nearly two years into Illinois’ operating
without an official state budget. The current budget gridlock and political
impasse are the culmination of decades of fiscal mismanagement by Illinois
politicians.
Avoiding tax hikes is an absolute necessity for Illinois. Illinoisans already
live under one of the highest tax burdens in the country – including some of the
nation’s highest property taxes. Residents are already leaving in record
numbers, and some cities are already in or near recession.
Major spending and structural reforms are necessary: so skyrocketing pension
costs don’t continue to be prioritized over social services; so bloated college
and university administrations aren’t prioritized over low-income students; and
so the bureaucracies of Illinois’ 7,000 units of local government aren’t
prioritized over seniors struggling to pay the property taxes on their homes.
Here’s where the governor must improve on his initial proposal:
Reject a $4.6 billion tax hike
Illinois is suffering from a perpetual spending problem. The governor is correct
to say that Illinois cannot tax its way to economic prosperity. The state must
balance its budget without inflicting massive tax hikes on Illinoisans.
But by leaving a shortfall of $4.6 billion, the governor’s budget leaves open
the possibility for the General Assembly to put a $4.6 billion tax hike on his
desk – which he should veto. The governor must eliminate that possibility by
implementing more structural spending reforms.
The budget needs more spending reforms
The governor’s budget includes some good state worker health care and
procurement reforms. Those savings, among others, help reduce the state’s total
spending to $37.3 billion from the $39.7 billion the Governor’s Office of
Management and Budget estimated would have resulted in the absence of an
official budget.
However, the governor continues to say he is also willing to accept some
unspecified amount of tax hikes in exchange for some economic and governance
reforms.
But billions in damaging tax hikes in exchange for items such as term limits,
for example, is a bad deal for Illinoisans. Yes, Illinois should impose term
limits on politicians, but not at the expense of tax hikes. The damage of tax
hikes – more out-migration, fewer jobs and a bigger burden on Illinoisans – will
far outweigh the benefits of term limits, which will come far in the future.
Illinois’ first priority must be structural spending reforms that are permanent
and immediate, not political reforms that take years to implement and offer no
change in the spending trajectory.
[to top of second column] |
 The governor’s spending reforms, for example, can be improved by
eliminating $500 million in administrative bloat and overly generous
executive pay in higher education.
Reforms can end the state’s $1.4 billion pension subsidy to school
districts and universities – subsidies that let those institutions
dole out higher pay, end-of-career salary hikes and pensionable
perks that dramatically drive up the cost of pensions.
Reforms can also reduce the state subsidies to local governments
– excluding cities with populations below 5,000 – which prop up the
nation’s most numerous units of local government and the
bureaucracies that run them, saving $1.3 billion.
And reforms can save $500 million, or 10 percent of payroll, by
finding efficiencies and eliminating waste in state government.
The budget ignores ways to reduce “automatic spending”
In his address, the governor said many reforms are difficult to
undertake because “60 percent of the state’s general revenues … are
locked up by statute.”
However, there are many ways to reduce spending on items such as
pensions and Medicaid, over and above the more difficult structural
reforms the state really needs.
Take pensions, for example. The state can significantly reduce the
cost of pensions through legislation that eliminates unnecessary
perks such as the accumulation of unpaid sick leave, end-of-career
salary spiking, and pension pickups for government workers.
With Medicaid, the state can reduce costs while improving access to
care for Illinois’ high-need families by applying more frequent
eligibility checks and leveraging competitive bidding and the
state’s high volume of purchases to negotiate lower prices for
medical equipment and prescription drugs.
Illinois needs a balanced budget and structural reforms
Illinois needs a budget that prioritizes taxpayers over politicians,
social services over pensions, and spending reforms over tax hikes.
The governor’s correct starting position on any budget should commit
Illinois to living within the state’s $32.7 billion in expected
revenues. It’s what the people can afford. The governor would then
have to sell this balanced budget to the people of Illinois.
Meanwhile, for those who want to tax the people of Illinois even
more, the governor should leave it to others to make that case
rather than enabling them.
That’s why the Illinois Policy Institute released a comprehensive
plan that, if implemented, eliminates any need for a tax hike.
The plan fills Illinois’ budget hole, provides tax relief to
struggling homeowners through a comprehensive property tax reform
package, implements pension reforms that begin an end to the state’s
pension crisis, and enacts major reforms to state spending.
The bottom line is this: Springfield politicians don’t deserve
another penny in new taxes from Illinois families.
Click here to respond to the editor about this article
|
