Fixing state’s budget process
We have a budget and a tax increase, about which none of us are happy. We also still have a whole lot of debt and a whole lotmore work to do to begin rebuilding our state.
In the 736 days Illinois went without a budget, thousands of university and human service workers lost their jobs. Tens of thousands of people who could be contributing to the tax rolls left Illinois, never to return.
The new budget allows Illinois to borrow$ 6 billion to begin to address our $ 15 billion in unpaid bills, but state Rep. Greg Harris, the House Democrats’ budget point man, has said the state really only can generate enough revenue to borrow half that amount, Reuters reported. And Illinois still has $ 130 billion in pension debt built up over decades of underfunding. How do we fix that and ensure we never have to go through two budgetless years again?
I don’t profess to have all the answers, but I remembered where to find some.
Back in 2011, former New York Lieutenant Gov. Richard Ravitch and former Federal Reserve Chairman Paul Volcker created the State Budget Crisis Task Force because of their growing concern about states’ finances. I was at the Union League Club in 2012 when they unveiled their sobering report.
“Illinois has compounded its challenges with poor fiscal management and opaque budgeting,” the task force said. “Illinois borrowed and shifted money across years and funds to ‘ balance’ the budget … The state has perennially pushed its bills off to the future … Illinois has been doing backflips on a high wire, without a net.”
That was long before two years with no spending plan. We need to watchdog our debt, budgeting and the politicians who make the decisions.
What about solutions? The State Budget Crisis Task Force had many.
On pension reform: Illinois could learn from the hybrid systems adopted in a number of other states, the task force said. The just- approved budget does allow future workers to contribute to a 401( k)- style account, which could help ease the pension burden, but each fund must set up the accounts. Also, Illinois should provide annually required contribution amounts alongside the pension contribution schedule. On taxes: Illinois’ sales tax is antiquated, the task force said. It should “reform its income and sales tax structures to make them broaderbased, stable and productive.” In 2014, candidate Bruce Rauner talked often about updating sales taxes, but a few new sales taxes on services were abandoned in the budget just approved.
On budgeting: The task force said the governor’s office should release a detailed report on approved budgets within amonth of passage. The comptroller should release full reports on tax collections and spending within six months of the fiscal year’s end. Illinois should be more transparent about fund transfers and about all the funds available, it said. Illinois has more than 800 funds, some of which will be “swept” to help complete the spending plan.
Multi- year forecasting and long- term planning that goes out four years are needed. “Rules and regulations will need to be put in place so that the plan is not just a recommendation but will be adhered to,” the task force wrote back then. An omnibus spending bill: “If the total state budget was enacted as a single omnibus bill, this would facilitate monitoring and increase transparency,” it said.
A rainy day fund: For years, politicians called for one. On occasion, Illinois had one. We should be putting money aside for storms ahead.
Impasse Illinois: The task force did not foresee a two- year impasse, but let’s consider steps to stop that possibility, please. We had an impasse. What we needed was a shutdown.
The Associated Press reported that no budget means a shutdown in two dozen states. No school money. No state parks. No beaches. ( Just ask New Jersey Gov. Chris Christie about that.) No lawmaker or employee pay. Other states have shutdown laws that deter late budgets.
Let’s do what it takes now, while we’re all still stinging, to get those changes made.
Several Republicans who voted for the budget and tax increase said they were breaking ranks with Rauner because they were feeling pressure fromtheir constituents. We need more of that constituent involvement consistently if we’re to truly tackle our enormous financial challenges.
We can do it. Let’s get busy improving Illinois.