“Rome is Burning”
Reader alert/warning—another state budget impasse column!
There are reports that Illinois State Senate leaders from both political parties are close to unveiling a tax increase proposal that would raise about $5 billion a year to address the lack of a balanced state budget.
Unfortunately, this alone will not get the job done. Bitter medicine, probably undrinkable to most, is required to rescue the state.
Our lawmakers have never contemplated actions—all politically painful—of the magnitude the economists suggest will be necessary.
I recently wrote a piece for the Taxpayers’ Federation of Illinois, a business group, in which I review a paper by state budget experts David Merriman and Dick Dye. The two economists say the state has a $13 billion gap between $73 billion in annual expenditures and $60 billion in revenue.
They project the state will have to raise at least $7.6 billion more in annual revenue and make draconian, progressively larger cuts in state spending over 10 years in order to bring the state’s fisc back into balance.
[The situation is probably even worse than the economists suggest. Their projections do not include a plan to pay off $12 billion in unpaid bills, and they also project highly optimistic future state economic growth.]
History suggests Illinois elected officials can resolve big fiscal problems—if everyone works together.
During the Great Depression of the 1930s, the legislature met almost continuously. A bi partisan, two-thirds majority of legislators ultimately responded to Gov. Henry Horner’s plea to enact a new sales tax (while scotching the statewide property tax) to meet a relief crisis facing more than a million unemployed.
In 1969, political adversaries Gov. Richard Ogilvie and Chicago mayor Richard Daley worked behind the scenes throughout a six-month legislative session to fashion a bi-partisan majority for a new income tax.
(By the way, a green-as-grass new legislator that year, I voted for the income tax and was re-elected—without opposition—a year later. In today’s brutal, name-calling political environment, no lawmaker who supports tax increases could expect anything other than to be skewered by the opposition in a re-election bid, which is part of the present problem.)
The present political environment is more much divisive, “toxic” is a word I see used often, than it was in those earlier days. Back then, each side’s political top dogs actually talked to one another, something our governor and House speaker have not done in more than two years.
If lawmakers cannot stomach more than $5 billion in tax increases, then spending cuts will have to be even more severe than Merriman and Dye suggest, if the fiscal situation is ever to be stabilized.
The economists dismiss cuts, for example, in most of the state budget, to include pensions, Medicaid, distributions to local governments and K-12 education. They say these programs are protected, respectively, by the courts, the federal government and political popularity.
I think, however, each of these “protected” areas has to be cut, at least somewhat. Lawmakers will almost certainly look at sleight-of-hand savings to the state budget, which would simply shift present state burdens to local governments.
This might include devolving the “normal cost” for teachers’ pensions to the local school districts (“save” close to $2 billion in state spending). Lawmakers could also reduce income and sales tax dollars that now go automatically to municipalities and counties (pick a number from the $3.5 billion total in annual distributions).
But then how could lawmakers justify a property tax freeze on those governments, something the governor insists upon?
And even though state funding for higher education has been cut in recent years, the sector still stands out there, unfortunately, as a target atop a fence post, subject to more cuts. Public colleges and universities will have to reinvent themselves to live with less. To save the diamonds, many programs, maybe even institutions, will have to be down-sized, even shuttered.
University of Illinois president Timothy Killeen has cried from the heart, “Rome is burning.”
Yet the University of Illinois can still be anything—but not everything—it wants to be. And state employees will have to accept freezes on their pay and at the same time kick in to their health care coverage.
Even if all the above, excruciating cuts are made, I don’t see the total adding up to anything close to the $8 billion or so needed (a $13 billion gap at present between spending and revenue, minus say $5 billion in new revenues) to stabilize the fiscal situation.
The bottom line is, painful for me to write, that Illinois will have to adjust, for some years to come, our once-towering aspirations for greatness to the humble mediocrity of our circumstances.
