By ALAN J. ORTBALS
The nation got some good news last month when the U.S. Census Bureau reported that household incomes were up and the poverty rate was down.
And when you look back to see from whence we came, it’s truly impressive. Eight years ago the national economy was in free fall. We were losing more than 800,000 jobs per month; unemployment topped 10 percent; the stock market had lost half its value; banks were teetering and the American auto industry was on its back.
Now, unemployment is less than 5 percent; the stock market has tripled; and America is building cars and homes again.
Here in the Land of Lincoln, however, we are parked on the sidelines watching this prosperity parade pass us by. Illinois is suffering its own recession. Businesses of all types are cutting back. Those that can are investing their time, money and resources in other markets. Unemployment here is 20 percent higher than the rest of the nation.
Why? Because of the standoff between Republican Gov. Bruce Rauner and the Democrat-controlled legislature over Rauner’s Turnaround Agenda.
The governor, the legislature and everyone else who takes a rational view of the situation knows that a tax increase is necessary to balance the budget and put the state on the path toward solvency. Rauner, however, refuses to acquiesce to one without passage of his Agenda — something the Democrats are simply unwilling to do — and the legislature can’t muster the votes to override a veto. So, there it sits with no budget and spending priorities set by court order.
You might think that this is fine — the government is bloated anyway — but this impasse doesn’t just affect those departments, agencies and districts that directly receive state funds. It also impacts every private business that provides goods or services to them. And, because those companies have less revenue, they curtail their spending with businesses that provide goods and services to them and so on and so on.
That’s where we are now, with the state’s economy getting worse by the month and no end in sight.
In an effort to add more friends in the legislature, Rauner is spending millions of his own dollars in support of Republican candidates in the November election — more than $13 million so far. But, I don’t think it will make any difference. A few seats may move from one side of the aisle to the other but certainly not to the extent that the Republicans would take control of both houses. And, I don’t see how we can stand another two years of this. How bad will things get by 2018?
For the good of the state and its nearly 13 million people, Rauner should put this fight off for another time and negotiate a balanced budget with the legislature. We’re not as far from solvency as many people think. This is fixable.
The Center for Tax and Budget Accountability, an independent, bi-partisan Illinois think tank has put forward a clear and simple plan that would correct our fiscal path in a few years. In a nutshell it would:
- Increase the personal income tax rate from 3.75 percent to 4.75 percent; (It would still be lower than Iowa, Missouri, Wisconsin or Kentucky)
- Increase the corporate income tax rate from 5.25 percent to 6 percent; (It would still be lower than Iowa, Indiana, Wisconsin and Missouri)
- Expand the sales tax to cover many services; (Illinois sales tax applies to only five services. The average among other states is 51); and
- Reamortize the pension debt using a level dollar approach (which can be done simply by amending state law.)
According to the center’s report, It’s All about the Revenue: A Common Sense Solution for Illinois’ Fiscal Solvency, these simple steps are all that’s necessary to solve the state’s financial problems.
I understand that the governor believes that adoption of his Turnaround Agenda is necessary to make Illinois competitive again. Others disagree. So, let’s let the voters decide.
In 2018 Rauner and much of the legislature will be up for election. I think the Republicans should make that election a referendum on his Agenda. Like Newt Gingrich did with his Contract With America in 1994, have all the Republican candidates sign it and run on it. If they can convince the majority of Illinoisans that the Agenda is crucial to our future, they’ll not only return Rauner to office but give him the majority he needs in the legislature to pass it. If he continues on his current path, he’ll not only do great damage to the state but he will be held responsible for it by the voters.
Governor, a good general not only picks his battles, he also picks the time and place. This isn’t it. Put this fight off to 2018 and, in the meantime, get Illinois moving again.
Alan J. Ortbals is president and publisher of the Illinois Business Journal. He can be reached at [email protected] or (618) 659-1977.