Editor Note: In a For The Good of Illinois subscriber email on November 4, 2011, we forecast “The Next Income Tax Hike”. We were the first to sound the clarion call. The Champaign News-Gazette highlights our work in the recent editorial.
January 5, 2012
Editorial | Champaign News-Gazette
The prospects for improvement in Illinois’ dismal budget picture are nowhere to be seen.
Those optimistic souls hoping the new year would bring brighter financial prospects for Illinois state government got a heaping helping of bad news when Gov. Pat Quinn released horrific budget estimates for the next three years.
But the real shocker surrounding the sorry budget forecast is that the state’s finances probably are in even worse shape than Quinn admitted.
All of which demonstrates the foolishness of a decision by Quinn and state legislators to approve a package of tax cuts totaling more than $250 million a year just a couple of weeks ago.
The tax cuts, of course, were mostly about politics. The numbers Quinn released earlier this week involve policy. They forecast a future that threatens to leave the state’s operating budget deeply in deficit and the state’s multibillion-dollar debt largely unchanged. That means unending financial chaos for state-related programs and institutions.
Given that 2012 is an election year, nervous legislators can be expected to do their best to paper over the problems and push tough decisions past the November election. But here’s something to chew on — last’s year 66 percent state income tax increase (from 3 percent to 5 percent) included a provision to reduce the rate to 3.25 percent in 2015.
Taxpayers can forget that. Indeed, Adam Andrzejewski of For the Good of Illinois has been predicting for months that legislative leaders are cooking up another post-election tax increase for the 2012 lame-duck session of the General Assembly.
Here’s the bottom line — new revenues are pouring into state coffers because of the January 2011 tax increases. But they have not kept up with skyrocketing spending increases, particularly those supporting public employee pensions and health services for the poor (Medicaid).
Legislators have made a serious attempt to control Medicaid costs, reforms blocked by the Obama administration. But they’ve done little but talk about the pension problem.
Quinn’s budget projections indicate that the current state budget will end June 30 with a deficit in excess of $500 million unless cuts are made. It forecasts balanced budgets for Fiscal Year 2013 and 2014 but a massive $800 million deficit for FY 2015.
State budget director David Vaught said increased costs for pensions and Medicaid will require substantial spending cuts in other programs like public safety and education.
As bad as the Medicaid spending projections are, Illinois Senate Republicans argue that Quinn is down-playing the problem by dismissing the possibility of increasing health care costs that could add $2 billion to $3 billion to state obligations.
The public will know more specifics when Quinn delivers his annual budget address in March. But it’s pretty clear circumstances are not good.
That presents both an opportunity and a challenge for our risk-averse elected officials.
The opportunity was outlined by state Sen. Dan Kotowski, a suburban Chicago Democrat.
“Fund what works, get rid of what doesn’t. This is our way to end the reckless spending policies of the past,” he said.
Unfortunately, legislators can’t bear the thought of rethinking and restructuring the broad expanse of government entities and programs.
So that leaves the challenge of building a budget with chewing gun and bailing wire and hoping it doesn’t collapse until after members of the House and Senate are safely re-elected.