Two years of political and economic havoc; it didn’t have to be this way
By ALAN J. ORTBALS
Multiple Illinois legislatures and governors of both parties created the state’s fiscal problem over multiple decades, playing shell games to mask revenue shortfalls and shortchanging pension contributions to cover operating costs. Passing a temporary income tax hike in 2010 to solve a chronic revenue shortage was idiotic.
Into this mess rode Bruce Rauner in January of 2015 on the crest of a 50.27 percent wave election. For some reason he thought that was a mandate to fundamentally change state government despite the fact that he faced super majorities of Democrats in the General Assembly.
Without talking to the legislative leadership, he immediately hit the road, trying to sell his Turnaround Agenda to anyone who would listen and telling audiences that if the legislature would go along with his wish list, he might be willing to acquiesce to a tax increase. That was never going to get him anywhere other than where he and we ended up — with the state in virtual bankruptcy threatened with junk bond status.
I was never a fan of Rauner’s Turnaround Agenda. His proposed fix for the pension problem was deemed by many to be unconstitutional and major changes like term limits and right to work should be up to the people to decide —not the result of political extortion.
I guess Rauner thought that the Democrats just couldn’t wait to raise taxes, which was a world view completely out of kilter with reality. I’m president of our homeowners’ association and I can tell you that even a modest increase to help take care of our own backyard sparks a backlash. The reason Illinois dug itself such a hole was because politicians from both sides of the aisle didn’t have the nerve to do what they knew had to be done and just kept kicking the can down the road.
Before you scream about Illinois being a high tax state, consider the following. At a flat 3.75 percent, our income tax rate was one of the lowest in the nation. Even at 4.95 percent, it’s still lower than Missouri, Iowa, Wisconsin and Kentucky. And, unlike Missouri, we don’t tax retirement income. We don’t tax personal property and we don’t tax food and drugs. Cross the river to play a round of golf and they charge sales tax on it. Even Rauner knew that a tax increase was necessary, but he didn’t have the guts to propose one.
And, Rauner badly played his hand. Rather than taking his show on the road, he should have gone to the legislative leaders behind closed doors and tried to cut a deal — proposing a tax increase that he would take the heat for in return for passage of his Turnaround Agenda items. I don’t think he would have gotten everything he wanted but I’ll bet he would have gotten some of them.
Instead, he tried to get the legislature to both take the heat for a tax increase and swallow his agenda that was anathema to the Democrats’ base. That strategy never made any sense. Having failed at that gambit, he needed to take the lead, present a balanced budget to the General Assembly and put his Agenda on the back burner. But he didn’t do that either.
The Illinois state constitution requires the governor to present a balanced budget and Rauner claims to have done that, but that’s a claim that received a “pants on fire” rating from the Pulitzer Prize-winning Politifact.
If you’d like an opinion that’s a little closer to home, this is how Ralph Martire, executive director of the Center for Tax and Budget Accountability, an Illinois think tank, sized it up.
“The FY2018 General Fund budget proposed by Gov. Rauner cannot be considered balanced by any objective standard for two reasons: first, it relies on over $1 billion in unspecified and unlikely savings from ‘pension reforms’ that are not only unlikely to pass, but if they did, would likely be ruled unconstitutional; second, and even more troubling, is the $4.572 billion in ‘savings’ the governor anticipates from ‘working together on a grand bargain’ — which is so ambiguous that it cannot credibly be valued at all.”
So, after inflicting havoc on the state for two years, Rauner walked away with nothing. I didn’t vote for him but I expected better. I thought as a nonpolitician and a successful businessman, he would have taken a pragmatic, non-dogmatic approach to problem solving, ignored the political ramifications and would have been far more adept at negotiations. What we got instead was the political games played by an amateur and that hurt everybody. It didn’t have to be this way.
Alan J. Ortbals is president and publisher of the Illinois Business Journal. He can be reached at email@example.com or (618) 659-1977.