Christmas wish list: 12 gifts for Illinois taxpayers in 2018

Christmas wish list: 12 gifts for Illinois taxpayers in 2018

After a punishing 2017, Illinoisans are in dire need of reform from Springfield.

It’s been an unforgiving year for Illinois.

Straining under the weight of a record income tax hike and a mountain of debt, there was enough coal delivered from the General Assembly this year to fill every Illinoisan’s stocking.

Since the year kicked off, lawmakers have, against the wishes of voters, avoided responsibly confronting their structural spending excesses with needed reforms and instead cleaved off more income from workers’ paychecks.

The present policy outlook in Springfield doesn’t exactly inspire optimism for the road ahead in terms of state governance. But this isn’t to say that there aren’t a number of key policy solutions firmly within reach for lawmakers to consider, should they decide to break long-held habits.

The 12 reforms in this policy wish list would be gifts to working Illinoisans this Christmas.

No. 1 Roll back the income tax hike

Before the current budget, residents of Illinois were already among the highest taxed in the nation. But when Illinois lawmakers successfully overturned Gov. Bruce Rauner’s veto of the proposed budget package for fiscal year 2018, lawmakers heaped a 32 percent income tax hike onto that burden. Increasing the personal rate to 4.95 percent from 3.75 percent, and the corporate rate to 7 percent from 5.25 percent, the measure achieved the distinction of the largest permanent tax hike in state history.

Not that Illinoisans had to wait to gauge the effects of a record tax hike. The previous personal rate had already been sending taxpayers heading for the hills. This illustrates a dead end for Springfield’s current taxation habits. Neglecting to enact serious spending reforms, and further continuing to raise taxes on a shrinking tax base will sooner or later reach its ugly logical conclusion. Rolling back the income tax hike baked into the budget isn’t a modest proposal – it’s an urgent necessity.

No. 2 Pass comprehensive property tax reform

Illinoisans shoulder one of the highest property tax burdens in the nation. Households in the Land of Lincoln have seen their property tax bills grow three times the rate of incomes, practically taking the shape of a second mortgage for some families. But too many property tax “freezes” considered in Springfield have ignored the structural cost-drivers that fuel rising property taxes in the first place.

Taxpayers need real relief. So how should lawmakers deliver? Passing a property tax freeze on homeowners’ actual bills (not just the levies of local governments), and requiring voter approval for property tax hikes are two powerful reforms that would go a long way for families struggling to pay higher property taxes as their own incomes stagnate.

No. 3 Pass pension reform

At the nexus of Illinois’ fiscal problems is the state’s exploding pension costs. Continual mismanagement of defined-benefit pensions have drained the reserves of Illinois municipalities statewide, in communities large and small. At the state level, in addition to provoking routine tax hikes, skyrocketing pension costs have encouraged borrowing habits that have ultimately resulted in a credit rating that rests one notch above junk.

But there’s an alternative that could began an end to the pension problem. Just look to the rising number of state university employees that have opted out of the dysfunctional pension system, choosing instead to enroll in a 401(k)-style retirement plan. Unfortunately, university workers are the only state workers in Illinois who are allowed this alternative. If lawmakers were to extend this option to state workers across the board, taxpayers and public-sector workers alike would benefit.

No. 4 Pass a real balanced budget requirement

It may not seem like it, but Illinois already requires a balanced budget. The Illinois Constitution states explicitly: “Proposed expenditures shall not exceed funds estimated to be available for the fiscal year as shown in the budget.” But the language lacks teeth. Case in point: Illinois hasn’t had a balanced budget in more than a decade.

The General Assembly needs to establish a renewed commitment to overseeing a balanced budget. Reforms should include specific rules against the borrowing and bad accounting practices that have allowed lawmakers to circumvent the constitutional requirement. It would protect the state’s reserve funds and spare taxpayers from inheriting the consequences of lawmakers’ spending excesses.

No. 5 Pass government union bargaining reform 

Unlike every neighboring state, Illinois has not enacted reforms to protect taxpayers from outsized government union power at the negotiating table. And this imbalance shows up in the form of extraordinarily high property taxes.

Illinoisans who’ve watched the growth of their property tax bills outpace that of their incomes cannot sustain the mounting costs over which government worker unions refuse to compromise. The answer is to take a lesson from surrounding states and level the playing field on which government worker unions bargain with governments. Imposing limits on the length of government worker union contracts, and on the scope of what can be bargained, would minimize taxpayers’ plight. Furthermore, strikes that deprive core services to the very taxpayers who finance them should be prohibited.

No. 6 Pursue aggressive government consolidation efforts 

One driver of high property taxes is the sheer abundance of local governments in Illinois. The Land of Lincoln has the most of units of local government in the nation, with nearly 7,000 taxing bodies. One particularly costly manifestation of this problem is Illinois’ sheer volume of school districts, tallying at 859 – the fifth-most of any state in the country.

