Senate Week in Review
It’s the last week of the year, a week between the two national holidays – Christmas and New Year’s Day. The Illinois General Assembly is not in session, but the Capitol is not a dark and abandoned place. State employees are still on the job and an occasional group of people tour the ornate building during the day while the Capitol Dome is draped in multi-colored lights at night.
Ending 2015 With No Budget
Illinois government ends the year without a complete and constitutional budget in place, but as the saying goes, “Hope springs eternal.” We have a pledge from legislative leaders and the Governor that talks to end the current budget impasse will continue, even as talks on the next budget typically get under way by March.
This is a traditional time of the year for introspection and anticipation. We reflect on the year that is ending and look ahead to the new year that is beginning.
The biggest challenge Illinois faces in 2016 is the above-mentioned state budget. The state’s on-going fiscal crisis is a thorn in our side. It restricts the government’s ability to provide basic services for the most vulnerable of our citizens and it creates an uncertain future for a state saddled with billions of dollars in overdue bills and massive public debt. How to pay for all of it is the big question. I think it’s fairer if we generate new revenue by expanding the economy through the creation of new businesses and jobs. Growing the economy is preferable to asking the people of Illinois, already saddled by high taxes and fewer jobs, to pay more.
Bills Are Piling Up
Illinois Comptroller Leslie Munger recently released a report on the first quarter of the current fiscal year that began July 1. By the end of October, there were more than $6.6 billion in overdue bills. She indicates the backlog amount will continue to climb. Without a budget in place, there is little control on spending. As I wrote in a previous column, a budget is a blueprint for financial stability and responsibility. It’s about keeping spending in line with revenue. That’s responsible governance, but that’s not what taxpayers are experiencing.
You Can’t Tax Your Way To Prosperity
In 2015, state income tax rates fell from 5 percent to 3.75 percent. That’s a partial rollback of the 2011 Democrat tax hike that took rates for individuals from 3 percent to 5 percent. Unfortunately, state spending did not decline accordingly to match the drop in revenue from the lower rate.
Instead, what we’re hearing is a call to reinstate the 5 percent state income tax rate for individuals. House Speaker Michael Madigan said five percent is a “good place to begin.” His comment makes me wonder where he wants to stop.
The 2011 tax hike, a 67 percent increase in the rate, was the largest in state history. Sponsors and supporters promised it would pay off old bills and resolve the state’s fiscal problems. Unfortunately, those who controlled government also expanded government and increased spending. Using an increase in income to pay off old bills is a responsible practice, but getting out of debt doesn’t work if you keep spending money at a higher rate than you are earning it or – as a government – collecting it.
During the tax rate hike period from January 2011 through the end of 2015, Illinois government will have taken more than $31 billion from individuals, families and employers for government. Today, the public is saddled with the same level of overdue bills that we had prior to the tax rate hike.
It’s not a good track record, it’s not a resume enhancer, and it’s certainly not a confidence builder at a time when some people are suggesting taxes be raised again as a first step.
Turn Around = Opportunity
We need a top-to-bottom assessment of government spending and priorities. We need to eliminate duplication of services and reduce waste, fraud and abuse wherever we can. We also need to pass the economic/government reforms outlined in Governor Bruce Rauner’s Turnaround Agenda to get our economy humming again, and we must realistically address the long-term debt of underfunded public pensions in a way that is fair and equitable for both employees and taxpayers. Estimated at about $110 billion, Illinois’ public pension debt diverts available resources today and leaves a huge burden for future generations.
One element of Rauner’s Turnaround Agenda I supported and that I advocated since first coming to the Illinois Senate is workers’ compensation reform. It is perhaps the single largest roadblock to a prosperous Illinois. Workers’ comp is an insurance program that covers employees injured on the job. The rates for coverage paid by Illinois employers are among the highest anywhere in the nation. Costs for coverage are assessed on every $100 dollars of wages employers pay their workers. The most recent study by the State of Oregon’s Department of Consumer and Business Services shows Illinois with the seventh-highest workers’ compensation rate in the nation in 2014. The rates paid by Illinois employers are 27 percent higher than the national median average and higher than five neighboring states.
The most important reform we can make to workers’ compensation law is making the system fair for both employee and employer. The single most impactful factor in that reform is establishing a “causation” standard that says the majority cause of the workplace injury or illness must be the workplace. That sounds logical but as it stands now, the employer is held 100 percent responsible for damages if it’s shown the workplace is related in any way to an injury or an aggravation of an injury, even if the original injury is unrelated to the workplace.
The high cost of Illinois’ workers’ compensation system makes it harder for businesses to be successful and it reduces job creation and keeps wages low.
Given this reality, it’s not surprising to learn that according to recentU.S. Census Bureau data and reported by the Illinois Policy Institute (IPI), people continue to leave Illinois for other states. According to IPI, Illinois lost “105,000 more people to other states than it gained from the period of July 2014 to July 2015.”
Overall, Illinois’ population shrank by 22,194. We are the only state in the Midwest region to lose population. The Institute also reports:
• Illinois’ loss of 105,000 people to other states tops last year’s loss of 95,000 people to other states, which was a record at the time.
• The 2014-2015 loss brings Illinois’ five-year tally to 400,000 people lost on net to other states, and 10-year tally to 700,000 people lost on net to other states.
While there is much about our state that is in need of repair and reform, I believe we have an opportunity to make 2016 a turning point in restoring confidence in state government, revitalizing our economy, inspiring hope and creating opportunity for everyone.
State Disaster Areas – Clinton, Madison and St. Clair
Governor Rauner issued State Disaster Proclamations on Tuesday, December 29 and Wednesday, December 30. The proclamations cover 12 counties including Clinton, Madison and St. Clair.
The Governor is also committing state resources to help local responders react to the flood threats to life and property by activating the state’s Emergency Operations Center in Springfield. Other counties included in the Disaster Proclamations are; Alexander, Calhoun Christian, Douglas, Jackson, Jersey, Monroe, Morgan and Randolph.
You can check on current weather situations across the state, find assistance and preparedness information by visiting the READY ILLINOIS website at www.ready.illinois.gov.
“The greatest thing in this world is not so much where we stand, as in what direction we are moving.” — Oliver Wendall Holmes, Associate Justice of the United States Supreme Court, 1902 to 1932. (Portrait of Oliver Wendell Holmes. Reproduction courtesy of the Supreme Court Historical Society.)