By ALAN J. ORTBALS
The last four years have been dreadful for the people of Illinois. Some 45,000 people left the state between July 2017 and July 2018, the fifth straight year of population loss. In the battle between Gov. Bruce Rauner and Speaker Mike Madigan, we became collateral damage.
Now that we have a new governor, we can hopefully put all of that behind us and work together to chart a course to both solvency and lower taxes and make Illinois a more business friendly state. Here are a few steps we should take to get us headed in the right direction.
Workers Compensation Reform. Illinois has some of the highest workers compensation rates in the nation. Meanwhile, our neighbor to the east, Indiana, has some of the lowest. This is a huge barrier to doing business here. We need to take a close look at what Indiana and other border states are doing and move to bring Illinois in line with them.
Reduce Property Taxes. We have far more units of local government than any other state, many of them that we could do without. For example, Illinois has more than 1,400 township governments. Townships are anachronistic and no longer needed but state law has been designed to protect them. An attempt to dissolve just one township requires petition signatures equal to 10 percent of the number of votes cast in the entire county in the previous election; they must be gathered within a 90-day window; all voters in the county get to vote on the question; and it requires approval in three-fourths of the townships to be successful. Dorothy Gale had an easier task going after the broomstick of the Wicked Witch of the West. There needs to be a real avenue to allow citizens of a township to decide this matter for themselves.
Graduated Income Tax. Illinois has been saddled with a flat income tax rate for nearly 50 years. It’s one of the reasons Illinois has dug itself into such a fiscal hole. Because a flat tax relies too heavily on those at the bottom of the income pyramid and because the incomes of those folks over that period have essentially been stagnant, the state has had to resort to games like sweeping money out of the road and bridge fund and shortchanging pension payments to try to make ends meet. It’s also hampered our economy because every dollar that those at the bottom of the pyramid pay in taxes is a dollar they don’t have to spend on goods and services.
The Illinois Center for Tax and Budget Accountability has laid out a plan for a progressive income tax that would lower taxes for 98 percent of Illinois taxpayers; keep the upper end in line with other Midwestern states; and generate $2 billion more per year in revenue. This needs to be implemented.
Pension Reform. Illinois’ pension fund shortfall stands at $130 million and is growing by the day. Pension fund contributions now take up approximately a fourth of state expenditures, squeezing other public services.
The legislature has tried to tame this beast but without success. That’s because state employee retirement benefits are protected by the Illinois state Constitution. In 2015 the Illinois Supreme Court struck down a law that would have curbed future benefit growth by limiting cost-of-living increases, capping pensionable income and raising retirement ages. Those measures would have saved the state tens of billions of dollars. We cannot give up on this.
Providing employers with relief from sky-high workers comp insurance rates and allowing voters to have a real voice in consolidating and eliminating layers of government can be done through the normal legislative process. Because the Democrats are in complete control of state government, if they don’t take action on these items, you know who to blame.
The other measures — switching to a progressive income tax and subduing the pension monster — require amendments to the state constitution and that’s a Herculean lift. Both houses would need to pass the measure by super majorities; the governor would need to sign it; and the voters would need to approve it. But, it can and must be done.
These are just some of the steps that should be taken. It’s not meant to be an exhaustive list. But, implementing them would go a long way toward solving our state’s mounting problems.
Alan J. Ortbals is president and publisher of the Illinois Business Journal. He can be reached at [email protected] or (618) 659-1997.