“We have had for decades in Illinois a consensus from both parties that what they want from state government is health care, human services, education and public safety,” explains Shriver Center President John Bouman on today’s show. “In fact over 90 cents on the dollar of discretionary spending in the state budget, that’s exactly what it goes for. So if you’re gonna cut your way out of a budget crisis that’s what you have to cut.”
But, says Bouman, for decades Illinois has never been able to raise the money to pay for the things it promises. “We’ve had a revenue problem in this state for decades,” he explains. “The recession turned it into a train wreck. And that’s why four years ago the General Assembly passed a temporary income tax increase. Without that, we would now be about thirty billion dollars in deficit…this is not a spending crisis. It’s a revenue crisis.”
Governor Rauner is faced with two significant problems. In one case, the current fiscal year is about four billion dollars short of the budget Pat Quinn left for him, and he also has to develop his own budget for next year that reflects his own priorities.
Why is this year so out of balance? Because a temporary increase in the state income tax, enacted for years ago, was automatically reduced this year unless the Legislature reinstated it, and it didn’t. The new anti-tax Governor didn’t want it and instead he made drastic spending reductions. Those reductions included $1.5 billion in medicaid cuts, 128 million in cuts to the RTA and CTA, and $385 million in cuts to higher education. And numerous cuts to small social service programs.
“These are services that affect the needy,” says the Tribune’s Lolly Bowean. “Sometimes we push away that idea by thinking, well, Im a working person, therefore I’m not needy. But low-income residents come in all shapes and sizes. They’re the retired who are on limited incomes, they are people who are disabled, they are homeless teenagers who find themselves in crisis, so the money that’s being cut comes back home to us when you see that your grandmother can’t take an ambulance to the hospital or that the Pace bus that used to cost three dollars now costs four. So these programs, although they may not feel like they’re being directly used by the middle-class, all of us are touched in some way”
And the situation’s made worse, says Glenn Reedus, who heads DePriest Voters’ Chronicles, because of population shifts.
“You’ve got people leaving Chicago,” he explains, “so you’ve got fewer people trying to fill the pot, and what had been coming in is no longer there, so it’s an impossible situation.”
The battle that’s just getting under way right now, though, isn’t over these immediate cuts the Governor has made to balance the current budget. This big fight is over Rauner’s first budget of his own, the one that takes effect later this year. And it’s going to get interesting.
“I think he knows that there has to be significant revenue,” Bouman speculates. “I think he’s trying to win these business reforms and to make some cuts to protect his right flank. And he needs Republican votes…I don’t think the leaders of the House and Senate are going to be able to get Democratic majorities for the kind of budget that it looks like is shaping up here, and the Republicans are going to have to vote for some revenue.
Among Governor Rauner’s supporters, it’s commonly stated that Illinois is a high-tax state, and that taxes suppress business activity and therefore job creation. But Bouman doesn’t see it that way.
“We’re not talking about the People’s Republic here,” he tells us. “Illinois currently, with the 5% income tax, was around 30th in taxing its people among the 50 states, so with the roll-back we’re back in the bottom third, and we’re not a high-spending state. Three-quarters of the states spend more (as a percentage of residents’ income) on state government than we do. So we’re not talking about putting Illinois in some extreme situation. We’re just talking about being grown-ups and realizing we have to pay for the things we want from state government.”
As to the debate about business climate and whether Illinois is or isn’t business-friendly, Bouman says it’s a bit more nuanced than that.
“There’s a lot of false claims about the relationship between state and local taxes and decisions about business location. It’s a factor, but it’s like, tenth on a list of twelve. More important are the things that you actually need from state government like transportation systems, a good, educated workforce, amenities, a good health system. And, let’s face it, a market.”
And, just to be clear, none of this debate has anything to do with the hundred-or-so billion dollars in shortfall in the pension plans. That’s a whole different discussion.