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 With the inauguration of Gov. J.B. Pritzker on Jan. 14, outgoing Gov. Bruce
Rauner will leave the keys to the governor’s mansion with another first-time
officeholder.
But that isn’t all the state’s 43rd governor will inherit.
While the name on the office letterhead will be new, the scope of fiscal hurdles
facing the state remains unchanged. Illinois’ growing unfunded pension liability
inched upward to nearly $134 billion from $130 billion, the Commission on
Government Forecasting and Accountability reported in November. And the state
comptroller’s records show a backlog of unpaid bills standing at $7.5 billion.
Despite two historic income tax hikes – one in 2011 and another in 2017 – the
state’s fiscal condition has only worsened.
Illinois’ biggest budget problem is its people problem. In December, U.S. Census
Bureau population data revealed that residents fleeing the state had caused
Illinois to shrink for its fifth straight year. Illinois’ lackluster economy –
due in large part to a punishing tax burden – is the primary driver of residents
leaving for greener pastures. Paul Simon Public Policy Institute polling has
shown repeatedly that high taxes are the No. 1 reason Illinoisans wish to leave
the state.
Illinois’ newly inaugurated governor enters office faced with a choice: Take the
necessary, albeit difficult, steps toward restoring the state’s finances, and
creating path toward relief for taxpayers – or hike taxes and kick the can
further down the road, saddling future Illinoisans with massive debts. Here are
five reforms Pritzker could pursue to put the state on a path to recovery:
No. 1: Pension reform
Illinoisans shoulder among the highest property tax burdens in the nation. The
main cause? Unsustainable growth in pension costs for government workers.
Pension reform must be the highest priority for the Pritzker administration upon
taking office.
The Illinois Supreme Court’s strict interpretation of the Illinois
Constitution’s pension clause has driven the court to strike down even the most
modest pension reforms – even as high pension costs crowd out core government
services across the state.
That’s why it is a moral imperative for state lawmakers to muster the political
will to amend the Illinois Constitution, as states such as Arizona have done and
as Chicago’s mayor has recommended.
A sensible constitutional amendment would protect benefits that have already
been earned by government workers, while allowing for adjustments to the future
growth in benefits that have not yet been earned – such as 3 percent compounding
benefit increases throughout retirement.
No. 2: School district consolidation
Another reason for Illinoisans’ daunting property tax bills is the extraordinary
number of local government bodies they’re supporting. For example, Illinois is
home to nearly 860 school districts, the fifth-highest total in the nation.
Meanwhile, those districts serve the fifth-lowest number of students per
district, which suggests Illinois taxpayers are paying for an overabundance of
administrators who have little to do with the classroom.
That comes at no small cost. Illinois ranks 8th in the nation in administrative
spending as a percentage of education spending – meaning a substantial chunk of
money meant to improve student outcomes never reaches the classroom, and goes to
district-level boardrooms instead.
Consolidation of school districts, which involves trimming bloat at the
administrative district level, should not be confused with the consolidation of
individual schools – which is not often a desirable policy.
By consolidating school districts, overhead would drop, more resources would be
freed up for the classroom and local leaders would be empowered to take
immediate steps toward property tax relief.
No. 3: Local government consolidation
Beyond just school districts, Illinois is overrun with units of local
government. At nearly 7,000 of them, Illinois is draped in more layers of
government than any other state in the nation. These layers include townships,
park districts, mosquito abatement districts and more.
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Many of these government units overlap, and often
wastefully perform identical services. In addition to excess
taxpayer costs, too much government provides refuge for waste and
abuse: The McHenry County state’s attorney opened criminal
investigations into three separate townships in the county this
year. Following one of the investigations, the state’s attorney
described the “flawed” township form of government in a report as
hotbeds of “incompetence, guile and impropriety.”
In an October interview with the Northwest Herald, then-candidate
Pritzker referred to Illinois’ volume of government as “highly
inefficient,” suggesting he’d support local consolidation efforts.
Last year, a bill seeking to make it easier for McHenry County
taxpayers to dissolve their townships at the ballot box enjoyed
overwhelming bipartisan support, passing unanimously in both
chambers of the General Assembly. Unfortunately, due to what was
reportedly a clerical error and Rauner’s amendatory veto, that bill
is effectively dead.
Pritzker should work with lawmakers this year to revive the
bipartisan push for local control over government consolidation –
and expand those powers to taxpayers in all Illinois counties.
No. 4: Constitutional spending cap
State lawmakers gave Illinoisans cause for optimism in 2018 when the
Illinois Policy Institute’s proposed constitutional spending cap
found support on both sides of the aisle. On April 26, state Sens.
Tom Cullerton, D-Villa Park, and Michael Connelly, R-Naperville,
held a press conference endorsing a spending cap amendment to the
Illinois Constitution.
State spending grew 25 percent faster than Illinoisans’ personal
incomes between 2005 and 2015. And when spending grows faster than
taxpayers’ ability to pay, tax hikes and debt come next.
A smart constitutional spending cap would limit the growth in state
spending by tying it to the rate of growth in the state’s economy,
allowing the state to rehabilitate its finances without the need for
future tax hikes. Moreover, it would provide long-term certainty
about the state’s tax climate, making Illinois a more desirable
destination for families and businesses.
No. 5: True balanced budget amendment
Illinois holds the distinction of worst credit rating in the nation.
It’s hardly a mystery why: The Prairie State has not passed a truly
balanced budget since 2001, despite the state constitution’s
requirement to do so. The state’s fiscal condition only worsened
between 2015 and 2017, when for two years the state failed to pass a
budget at all.
When the General Assembly passed its budget for fiscal year 2019,
lawmakers declared a bipartisan victory. But that spending plan
remains out of balance by more than $1 billion, and it does nothing
to address the state’s severe, structural debts.
Springfield’s budgeting process is broken. One key reason for this
is that the state’s balanced budget requirement is “prospective,”
meaning revenues and expenditures need only match during the
planning stage. If unforeseen midyear costs push the state
overbudget, deficits simply carry over to the next fiscal year.
Pritzker should work with state lawmakers to change that by
strengthening the state constitution’s balanced budget provision to
require “end-of-year” balance, as opposed to prospective balance.
End-of-year budgeting practices, which prevent deficits from
carrying over, are used by nearly 40 U.S. states and would go far in
keeping Springfield from spending more than it takes in.
Establishing a sound budgeting process would be a significant step
toward restoring taxpayers’ confidence in their state.
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