Pat Quinn’s Illinois Budget Address is Tomorrow, But the Fuss Has Begun

Pat Quinn hasn’t yet delivered his state budget address, but state GOP legislators are already crying foul. Meanwhile, two potential solutions, a reduction in pension benefits for existing employees and a progressive state income tax, are likely to remain unconstitutional.

The Illinois GOP is pushing back against Gov. Pat Quinn’s expected proposal to borrow $8.75 million to pay off the state’s overdue bills. But they’re clearly still working on the messaging. (You can see the news conference in question here.)

Senate Minority Leader Christine Radogno, R-Lemont, was vague about how slowly the state should pay the bills or where to cut, but she said every part of government should be on the chopping block. That includes education and human services such as child care.

“I don’t think we’re a lot better off for those,” Radogno said at a news conference.

The Sun-Times reports that Radogno thinks we should cut spending through “efficiencies,” but that state layoffs probably aren’t necessary.

There’s some truth to the idea that the state’s operating budget is pretty lean, particularly in the matter of staffing; the number of state employees has decreased in both the short and long term (also note where the decreases and increases are in that second link–if we’re actually not better off with social services, the percentage of state employees accounted for by social services has at least decreased considerably since the ’70s).

The most compelling analysis of Illinois’s budget crisis I’ve read comes from Adam Doster at Progress Illinois, shortly after Pat Quinn was re-elected, based off an October report for the Center for Tax and Budget Accountability (PDF). The CTBA report argues that Illinois has actually maintained its status as a low-cost, low-tax state while keeping the size of state government in check.

So why is the state in so much debt? The report’s authors say that Illinois’s tax revenues argue that the state’s tax system is structured in such a way as to be particularly vulnerable to certain economic trends:

* the low flat income tax makes the state more reliant on revenues from low- and middle-income residents, whose wages have stagnated, not to mention putting a greater impact on taxpayers with a “higher marginal propensity to consume,” meaning that it’s not an efficient method of taxation if you want to encourage maximum consumer spending

* the state’s heavy reliance on property taxes makes the state reliant on the housing market, which has obviously been volatile

* the fact that the state doesn’t tax retirement income at all means reduced revenues in the face of an aging population

* and the state’s sales taxes don’t apply to many services, as opposed to the sale of goods, which make up an increasing percentage of personal spending.

The PI article is good, but the CTBA’s full report is also worth a read. In essence, the Center’s argument is that the state’s tax structure just can’t support its budget even in good times… and that the budget, compared to that of other states, really isn’t that inefficient or overly generous in its services. It’s certainly a different perspective than the usual back and forth about whether we’re taxing and cutting too much or not enough.

One thing to look for–casually, since I sort of doubt there’ll be progress on either front–is that two potential fixes for the state’s budget crisis are both (probably) unconstitutional: changing pension benefits for existing employees (the first cut the Tribune editorial board calls for) and installing a progressive income tax. The CTBA offers workarounds for the latter, an effort at which failed in 2008, and it’s been suggested that the state could at least test the limits of the former.

Also worth a read: Illinois Issues on how the state’s unpaid bills are affecting the people we owe money to.

And worth noting: there’s additional pressure on Quinn since the state pushed back a bond sale in order to give investors a chance to hear what he has to say tomorrow.

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