It's not exactly like the Civic Federation is some leftist organization, eager to tax Illinoisans into oblivion. Indeed, the 116-year-old institution headquartered in Chicago is officially non-partisan, though it's always had a pretty pro-business, conservative slant. So when that group recommends raising the state's individual income tax from 3 to 5 percent, taxing pensions and Social Security checks in Illinois, and higher taxes on tobacco to avoid "Doomsday," well, citizens should pay attention.
It's not exactly like the Civic Federation is some leftist organization, eager to tax Illinoisans into oblivion. Indeed, the 116-year-old institution headquartered in Chicago is officially non-partisan, though it's always had a pretty pro-business, conservative slant. Its current leader worked for Republican governors Jim Edgar and George Ryan.
So when that group recommends raising the state's individual income tax from 3 to 5 percent, taxing pensions and Social Security checks in Illinois, and higher taxes on tobacco to avoid "Doomsday," well, citizens should pay attention. By the way, the Federation is not in favor of reaching into anybody's wallet "until pension reforms are undertaken and at least $2.1 billion in budget cuts" are made.
"This is historic, it is epic," says the Federation's president, Laurence Msall. "It is impossible to overstate the level of peril."
Now Illinoisans have been conditioned to be cynical, and many if not most will choose not to believe Msall. They perceive state government as not impacting them in any direct way, and don't want to pay a single penny of additional taxes to it. We'd venture that the vast majority of Illinoisans do not appreciate how bad the state's budget situation is, arguably the worst in the nation, certainly with California among America's bottom feeders.
First, the state is facing an anticipated deficit of $13 billion, which comprises half of its core operating budget of $26 billion (the total budget tops $50 billion, with the difference largely in non-discretionary spending). In fact Illinois could erase every dollar it sends to K-12 classrooms - more than $7 billion - and still not cover the shortfall. It could eliminate all health care spending, including the Medicaid that pays Grandma's nursing home costs - $8 billion - and still not get the job done. Illinois already employs 20 percent fewer workers than a decade ago. The Chicago Tribune reports that even "if the state payroll was magically purged of every single employee, the annual salary savings would amount to $4 billion, less than one-third of what is needed ... to dig out of the deficit hole."
Meanwhile, the recession has hit sales and income tax revenues hard. The state's credit rating is sinking, so it's more expensive to borrow money. Clearly Uncle Sam is in no position to bail Illinois out. That's what prompts Ralph Martire, director of the Center for Tax and Budget Accountability, to say that "any elected official or candidate who says you can solve this without a tax increase is either incredibly math-impaired or intentionally deceiving voters."
The other side of that coin, of course, is that the worst time to hike taxes is now, in a recession this severe. And few trust the Legislature not to squander the extra money a tax increase would bring in on wholly unnecessary pet projects. Legislators on the whole have shown no discipline to date, so what makes anyone think they will in the future?
The latter is probably the prevailing attitude. In the leadership vacuum that is Illinois, most self-respecting bookies would likely lay odds on state government doing nothing - again - to confront the crisis.
Indeed, what Democrat will take on state government's largest union, AFSCME, or the teachers' unions, all resistant to negotiating cost-saving changes? Meanwhile, House Speaker Mike Madigan has said he won't carry any tax increase unless Republicans are on board. Naturally, House Minority Leader Tom Cross, who no doubt wouldn't mind becoming speaker himself following the November election, has taken tax hikes off the table.
Forget the feds, it's Illinois that's ungovernable, and for all practical purposes bankrupt - unable to pay its bills promptly, skipping pension payments, slashing social service providers, withholding millions from classrooms, borrowing to postpone its demise even while the banks and credit agencies are wising up to what a bad risk Illinois is. Apparently the politicians believe maintaining that status quo is less of a problem at the polls than doing something about it.
All involved are walking a dangerous tightrope. It is true that Republicans have been hampered by Democrats who call all the shots in Springfield, but the GOP cannot escape responsibility entirely. Cross needs to get us to $13 billion in cuts. He must lay out his plan for balancing the budget for all to see. He shouldn't be allowed to do what everybody in Springfield always does: Lowball the deficit, essentially lie with rosy revenue projections, make vendors wait for payment for services they've long ago provided, skip another pension payment, borrow more, push their problems onto local governments.
In fact we've gotten no sense from Republicans that they have any plan at all beyond just saying "no" with the hope that will be enough to put them over the top in November. And when they say things like cut, but whatever you do don't touch education, then they can't be taken seriously.
The question of the year: Will both sides transcend their self-interests and actually come together to govern the state?
If not, is there a third party that can come to Illinois' rescue? Unfortunately, not soon enough. It's tempting to say "anybody but Democrats" in our state endorsements this fall. Problem is, Republicans are not offering a viable alternative. It's a lose-lose.
If you're a teacher, a provider of health care, social services or public safety, someone who depends on them or who pays local property taxes, prepare for the worst, because right now it looks as if 2010 will be bloody.
Peoria Journal Star