What Now Illinois?

With the graduated income tax proposal defeated by voters, financial problems threaten disaster for Illinois.

The current income tax is a flat tax, so created by constitutional amendment many years ago. It was a prime strategy to win approval then. Everyone at the time was afraid of a graduated tax. So it was passed as a flat tax; if memory serves it was 2.5%, maybe 2.25%. Many years later the tax stands at 4.95% in attempts to balance the budget. The problem: the poorest among us could not afford the tax at all, then and now. 

The old tax also benefited from the soaring growth of two-income earner households. Then the run-up of wages and salaries proved a revenue boon for the state.

At long last a troubling problem finally caught the attention of legislators – the public employee pension plans that were seriously underfunded. The game of underfunding pensions was played by both political parties. Legislators were only too glad to shirk the responsibility until it was too large to ignore.

The bill has come due and the public must pay into the pension funds what they have not contributed for many decades. The bill is at least $50 billion dollars. There are those who claim the figure to be in excess of $100 billion, but that is a skewing of actuarial tables. Let’s stick with the $50 B number for now.

Funding that shortfall will take many years to accomplish. Two or three billion dollars a year for the foreseeable future ought to take care of it. Meanwhile, the state budget is in deficit and made far worse by the COVID pandemic. Not only have state expenses risen during the crisis, but state revenues have fallen precipitously as the economy has suffered its aches and pains of COVID.

Republicans, of course, are now claiming the state budget needs to be slashed to be fiscally responsible. Hah! A little late for that argument because of their collaborative role in creating this mess in the first place. Voices in Springfield are suggesting slashing government payrolls, education and a host of social services. And then they wonder why the state is slow in responding to problems like childcare, education reform, and more!

No; more creative solutions are needed. The first target of reduced budgets should be police as their functions are re-engineered to serve communities rather than bludgeon them with systemic racism. We all know the cost of that form of community policing, and it is not all in Chicago!

Another solution is reforming the state income tax and this time actually teach voters what the issues are rather than running a pro and con promotional ad campaign. Illinois voters are adults and can take the truth. They will also take responsibility to properly fund an effective state government.

We have serious business to accomplish in Illinois. Public education is bloated and mandated to accomplish too much. It needs reimagining and re-engineering which will undoubtedly reduce costs and improve productivity. Criminal Justice System is also bloated and hamstrung by outdated policies and programs. Decriminalizing drug addiction would help simplify operations and cut costs.

Economic development begins with investment in education and skill development among residents of the state. Strong higher education programs to support life-long learning and return strong financial benefits to the state.

Long-term replacement of public infrastructure is another investment that would pay large dividends to the state. Developing collaborative programs between state, specific industries and agriculture, plus institutions of higher education, would improve innovation and adaptation to rapid technological changes affecting jobs, markets, products, and the evolution of new industries.

The future beckons to those who are prepared for it. Will Illinois rise to the challenge or continue to mire itself in bickering politics and disastrous financial management? Our elected officials haven’t done well with this challenge so far. Will they now?

But to do so they will need a supportive electorate. Are you and I ready to be that?

November 10, 2020