The horrid history of political promises in Illinois
The Illinois Senate recently heard testimony on a bill to bail out College Illinois, a Ponzi scheme doubling as an ominous symbol of the state.
More than 20 years ago, a state agency called the Illinois Student Assistance Commission, or ISAC, started offering a plan where families could “prepay” for their child’s college tuition at a fixed price, thus “locking in” savings.
Here’s the catch: ISAC had no businessmaking those promises, and the state isn’t required to pony up the money necessary to back them if tuition surges beyond ISAC’s investment returns.
Nowthe College Illinois programis $300 million short, and more than 2,600 contract holders stand not to receive their full benefit.
Overpromise and underdeliver: Illinois’ unofficial motto.
College Illinois is just the latest political promise to fall apart. But that hasn’t stopped the state’s new governor from making equally irresponsible claims.
Gov. J.B. Pritzker is offering Illinoisans a deal of his own. Pritzker’s new TV ad promises that “97 percent of Illinoisans will not see an income tax increase” under his $3.4 billion tax hike. In exchange, Pritzkerwants to remove Illinois’ flat income tax protection from the state constitution.
Keep in mind that Pritzker’s tax plan relies on outlandish assumptions that put it short of his $3.4 billion revenue estimate by between $1 billion and $2 billion. That means his rateswill need to go up. Also, the pace of property tax growth in Illinois means Pritzker’s promised income tax break for the typical family will be completely wiped out in a year or less.
But even assuming Pritzker’s rates are signed into lawas stated, should Illinoisans take the deal?
A look back at the state’s tax hike history suggests not.
In 1989, state lawmakers passed a two-year temporary income tax hike, bringing the personal income tax rate up to 3 percent from2.5 percent. Transcripts from the IllinoisGeneral Assembly showlawmakers framed the debate around providing school funding and property tax relief. In 1991, they made the education portion of the tax hike permanent, with the rest extended for another two years. In 1993, they made the whole thing perma- nent.
Thenext year, Gov. Jim Edgar signed into lawa bipartisan pension bill he claimedwould solve the state’s then-$15 billion pension debt.“We had a time bomb in our retirement system thatwas going to go off in the first part of the 21st century,” Edgar told The State Journal-Register in 1994. “This legislation defuses that time bomb.”
His 50-year payment plan, known as the “Edgar ramp,” paved theway for the 25 years of pension politics that havewreaked havoc on state and local budgets.
By 2011, Illinois’ pension debt had ballooned to more than $85 billion. Of course, the bill eventually came due. But lawmakers promised in 2011 that another temporary income tax hike would fix the problem.
“The purpose of this bill is to raise enough money so thatwe can continue to pay our pensionswithout borrowing the money, to pay off our debt, to have enough money to pay the interest on that debt, and for the first time ever, establish caps on howmuch we can appropriate,” Senate President John Cullerton said on the Senate floor.
“This, again, is a temporary tax.”
So Illinoisans shouldered a record income tax increase, with lawmakers hiking the income tax rate to 5 percent. They promised the tax hikewould partially sunset in 2014 to 3.75 percent, and sunset again in 2025 to 3.25 percent.
Despite more than $30 billion in additional tax revenue from the tempo- rary tax hike, Illinois’ pension debt grew by $25 billion.
In 2017, lawmakers broke their sunset promise. After a yearslong budget impasse, they passed the largest permanent income tax hike in state history, hiking the rate back up to 4.95 percent.
The pension problem hasworsened since then. And credit downgrades loom. And now, Pritzker says his $3.4 billion tax hike will really fix the problem.
“The fair taxwould eliminate the budget deficit, balance future budgets and reduce the pension liability,” Pritzker said this week at a Belleville news conference.
Illinoisans have heard these lines before. And Pritzker is pressuring their state representatives to vote on a constitutional amendment in the coming weeks.
Those lawmakers should side with their constituents — not the governor.
Voting for an amendment with Pritzker’s rates attachedwould be another political promise, made to be broken. And voting for an amendment without them? That’s just a blank check.
Illinoisans can afford neither.
Austin Berg, a writer for the Illinois Policy Institute, wrote this column for the Illinois News Network.