Rauner’s Promises Are Budgetary Fantasies PDF Print E-mail
Commentary/Politics - Illinois Politics
Written by Jeff Ignatius   
Sunday, 31 August 2014 19:28

“We should have billions of dollars every year as part of our budget process ... [to] maintain and expand our infrastructure,” Bruce Rauner said last week, according to the Chicago Tribune.

Rauner has been doing his best to woo the road builders all year, and he was speaking to the Illinois Farm Bureau, which has lots of members who rely on roads and bridges to get their goods to market. So I understand the practical politics of his bold promise.

But this stuff costs money. Lots and lots and lots of money. And infrastructure is only his second priority. His top priority is education funding; he wants to spend even more money on schools.

Yet Rauner says he wants to slash the state’s income-tax rate. Can he really do all that with lower revenues?

There are three ways to pay for these pie-in-the-sky plans: (1) gin up the state’s economy to North Dakota levels; (2) stop making the full state-pension payments; or (3) increase total state taxation far above current levels.

Let’s examine all three.

(1) Rauner has been saying all along that economic expansion is key to generating the revenue needed to pay for everything he wants to do. Yes, Illinois’ jobless rate is down considerably over the past year. But unless oil and natural-gas fracking turns our state into another Saudi Arabia, there’s just no way Illinois can hit Rauner’s projections.

Last week, the Congressional Budget Office issued a forecast that the nation’s economy will grow by 1.5 percent in 2014. We’ll need state growth way beyond that just to start covering Rauner’s big promises. Does anybody out there really believe Illinois is capable of outperforming the national economy by that much, even with massive reforms to civil lawsuits, workers’ compensation, and unemployment insurance?

(2) Resuming the state’s sad history of skipping or skimping on pension payments would likely result in a major bond-rating downgrade, perhaps even to junk status. That’s really not an option. The other move would be to force local school districts to take over the state’s role of funding the teachers’ pension system. But Rauner has also proposed another magical fantasy of capping local property taxes.

He can’t shift pension costs and cap property taxes all at once without decimating the budgets of every school district in Illinois. Period. And if he doesn’t muscle this local fiscal nightmare through the General Assembly in a big hurry (fat chance), there won’t be nearly enough money available to pay for even a little of what he wants to spend.

Rauner has also said he wants to immediately put all state employees, teachers, and university employees into a 401(k)-type retirement system to ease pressure on the state budget. But considering the Illinois Supreme Court’s clear hostility to anything that even remotely pares back public pension benefits, that idea ain’t gonna pass constitutional muster. Not to mention the huge outstanding pension debt the state has accumulated over the years, which still has to be paid off.

(3) After assuring Republican-primary voters that he’d slash taxes, the candidate now says he wants to gradually roll back the 2-percentage-point 2011 income-tax hike over four years. That’s somewhere around $8 billion in lost annual revenue by his target date – about a 40-percent cut in current income-tax receipts. And personal and corporate income taxes account for a little over half of all state revenues.

According to the General Assembly’s Commission on Government Forecasting & Accountability, state revenues, including federal sources and the 2011 income-tax increase, have grown an average of just 4.5 percent a year since Fiscal Year 1998.

Rauner’s proposed service tax would have to be much bigger than the $450 million or so he’s advertised to cover a nut like that. And never mind that taxes on services will tend to drive down consumption, which reduces demand, which hurts economic growth, particularly at the middle and lower ends. (See fantasy number 1.)

Say what you want about Governor Pat Quinn (and I’ve said more than my share of negative things over the years), but at least he tries to live somewhere in the neighborhood of budgetary reality. In contrast, the new government spending that Bruce Rauner is proposing on the campaign trail transcends the political posturing we’ve grown accustomed to as Illinoisans.

I don’t say this lightly, but it’s a boldfaced lie, cheerily spoon-fed to an angry, disgusted populace desperate for even a hint of good news. He needs to be called out for this.

Rich Miller also publishes Capitol Fax (a daily political newsletter) and CapitolFax.com.


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