Illinois lawmakers have yet to plug a massive budget hole that is carving deeply into education and other state-supported services. Rick Winkel has seen the widening budget gap from all sides, serving in the Legislature for more than a decade before joining the U. of I. as director of the Office of Public Leadership and Public Affairs at the Institute of Government and Public Affairs. The former state senator, who also is an adjunct professor in the College of Law, discusses the state's financial crisis and possible solutions in an interview with News Bureau Business & Law Editor Jan Dennis.
Many economists - including some of your colleagues at IGPA - say an income tax increase is likely necessary to pull Illinois out of its $13 billion budget hole. Why is the Legislature so reluctant to consider one?
Notwithstanding evident reluctance, support does exist in the Legislature for a tax increase. For example, in the state Senate, where 37 of the 59 members are Democrats, 31 Democrats voted in May 2009 to pass House Bill 174 to increase the income tax rate on individuals from 3 percent to 5 percent (a 67 percent increase) and amend the sales tax to include dry cleaning, video rentals and dozens of other services. No Senate Republicans voted for the measure.
In the House, where the Democrats enjoy a 70-48 advantage over the Republicans, Speaker Michael Madigan made it clear that, unlike the Senate, House Democrats would not go it alone. He said that House Democrats would consider the Senate's tax increase legislation if, and only if, some Republicans first committed to vote for it, too. However, Republicans have remained united in their refusal to support a tax increase, saying instead that they would not consider a tax increase until the state had first attempted to balance the budget by cutting spending, eliminating waste, and gradually paying down backlog of unpaid bills. Therefore, the tax increase legislation died.
Is the upcoming election a factor and might support for a tax increase build after November?
While legislators seem to agree that the state has an unprecedented structural deficit and an enormous backlog of unpaid bills, all 118 state representatives and 20 of the 59 state senators are up for re-election Nov. 2.
(The reason not all senators are running is that the Illinois Constitution divides the senators into three groups, and each group has one two-year term at different times during the 10-year census period as well as two four-year terms.)
Those few legislators who face serious challengers in competitive districts believe that if they were to support an income tax rate increase, then angry voters would throw them out of office. On the other hand, some legislators in relatively safe districts would argue that a tax rate increase is unnecessary and oppose it as a matter of fiscal policy.
Thus, one might think of the upcoming election, especially the contest for governor, as a referendum on the future direction of the state's fiscal policy. Voters will choose between Pat Quinn, a Democrat who advocates an income tax increase, and Bill Brady, a Republican who would rely solely on austerity measures with no tax increase. If Quinn wins, then support might build in the legislature for a tax increase. That will not happen if voters elect Brady.
As the budget gap goes unsolved, unpaid bills are piling up that are cutting deeply into education, social services and other state-supported services. Is the Legislature's failure to address the problem irresponsible or is there good cause for its inaction?
In view of the dire consequences and as a matter of sound fiscal policy, there is no good cause for legislative inaction. It would be irresponsible.
Can the budget gap be closed without an income tax increase? Could spending cuts erase the deficit or are they just part of the solution?
In my opinion, the governor and Legislature must exercise the political will to cut spending and waste by $3-4 billion, and then resolutely commit to hold the line on spending - no new programs or expansions - and the state of Illinois must begin systematically paying down the backlog of unpaid bills over the next two to three years. The governor and Legislature must firmly establish this austerity program by statute, and once that is accomplished, only then might the Legislature consider passage of a tax increase. Illinois taxpayers would be more tolerant of a tax increase if the governor and Legislature would make a genuine and verifiable commitment to govern responsibly within a balanced budget.