This is an area where prudent consolidation is most intuitive: Nearly 25 percent of Illinois school districts have only one school, while one-third serve fewer than 600 students. This leaves ample room for cost-effective school district consolidation. Policymakers would be wise to expand on Public Act 100-0107, signed into law by the governor in August. The law is a step in the right direction, enabling cash-strapped municipalities to shed excess weight and integrate into more solvent government units.

No. 7 Prioritize students over administrators in higher education

Despite flatlining student enrollment, tuition costs at Illinois public universities are climbing a sharp upward trajectory – with universities increasing tuition by as much as 100 percent. When one takes notice of the ballooning administrative bodies and the rising compensation packages that have accompanied them, one gets a clearer sense of what’s driving those spikes. Unfortunately for students, however, this administrative bloat has come at the expense of education and operations.

In turn, students are voting with their feet. And Southern Illinois University, Carbondale has felt the pinch. This is why new SIU Chancellor Carlo Montemagno has taken initiative in radically reforming the fundamental structure of his campus, placing a specific target on administrative bloat, aiming to fundamentally restructure the campus from the ground up. Public colleges and universities across the state could benefit enormously by following Montemagno’s lead.

No. 8 Criminal justice reform

One impactful measure Illinois can take toward generating tax revenue and sparking growth is reducing the barriers to entry for skilled workers who aspire to participate in the economy. The Land of Lincoln made progress in this capacity when the governor signed into law Public Act 099-0876 last year, prohibiting the Illinois Department of Financial and Professional Regulation from discriminating against many ex-offenders seeking employment in a variety of trades.

Further steps can be taken by exploring alternative sentencing for offenders charged with nonviolent crimes. Over-incarceration is a dilemma that has saddled Illinois with a slew of both societal and economic consequences. In 2015, the governor set a goal of reducing Illinois’ prison population 25 percent by 2025. “Smart on crime” efforts that address the root causes of crime, tackle the state’s high recidivism rate and reduce unnecessarily punitive sentences, can go a long way toward achieving that goal – saving taxpayer dollars and improving public safety.

No. 9 Term limits

As of January 2017, Illinois was one of only 14 states with no form of term limits for state lawmakers nor the following executive branch offices: governor, lieutenant governor, secretary of state, attorney general, treasurer, auditor general and comptroller, according to the National Council on State Legislatures.

But nearly four out of five Illinoisans support term limits for elected representatives, according to the Paul Simon Public Policy Institute. In 2014, Illinois activists collected hundreds of thousands of petition signatures to put a referendum on legislative term limits on the state ballot. But the effort was killed after an associate of House Speaker Mike Madigan successfully sued to silence voters on the matter.

Those who argue against term limits commonly argue that “Illinois already has term limits, they’re called elections.” Others shift blame to voters for low election turnout. However, fair elections would require fair legislative maps, something Illinois lacks for the same reason it doesn’t have term limits: entrenched political interests.

No. 10 Mapmaking reform

Elections entail the civic duty of voters to choose their representatives. Representatives in Illinois, however, have opted to choose their voters. Through redistricting – the re-drawing of maps delineating the districts lawmakers represent – politicians can routinely manipulate electoral odds in their favor. This is because Illinois’ law virtually ensures partisan mapmaking. The result? Madigan has drawn Illinois’ legislative map three out of the last four decades following the census.

Unsurprisingly, incumbents such as Madigan have greeted efforts to reform this system with fierce opposition. And so, the system persists. And its effects are abundantly clear – more than 60 percent of Illinois’ state legislative races in 2016 were uncontested. Illinoisans deserve an independent, apolitical redistricting commission.

No. 11 TIF reform

A creation of the 1970s, tax increment financing, or TIF, is a scheme that benefits from its complexity and lack of transparency. Typically championed by lawmakers as a driver of urban renewal, TIFs in fact siphon tax revenue from local governments and transfer it to a private slush fund for municipalities to dole out to private companies. Evidence for the economic gains promised by proponents of the TIF program is dubious at best. In reality, TIFs have been shown to misallocate funds at the expense of local taxing bodies ­– school districts, park districts, counties – while enriching politically connected interests.

It isn’t any wonder why some towns have recently looked to dissolve TIF districts, while some school districts have looked to sue municipalities that have enacted them. Ideal reform would be pursued with ultimate goal of suspending TIF arrangements altogether. But recapturing some of the misplaced funds and reallocating them toward the debts of revenue-starved municipalities would be a welcome starting point.

No. 12 New Speaker, House rules

For yet another year, “new House speaker” should be an underscored item of every Illinoisan’s wish list.

Madigan this year became the longest-serving House speaker in American history. He also exercises extraordinary unilateral power in the House, at a level unseen in any other state legislature. Without changing leadership and the House rules that grant too much power to the speaker, moving the transformational changes so necessary in Springfield out of the General Assembly is a herculean task.

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