Immortal Words... About Illinois Politics
Groucho Marx once observed: “Politics is the art of looking for trouble, finding it, misdiagnosing it, and then misapplying the wrong remedies.”
Politicians in Illinois don't have to look very far to find trouble:
• The National Conference of State Legislatures released a report in July 2010 declaring Illinois's financial situation to be the worst in the nation.
• Illinois's budget deficit stands at $43.8 billion and has more than doubled in the last five years. [Auditor General report, 6/21/12.]
• Illinois has unpaid bills totaling about $8.5 billion. [News Gazette, 06/20/2012.]
• Illinois has the largest unfunded pension obligations in the nation with unfunded liabilities totaling $84.2 billion in fiscal year 2012. [State Universities Retirement System of Illinois, 2011.]
Illinois politicians have diagnosed the problem: The state is spending too much. To remedy this, they are closing facilities, laying off workers, eliminating programs, screwing retirees, and slashing budgets.
Is their diagnosis correct? Is Illinois really spending too much? Let's look at some facts collected by the Center for Tax and Budget Accountability:
• Even though Illinois ranks thirteenth in per capita Gross Domestic Product among the states, it ranks forty-third in spending on public services.
• “[Illinois] has been cutting real spending on all four categories of core public services for over a decade and ranks well below the national average in critical Education and Human Service spending both in per-capita and capacity terms.”-- Center for Tax and Budget Accountability, Analysis of Proposed Illinois FY2013 General Fund Budgets, April 2012.
• “In 2006, Illinois ranked fiftieth in state funding of education.”-- Margaret Egan, Mind the Gap: Reforming the Illinois Education Funding Formula, Loyola University Chicago.
• A study by Associated Press (6/30/12) found that Illinois has the smallest number of state workers per one-thousand residents of any state in the union. (The study excluded education employees.)
According to the Center for Tax and Budget Accountability, Illinois does not have a spending problem; it has a revenue problem. Illinois's tax system does not even generate enough revenue to maintain public services at the same level from year to year, let alone improve anything.
This is not some temporary problem brought on by the recession.
• “In 2005, when other states were doing well, Illinois was one of only three states to finish the budget year with a deficit.”-- Rockford Register Star, 7/7/12.
Politicians have done nothing to improve the situation. In fact, they continue to make it worse:
• “The state hasn't had a balanced budget since 2001. It papered over its budget problems by stringing out payments to doctors, pharmacists, schools, and local governments. It diverted money designated for special purposes to pay for general operations. It borrowed money to cover its annual pension payments.”-- Daniel C. Vock, staff writer, Pew Center on the States, 5/19/11.
• “A cuts-only approach to state budget deficits is shortsighted-- imposing immediate harm on families, while dampening economic recovery and compromising the future competitiveness of the American workforce.”-- Flip It to Fix It: An Immediate, Fair Solution to State Budget Shortfalls, United for a Fair Economy, 5/25/11.
• “Illinois has consistently cut payments to the private sector, nonprofit companies that provide the vast majority of direct human services in Illinois. This is the worst strategy during a recession, as it both reduces access to services when the need for them is greatest, and forces cutbacks and closures among nonprofit private businesses, further shrinking the Illinois economy and exacerbating overall unemployment in Illinois.”-- Ron Baiman, Director of Budget and Policy Analysis, Center for Tax and Budget Accountability, 2/24/10.
The Center for Tax and Budget Accountability is a bipartisan think tank created to promote fair and efficient tax, spending, and economic policies in Illinois. It does so by analyzing Illinois's fiscal problems with the goal of finding solutions that will ensure that essential state services are properly funded and the state's tax system is fair to all Illinoisans.
One would hope the politicians in Springfield would use the same kind of careful analysis with the same lofty goals as the Center for Tax and Budget Accountability, but that doesn't seem to be the case. This may be because the staff at the Center for Tax and Budget Accountability consists of experts in research and analysis of economic and fiscal policy, while most politicians' only qualification for dealing with complex economic matters is that they won an election.
While the state could do several things to increase tax revenues, the Center for Tax and Budget Accountability states:
• “[T]here is one long-term, structural policy change that would simultaneously stimulate job growth in the state, tax people more fairly and reduce Illinois's General Fund deficits: creating a graduated rate structure for the Illinois individual income tax.”-- The Case for Creating a Graduated Income Tax in Illinois, February 2012.
The poorest twenty percent of Illinois households pay thirteen percent of their income in combined income, property, and sales taxes. Those in the top twenty percent pay only 6.2 percent, and the richest one percent pays only 4.1 percent of their income. Does that sound fair?
• “The current Illinois tax system is the opposite of fair, because it places the greatest burden on low- and middle-income families. Indeed, Illinois presently has the third-highest tax burden for low-income families of all fifty states.”-- Center for Tax and Budget Accountability fact sheet, March 2012.
What the Center for Tax and Budget Accountability proposes is not some kind of new crackpot idea. Most states already have a graduated income tax, so we can see how they work.
• “If Illinois were to adopt the same graduated income-tax rate structure as Iowa, Illinois would raise $6.3 billion more in revenue than it does from its current five percent flat rate, while fifty-four percent-- over half of all taxpayers-- would pay less in state income taxes.” -- The Case for Creating a Graduated Income Tax in Illinois, February 2012.
Recently, there has been a lot of talk in Springfield about reforming pensions and Medicaid (translated: cut, cut, cut), but have you heard any mention of reforming our income-tax system? Admittedly, the state Constitution would have to be amended to allow a graduated income to be implemented-- so why hasn't anyone suggested that?
Earlier this year, legislators proposed a constitutional amendment, HJRCA 49, to make it harder for the General Assembly to increase pension benefits for anyone during the occasional fits of generosity that often infect legislators during election years. Instead of wasting time doing this, why didn't someone propose an amendment that could actually do something toward solving Illinois's fiscal problems-- like allowing a graduated income tax?
Is it somehow possible that Illinois politicians are unaware of the benefits of implementing a graduated income tax? I defy anyone to spend an hour investigating Illinois's budget problems without running across information, analyses, and suggested solutions from Center for Tax and Budget Accountability. Maybe our legislators are too busy shaking hands, kissing babies, and raising money for their next campaign to bother, but Governor Pat Quinn cannot pretend to be ignorant of the problem-- or the solution. A press release (4/17/07) from then-Lieutenant Governor Pat Quinn's office quoted him as saying:
• “Our taxpayers deserve immediate action to provide tax relief and fundamentally reform Illinois' regressive tax code.... [T]he Institute on Taxation and Economic Policy-- a nonpartisan Washington-based research group-- has ranked Illinois ‘soak the middle class’ tax code as one of the ten most unfair tax codes in the country.”
How soon they forget: As governor, Quinn has failed to push for reform of Illinois's regressive tax code, choosing instead to join lawmakers in rearranging deck chairs on the Titanic.
The Center for Tax and Budget Accountability has proposed a graduated income-tax plan for Illinois that would raise $2.4 billion more than the current flat tax, stimulate jobs in the private sector, and give a tax cut to ninety-four percent of taxpayers.
Sound too good to be true? Don't believe it? Check out the facts and figures at <http://www.CTBAOnline.org>. Maybe you don't like the Center for Tax and Budget Accountability proposal. Maybe you have a better idea. Great! Let's hear it, and be sure to let your state senator and representative hear it, too.
The point is that we have to do something different. We cannot allow politicians in Springfield to keep doing the same thing and expect a different outcome. That is one of the popular definitions of insanity.
It is time to stop the insanity.