Progress Illinois
December 07, 2009 - 4:15pm
An "Affront" To Reality
by Angela Caputo
After "balancing" the state's budget, in part, by pushing $3.2 billion worth of bills off until next year, Illinois lawmakers left Springfield over the summer crossing their fingers that the economy would rebound quickly and stave off the obvious need for an income tax increase. It was a naive proposition to say the least. And as Southtown Star columnist Phil Kadner writes over the weekend, this lack of concrete action has had devastating consequences. The ongoing ripple effect was painfully obvious at a summit last week, where nearly four dozen south suburban social services agencies -- who serve the disabled, mentally ill, elderly, homeless, and other vulnerable citizens -- came together to devise a survival strategy amid the cuts and delayed payments that are plaguing providers across the state. For some context, Kadner highlights the numbers:
The main theme seemed to be this: Illinois has cut funding to many of these programs, and state payments for services are 30, 60 or 90 days late.
More than $80 million is owed to 259 agencies surveyed by Metro Chicago United Way during the last fiscal year, which ended June 30.
Sixty percent of the groups surveyed said they will be forced to reduce or freeze the number of people they serve. More than 10 percent of the agencies anticipate that they will be forced to temporarily or permanently close locations because of less state funding.
It's important to remember that the problem here isn't overspending on human services, or even a bloated state government. Indeed, when adjusted for inflation, Illinois officials actually cut human service spending by an average of $385.1 million per year between fiscal years 2003 and 2010.
The underlying causes are the devastating recession on the national scale and our regressive and antiquated tax system here in Illinois. In a State Journal-Register op-ed over the weekend, veteran statehouse reporter and and retired director of the Paul Simon Public Policy Institute Mike Lawrence took aim at the "pandering Pinocchios" who've suggested that the budget crisis can be solved by simply cutting state services and stimulating private sector employment. Lawrence thinks this proposed remedy "may entice voters but affronts reality." More below:
Assume we freeze tax rates and a robust recovery produces revenue growth of 7.79 percent from the sales tax, 13.2 percent from the personal income tax and 41 percent from the corporate income tax — all of which would match spikes over the last quarter century. The yield would be $2.4 billion, only 20 percent of the deficit.
Illinois revenue experts consider even that scenario wildly optimistic. None of those categorical high points occurred in the same year. Moreover, the generally prosperous 1990s produced annual growth of 6.3 percent from the sales tax, 8.1 percent from the personal income tax and 11.1 percent from corporate and business taxes [...]
Clearly, a vigorous economic comeback cannot eradicate the red ink even if we also send political hacks and unneeded bureaucrats packing and cut the pay of legislators to minimum wage. Again, the numbers provide valuable context. We could wipe out the entire state government work force and reap $3 billion. We could level the legislature and dent the $12-billion deficit by some $70 million .
