Editorial: Reform spending, build trust before any tax hike

Staff Writer
Mount Shasta Herald

No question Illinois government has severe budget problems. There are two ways to deal with that: Make cuts, or raise revenues. We seriously doubt the state can slash its way to $11.5 billion, which is allegedly the size of its operating deficit. So yes, in an Illinois that cannot meet its "mountain of unpaid bills," we figured new Gov. Patrick Quinn would be proposing tax increases.

That said, we have some concerns that, if not addressed, will certainly cost the governor and his budget this newspaper's support. Quinn said his 2010 budget proposal is about three things - "reform, responsibility and recovery" - but in fact Illinois government over the last two decades has rarely delivered on any of those fronts.

First, the timing for these tax increases couldn't be worse. Companies are laying off workers by the thousands. Wages are down. It once was considered unwise public policy to hike taxes in a recession, yet that's what we're getting from governments across the board.

Second, this is a sizeable income tax increase - 50 percent, in fact. If Quinn has his way, the personal income tax rate would go from 3 percent to 4.5 percent and the corporate income tax from 4.8 percent to 7.2 percent. He'd also eliminate many corporate tax breaks, hold on to tens of millions that now go to local governments, and smack smokers. Meanwhile, the governor would hike fees on license plate stickers and driver's licenses to help pay for a $26 billion capital program.

Quinn argues that those tax increases would be offset for many by tripling the personal exemption from $2,000 to $6,000. In addition he proposes a sales tax holiday for school supplies. He says his public works program will create 340,000 jobs in new road and bridge and school construction. He's tapping into reliable revenue streams, not "gimmicks" like a gross receipts tax or more gambling. Illinois' income tax is relatively low, its personal exemptions ridiculously so.

Not to rain on anybody's parade, but if 5 million Illinois citizens will come out ahead in this budget, as Quinn contends, that means another 8 million won't. Arguably Quinn's proposals will put less money in the pockets of most Illinois citizens in a high-anxiety job climate, which means they'll be less likely to spend it and get the economy humming again.

We fail to see how these tax increases will convince Caterpillar to hire back the 24,000 workers it has let go in this downturn. Government may have a role where short-term job creation is concerned, but where most of us live, the private sector is the place we look for long-term, steady employment. "If you're able-bodied and you're breathing, we want you working in Illinois," said Quinn. Yes, but will this budget accomplish that?

Meanwhile, what assurances do we have that Illinois will stop living beyond its means? Quinn may have used the words "sacrifice" and "belt-tightening," but by our calculations this spending proposal for operations, at $52.9 billion, represents a jump of $5.8 billion, or 12.3 percent, over the current year's estimated expenditures of $47.1 billion. Don't show us the money, show us the discipline.

Beyond that, we believe it's impossible to address Illinois' chronic budget shortfalls without getting pensions under control. Why should public sector employees be spared the ravages of this recession while private sector workers paying most of the bill get creamed? In Illinois, at least, government pensions have become unaffordable, as evidenced by Quinn's proposal to lower next year's contribution to the pension systems by $2.9 billion in order to balance this budget. Obviously that will only aggravate what is already the largest unfunded pension liability in America. Quinn is counting on reductions in retirement benefits for new state employees - essentially a two-tier pension system - to produce future savings. Good luck with that. No doubt the public employee unions have already begun preparing their lawsuits.

We also are fed up with governments asking for more money while delivering the same old sorry results. Public education is the most egregious offender. Schools are not required to be as efficient with tax dollars as they could be. Illinois should have half as many school districts, and all of them should be unit, or K-12 districts. Meanwhile, we continue to throw money at a hopelessly outdated agrarian calendar that does little for poor children. We see no mention of going to year-round school.

With medical bills gobbling up more of the budget, isn't it time to stop giving mere lip service to managed care in Illinois?

Finally, just because Rod Blagojevich is mercifully gone doesn't mean corruption has gone away. What guarantees are there that these tax revenues won't go into the same black hole?

Look, we don't doubt that the state's budget situation has gotten considerably worse these last few months, though sometimes there's a tendency in politics to alarm constituents with worst-case scenarios to get them to go along with what you want to do. For a guy who may want to run for governor in two years, this was a pretty gutsy proposal. Quinn is right, this deficit is not "going ... away on its own."

That said, we do believe Illinois government has a ways to go yet - in terms of cuts, in terms of fundamental reforms, in terms of trust - before it has earned its way deeper into taxpayer pockets. This is a full platter in the leanest of economies. We expect the Legislature will not be shy about doing some tinkering.

Peoria Journal Star