Blagojevich must admit budget crisis demands tax hike
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Dennis Byrne, a Chicago-area writer and
consultant
January 15, 2007
Go ahead and just get it over with:
Raise our taxes.
Illinois' financial mess is driving the state to ruin
unless a tax increase is part of the solution. For heaven's sake, even the
state's business titans, who usually blanch at any mention of a tax increase,
are almost pleading for one.
That's because they understand, unlike our
Gov. Rod Blagojevich, that a state in financial ruin will lose jobs--in both
private and public sectors--and businesses; poor people will find it even harder
to get health care; the roads will deteriorate faster; and Illinois will
complete its fall to below the perpetually bottom-dwelling Mississippi in
virtually every quality-of-life measure.
With Illinois in hospice care,
Blagojevich can forget about all those "activist government" goodies that he
promised in last week's inaugural address. He also can say goodbye to all the
things he bragged about achieving in his first term.
No wonder
Blagojevich has asked to have a few more weeks before he has to present his
budget to the General Assembly next month. By then, the anticipation will be
sky-high as to what transparent gauze he'll try to hang over the state's ugly
finances.
Just how bad is it? The figures already have been well
publicized, from the elite business group the Civic Committee of the Commercial
Club of Chicagoto the Chicago-based Center for Tax and Budget
Accountability.
Illinois has the largest pension-fund debt in the nation,
about $43 billion, give or take a billion, depending on whom you ask. But what's
a few billion, more or less, when you're already drowning in $45 billion in
debt? Nobody noticing the difference would be just further excuse for
Blagojevich to lift another billion or so from the pension fund.
When you
add up the pension deficits, unpaid bills, Medicaid costs and other obligations,
the Civic Committee figures that the state's total liability is $106 billion.
That despite a provision in the Illinois Constitution that says: "Appropriations
for a fiscal year shall not exceed funds estimated by the General Assembly to be
available during that year." In other words, no deficit spending. Maybe we
should impeach the whole lot of them, if it's possible, for violating their
constitutional oath of office.
But not before they get into the usual
quarrel over whether the problem is caused by insufficient revenue or "wasteful
and profligate" spending. Ralph Martire, executive director of the Center for
Tax and Budget Accountability, claims that the deficits are not the result of
overspending or waste, noting that Illinois is one of the nation's
lowest-spending states (42nd). The group blames the shortage of revenue on a
variety of causes, such as a complex federal Medicaid reimbursement formula that
punishes states with disproportionately high numbers of impoverished
people.
But to ignore the spending side is irresponsible. Just to
highlight a portion of the Civic Committee's report: The cost of employee and
retiree health care has been growing 14 percent a year since 2000. I suppose you
could blame the shortfall on revenues, which increased only 4 percent annually
when they should have been growing at 14 percent, but that's
perverse.
Just look at the cost of the state's profligate spending on
insurance for retired state employees: Retirees with 20 years of service don't
pay for their health insurance. Many retirees are covered by plans that allow
free doctor visits. The state subsidizes 80 percent to 100 percent of health
insurance premiums. Employees get to retire at 55. Most of us in private
retirement plans would dearly love to have just one of those
benefits.
Whether spending or revenue is to blame, the problem now is
almost out of hand, and only tax increases (along with spending cuts) will give
this state a chance. The politicians and the special interests, such as the
teachers lobby, will fight to a standstill over what those steps should be.
Progressives will want a "tax swap," in which a state income-tax increase will
help equalize school funding while reducing property taxes. Fine.
Whatever.
Blagojevich, if he's true to form, will show up with another
cockamamie scheme for selling off state assets to fund current bills, a
"solution" that will drive the state into bankruptcy even faster.
At this
point, the solution is beyond me, but that's why we elect those people to go to
Springfield. But one more year of this nonsense, and we all might as well move
to Mississippi, where life undoubtedly will be
better.
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Dennis Byrne is a Chicago-area writer and
consultant. http://dennisbyrne.blogspot.com
