Reeder: Illinois’ problem is spending, not revenue
SPRINGFIELD – What do Dennis Rodman, Rod Blagojevich and Jesse Jackson Jr. have in common with Illinois state government?
Despite having large incomes, they’ve each found themselves teetering on the brink of insolvency.
When I was younger, celebrity bankruptcies used to puzzle me.
How is it that high-earners such as Wesley Snipes, Willie Nelson or Burt Reynolds can just go flat-out broke?
The answer is simple: They spent too much.
And so it is with the state of Illinois.
Illinois’ revenues are at the highest level in the state’s 194-year history and yet state bills are paid six months late, Illinois’ pension funds are in crisis and it has the worst credit rating of any state in the union.
And keep in mind, Illinois got to this point despite the fact that our General Assembly passed – and our governor signed – a “temporary” 67 percent income tax increase 2½ years ago.
Every working adult in the state of Illinois is now contributing an extra week’s pay to the state’s coffers since the tax hike passed.
That’s no small sacrifice. Illinoisans have cut grocery lists short, canceled vacations, deferred car and appliance purchases and made many other sacrifices.
And yet the state is still broke.
In fact, instead of cutting spending, state government is spending more.
In 2008, the last full fiscal year before the recession, Illinois spent $30.4 billion in base general revenue funds and in 2012 it was on track to spend $33.5 billion.
Rather than tightening the belt, the state has pulled out the credit card.
The level of state bond debt has increased during the same period, from $58.7 billion in 2008 to $71 billion.
And if that’s not bad enough, Illinois’ official unfunded pension liability was $55.4 billion in 2008 – and the Commission for Government Forecasting and Accountability projects that liability will grow to $102.7 billion this year.
No state has ever taxed its way into prosperity.
In the coming months, you are going to hear some nonsense about how Illinois needs to “reform” its revenue system by passing a graduated income tax.
It has nothing to do with tax fairness and everything to do with government consuming more money.
Illinois doesn’t have a revenue problem. It has a spending problem.
No matter how much more money you give Illinois state government, it is going to spend more, borrow more and avoid tough decisions such as pension reform.
Now government union bosses and their allies want us to pony up more cash – so they can be guaranteed a more prosperous retirement.
Sadly, politicians make lots of promises.
Few are kept.
For example, when Gov. Pat Quinn was running for office he promised to veto a tax hike as large as the one that ultimately passed. He signed it.
The legislative leaders promised that tax hike would be temporary when they pushed it through. Now they are quiet about its future.
So when I hear government union bosses say they were promised this or that I have to sigh. Taxpayers were promised things, too.
The answer is to put workers, rather than politicians, in charge of retirement planning.
“A 401(k)-type system is really the way to go,” said state Rep. Joe Sosnowski, R-Rockford. “The private sector has proven that time and time again. I don’t know if politically we can get there right now. But that is the direction we should be heading.”
Illinois also keeps expanding costly programs such as Medicaid at a time when the state is in fiscal crisis.
And the state has borrowed to pay for things such as $700,000 doors for the State Capitol.
Spending is public enemy No. 1 in Illinois.
• Scott Reeder is a veteran statehouse reporter and the journalist in residence at the Illinois Policy Institute. He can be reached at email@example.com. Readers can follow his work on Twitter @ScottReeder.