Illinois Plays Kick the Can
By Illinois State Senator Kyle McCarter
2017 is coming to a close and once again, the state’s poor fiscal health and weak economy are issues left unresolved. Legislative work during the spring session, special summer session days and the fall veto session did little, if anything, to address the systemic problems facing Illinois. I call it “kicking the can down the road.”
Finances and the Economy
As I detailed in last week’s column, Illinois ranks at the bottom when comparing the 50 states for fiscal health. We rank 49 for fiscal health in a study by the Pew Charitable Trusts. Pew looked at state fiscal years from 2002 through 2016. Only New Jersey ranks worse at 50. The report compared state spending with state revenue or income, and indicated states like Illinois suffer from “chronic shortfalls.” According to the analysis, the shortfalls are, “one indication of a more serious structural deficit in which revenue will continue to fall short of spending absent policy changes.”
During this week, a new report from Georgetown University was released. It’s also a cause for concern. According to the Georgetown University Center on Education and the Workforce, Illinois was among five states that suffered the most significant blue-collar job losses during the period from 1991 through 2015. The Georgetown University study was actually about the number and availability of good paying jobs for those people with less than a bachelor’s degree. While nearly half of the 50 states added jobs in this sector, Illinois, New York, Pennsylvania, California, and Ohio suffered the most blue-collar job losses.
The apparent link between the state’s fiscal health and job decline is not surprising. If a state’s fiscal house is on shaky ground, it hampers the economic climate for business expansion and job creation. Overspending, high taxes and burdensome regulations feed the fiscal problems and are negatives when it comes to recruiting new business and industry or creating economic growth. Burdensome government makes Illinois less attractive for business expansion and entrepreneurs and makes us less competitive with states that are fiscally responsible. Additionally, if our state economy is not growing at a sufficient rate, Illinois won’t receive the natural tax revenue growth needed to pay for priorities such as education, and programs and services for our most vulnerable citizens. It also leads to an inability of state government to pay its bills on time, ultimately government can’t get out of debt.
Illinois needs reform. Illinois’ road to recovery, opportunity and prosperity must include economic reforms to improve our business/jobs climate, and public policy reforms for more efficient and accountable government. That means ending the failed policies of the past. This is why I have advocated for reforms since coming to the Illinois Senate in 2009.
Since 2015, when voters decided they wanted politically-shared government, there has been an ongoing philosophical battle in Springfield. On one side are supporters of reform. On the other side, proponents of business as usual. Unfortunately, the latter group continues to dominate. As 2017 comes to a close, we can conclude that once again, the Legislature failed to address the systemic problems facing Illinois. Our fiscal problems and poor economy remain.
Illinois’ Overdue Bills Shrink
Last month, I reported on the state’s use of selling government bonds to pay off old debts. The bonds are a way of borrowing, allowing Illinois to use the proceeds of the sale like a loan. The bonds were used to reduce the backlog of overdue bills from a high of over $16 billion a couple of weeks ago to just under $10 billion as of the date of this report, according to the Illinois Comptroller. While the reduction is an important change, the remaining amount is still unacceptably high. In addition to the bonds eventually needing paid.
Among the recent bills being paid with the bonding maneuver are those owed to vendors that provide Medicaid services to the state. Hospitals, doctors, nursing homes and other healthcare providers have seen time delays from many months to more than a year between providing care and being paid. That’s operating government on the backs of providers. There is both a benefit and a detriment to the bonding plan. Money obtained through the bonds must be paid back, but the interest rate is far below what Illinois pays in interest penalties on the overdue bills. That’s the benefit. The detriment is that there is no definitive plan to pay back the bonds.
Additionally, borrowing by bonding, without any adjustment to the spending habits that helped bring about our fiscal crisis, ultimately won’t solve our problems. Continuing this failed policy means government is delaying its’ “day of reckoning.” In the “Taxpayer Bargain” balanced budget plan I introduced earlier this year I included a plan for bonding, but it was tied to reforms to save more than $500 million annually in late charges. It would also require a cap on government spending so we can begin getting Illinois out of debt.
If government was really serious about addressing these problems, the policies and practices that gave us the fiscal crisis would not remain in place.
Flood Assistance for Clinton County
In other news, there is some financial help available for victims of the summer floods. Senate Bill 403 was signed into law during the week, providing tax credits of up to $750 for eligible property owners in 18 Illinois counties, including Clinton where flood damages were sustained in July.
The bill creates a natural disaster tax credit that eligible, affected property owners may apply to their 2017 Illinois income taxes. Qualified properties include a taxpayer’s principle residence or land owned by a small business, but not a rental or leasing business. The allowable income tax credit will be the lesser of $750 or the deduction allowed under the Internal Revenue Code for each taxpayer who owns qualified property in a county declared a state disaster area.
The bill provides that township assessors shall issue eligibility certificates for appropriately requesting property owners, and that assessors shall certify to the Illinois Department of Revenue listings of flood-damaged properties. According to the Illinois Emergency Management Agency, the July flood damage had a fiscal impact to the state estimated at $4.6 million.
The other counties affected by the legislation are Cook, Lake, Kane, McHenry, Alexander, Jackson, Marshall, Union, Woodford, Carroll, Henry, Jo Daviess, Lee, Ogle, Rock Island, Stephenson and Whiteside — all of which were declared state disaster areas last summer.