Promoted from the diaries
By Sarah Gough and Matt Batzel
Don’t look now but it looks like Gov. Quinn is stealing a page from the Wisconsin budget playbook. Facing an ongoing fiscal crisis, Quinn is looking to move the teacher’s pension expense off of the state’s budget by having suburban and Downstate school districts start contributing to their teacher pensions. This move is similar to the approach Wisconsin took in moving some pension costs off of their budget with the Budget Repair Bill. Illinois would do well to emulate more of what Wisconsin has done to foster fiscal responsibility.
At the end of 2010, Illinois and Wisconsin both faced significant deficits. Illinois faced a $13 billion deficit, while Wisconsin faced a deficit of $3.6 billion. But the states took drastically different paths in addressing their shortfalls and today stand in much different places.
Illinois sought to cover their budget deficit by raising individual income tax rates by an astonishing 67% and corporate income taxes by 46%. This was supposed to be a temporary income tax increase, but it now appears more and more likely that it will not only be a permanent tax hike, but also one that will continue to grow.
Wisconsin took a much different path to address their $3.6 billion deficit. Despite the protests of union bosses, the state boldly passed its Budget Repair Bill requiring public employee contributions for healthcare and pensions. The Budget Repair Bill worked to help eliminate Wisconsin’s $3.6 billion deficit without raising taxes and one-time budget fixes or accounting gimmicks.
Illinois’ “temporary” fixes failed to produce similar results because they did not focus on meaningful reform. Throughout 2011 and into 2012, Illinois officials had to go back to the drawing board to come up with additional “revenue raisers” to deal with a seemingly never ending budget mess.
As it stands today, Illinois faces a deficit of nearly $9.2 billion. Wisconsin faces a deficit of $143 million that will be addressed without new legislation passing. If Quinn is going to steal a play from the Wisconsin budget playbook, he’s going to have to do more. Illinois cannot achieve financial reform without making some sacrifices and cutting spending. Illinois citizens have been forced to pay for runaway spending long enough. Now it’s time for them to see government at least try to live within its means.
In August, Illinois announced it would increase toll rates by 88%. Then in September the state laid off 1,900 public employees and closed seven state facilities.
Wisconsin, which does not have toll roads to “raise revenue” for the state, did not have to layoff public employees as a result of the savings from the Budget Repair Bill. At the local level, some school districts did have layoffs, but they took place primarily in districts that pre-emptively extended union contracts rather than using the savings from the Budget Repair Bill.
It is good to see Governor Quinn finally address Illinois’ pension crisis. The Pew Center for the States ranks Illinois worst at funding its pension with only 51% funded towards its liabilities. Wisconsin on the other hand, is funded at 100%.
With this fiscal mess in Illinois, it is no wonder that Moody’s downgraded the state’s credit to the lowest in the country. It also is no surprise that Wisconsin has a solid credit rating.
Now in February 2012, Illinois’ deficit has become even worse. A few weeks ago, Quinn mentioned he is considering borrowing all of the money to pay the debt and raise taxes to pay back the loans. That’s like curing the disease by killing the patient. The last thing Illinois needs is more debt and higher taxes.
Quinn’s latest proposal might sound like a step in the right direction, but it’s one that will likely cause property taxes to rise drastically if local governments are burdened with higher employee costs. Illinois would be wise to copy more of Wisconsin’s reforms and maybe taxpayers would catch a break, as Wisconsin has seen their school property taxes decreasing.
With Quinn’s Budget Address on Wednesday, stay tuned for his plans for the following: how Illinois will pay for new spending, what he will do about unpaid bills, how deep Medicaid costs will be, how many and which state facilities will be closed, and what he will do about pension costs.
“I think it’s going to be just an ugly year. There’s no money, the budget’s going to need some big cuts,” predicts Dan Long, executive director of the Commission on Government Forecasting & Accountability.
It is clear that Wisconsin has taken a better approach to address their budget deficit. We’re all anticipating what additional plays Gov. Quinn will borrow when he gives his budget address this Wednesday. Let’s hope Illinois follows their lead out of its fiscal crisis.
Sarah Gough and Matt Batzel are the Illinois and Wisconsin Executive Directors of American Majority, the nation’s leading national conservative grassroots training organization. To learn more about American Majority visit www.AmericanMajority.org.