State of the state: Illinoisans starving for certainty

State of the state: Illinoisans starving for certainty

Mandating more reasonable spending growth is the first step in a journey back to solvency for Illinois. The cap provides certainty today for a more responsible state government tomorrow.

Gov. Bruce Rauner delivered his fourth and possibly final State of the State address in Springfield Jan. 31.

The governor took direct aim at a few politically popular issues. One focal point was a bill that would bar lawmakers from working as property tax attorneys. Another was term limits.

But Rauner also gave a clue about his upcoming budget address, saying he would propose a balanced budget. If he can pull that off, it would be the first truly balanced budget his administration has proposed during his time in office.

Illinois’ most recent budget, the one lawmakers passed over the governor’s veto in July 2017, is emblematic of how the state became such a fiscal basket case. Despite a $5 billion tax hike, it already contains a deficit of more than $1 billion. And that deficit is projected to exceed $2 billion next fiscal year without spending reforms.

Much more daunting than the state’s massive budget deficit, however, is the deficit in residents’ certainty about the future and their trust in the state.

How can Illinois possibly dig its way out of all this debt? How much of the budget can pensions really eat up? When will the next tax hikes come – and how high will they be?

These have all become pressing questions because lawmakers have had free rein to grow spending far beyond what residents can afford.

From 2005-2015, state spending per capita grew 25 percent faster than per capita personal income in Illinois. Many communities saw an even greater disparity. In Rock Island County, for example, state spending per capita grew more than 70 percent faster than residents’ incomes over that time.

In a healthy economy, it’s OK for government spending to grow. But when spending growth outpaces economic growth, it forces policymakers to raise taxes or borrow money. State lawmakers have been eager to do both. And that injects uncertainty into the lives of Illinoisans.

Families and businesses can’t plan for their futures without some degree of certainty about the world they’ll live in five, 10 or 20 years down the road. The state of the state meddles with those plans.

When faced with too much uncertainty, people leave. And potential newcomers take pause. Indeed, this is the biggest budget problem of all – a shrinking population for four years running, driven primarily by people leaving the state. The net outmigration of people from Illinois to other states since 2010 is equivalent to the population of the four largest cities outside Chicago combined.

State lawmakers have proven unable to constrain their fiscal recklessness absent a real requirement to do so.

That’s why in its Budget Solutions 2019 recommendations, the Illinois Policy Institute is putting forward a real restraint. It’s called a smart spending cap: tie government growth to economic growth.

Illinois’ economy has grown at an average rate of 2.4 percent over the past 10 years, according to data from the Bureau of Economic Analysis and the U.S. Census Bureau. Rauner and state lawmakers should champion that rate of economic growth as a cap on state spending via a constitutional amendment.

The Texas and Tennessee state constitutions, for example, both contain spending caps based on residents’ ability to pay.

Thankfully for Illinoisans, there’s already bipartisan support for such a cap, with constitutional amendments filed in both the House and the Senate by state Rep. Allen Skillicorn, R-East Dundee, and state Sen. Tom Cullerton, D-Villa Park, respectively.

Mandating more reasonable spending growth is the first step in a journey back to solvency for Illinois. The cap provides certainty today for a more responsible state government tomorrow.

Compare that with the marquee budgetary proposals from the leading Democratic gubernatorial candidates.

J.B. Pritzker, Chris Kennedy and Daniel Biss all want to hike taxes, but none of them will say by how much – or even which Illinoisans specifically will end up paying more.

How can families and businesses make plans for that?

Among other harmful effects, a progressive income tax would invite enormous uncertainty into the lives of Illinoisans. If you think state lawmakers are tax-happy now, wait until they’re able to apply any rate to any income group whenever they need extra cash.

A spending cap, on the other hand, would empower Illinoisans to make bold plans without fear of out-of-control government spending, and the tax hikes that come along with it.

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Illinois needs a spending cap
Illinoisans need a state government they can afford.
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