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Big Illinois Government’s Insatiable and Impossible Demands from Taxpayers

It’s a sad tale of two cities.

The news out of Washington, D.C. this spring is that President Donald Trump and the Republican majorities in Congress plan on cutting taxes. The unsurprising news out of Springfield, Illinois is that General Assembly Democrats are planning to raise taxes.

Also not surprising is that there is a hot debate about whether the GOP tax cut efforts in D.C. can succeed. There is no debate, however, about Illinois Democrats’ accomplishing their mission. Especially when Republicans, including Governor Bruce Rauner, appear poised to help the Democrats.

What is also not debatable is whether raising taxes in Illinois will be enough to make ends meet in a state where spending continues to be out of control. It won’t be.

Sometimes a trip to dictionary.com is helpful even when we all know the definitions. The first word for today is “insatiable”:

  • incapable of being satisfied or appeased
  • not able to be satisfied or satiated; greedy or unappeasable

As in an insatiable hunger for more of your tax dollars.

Here are three synonyms:

  • voracious, unquenchable, bottomless

No one will ever provide the liberal Democrats in Illinois enough money to make them happy. I offer as proof the Illinois government employee pension systems. If Republicans would just use some of that Bruce Rauner/Ken Griffin money to get the word out about how corrupt those systems are, maybe Republicans would start to win more elections here.

Here is the title of an article from the Illinois News Network earlier this week: Study: Illinois’ public pensions are worse off than state claims. From the article (and notice the use of the word “bottomless“):

Illinois has on hand only 29 percent of the funds needed to meet the promises made to current and future retirees. That’s the worst record of any state, and [Hoover Institution Senior Fellow Joshua] Rauh concludes that for the state to stop sinking further into debt, it would have to contribute more than twice what it contributes now.

Illinois now devotes nearly 25 percent of its state budget to the state worker pensions, so doubling that figure means close to half of the state’s revenues would have to go to pensions to avoid accumulating further debt.

“I think people increasingly understand that they’re throwing tax dollars into a bottomless pit,” Mark Glennon, the founder of the WirePoints website and a former venture capitalist and financial adviser, told Illinois News Network.

Putting more money in the current system is futile, according to Glennon.

“The smart ones already know the current situation, but they’re not honest enough to talk about it in public,” he said.

A dozen years ago pension expert Bill Zettler began talking about it — and both political parties ignored his warnings. Bill regularly pointed out the simple truth that if something is impossible — it won’t happen.

That’s our second word for the day: impossible.

In that same Illinois News Network article, Mark Glennon merely confirmed what Bill Zettler had to say many years ago:

The promises that have been made to retirees in Illinois eventually will have to be broken, and the pensions won’t be made in full, according to Glennon.

“Ultimately, I think that’s unavoidable …” he said. “The numbers are far beyond insurmountable already.”

Getting back to the word “impossible” — as I wrote nine years ago, we have two competing impossibilities. Right now there isn’t support to make the needed changes, and yet there isn’t enough money to meet the obligations.

How do we get to a solution? Until public support is rallied — solving the pension problem in Illinois is “incapable of being done, undertaken, or experienced.” It is “incapable of occurring or happening.”

The credit rating agencies understand the situation in Illinois clearly. Note this headline from Crain’s Chicago Business: “Illinois’ credit rating slashed to a cut above junk.” Need I define the word “junk”?



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‘Taxpayer Bargain’ Budget Puts Taxpayers First

Editor’s note: Since the op ed below was first drafted, the authors have introduced their proposal in a series of bills to be considered by the state senate.

By State Sens. Kyle McCarter (R-Lebanon) and Dan McConchie (R-Hawthorn Woods)

For two years, a political paralysis has had a grip on Illinois government. For two years, we have operated the state without a regular budget – the longest in American history. Unfortunately, even though we don’t have a budget, the spending spree continues unabated. With no controls, spending is out-of-control. The state is on pace to spend 38 billion in the current fiscal year when we expect to collect $32 billion in revenue.

The budget proposals offered over the last two years have either been wildly out of balance or raised taxes first while doing little to restrain the growth of government. Tax and spend solutions have never worked for the long-term fiscal health of our state, nor contributed to sustainable economic growth and job creation.

The “Taxpayer Bargain” budget plan we unveiled April 4 will end the failure of what passes as ‘business as usual’ in Springfield, because it will begin to put our fiscal house back in order. It took years of mismanagement to get into this crisis and it will take years to get out of it. We must begin now. We are approaching an insurmountable debt crisis, but there is hope if we act in a fiscally responsible manner from this point forward. Under the “Taxpayer Bargain” budget, for the first time in many years, Illinois will have a complete and constitutional budget, meaning spending is limited to the actual revenue collected. It requires reforms that make government more efficient and accountable, and creates guidelines to reduce the waste and abuse of taxpayer dollars. It does this with no tax increase and no new taxes.

The plan is very strong medicine for a very sick state. It forces the Legislature to make tough decisions between needs and wants. The “Taxpayer Bargain” requires lower spending, with 10% across-the-board cuts at state agencies and departments. It simply asks for a dime of savings for every dollar spent. Recognizing that there are priorities, primary and secondary education is protected, as is Medicaid for the most vulnerable, and pension payment obligations. The plan includes a hard, enforceable cap on spending. Part of the fiscal management under the “Taxpayer Bargain” includes borrowing $7 billion to begin to pay off old bills so we can eliminate $500 million in late payments and fees. Paying back the bonds (borrowed money) will be tied to the spending cap. If the Legislature ignores the cap and returns to their overspending abuses of the past, they lose their salary for that fiscal year. On the other hand, any revenue collected that comes in above the cap, will go directly to priorities: Education – 25%; Capital construction (roads and bridges) – 25%; Pension debt payments – 10% and Paying off old bills – 40%.

A lot of input from both Republican and Democrat legislators was included in the “Taxpayer Bargain.” It also includes pending legislation sponsored by members of both parties. It is a compromise between political differences, but does not compromise or sellout common sense principles that Illinois government must live within its means just like Illinois families and businesses. If Illinois families can’t afford to overspend year after year then state government can’t afford it either. We know that making these cuts will be difficult and painful, but in order to restore Illinois’ fiscal health for today and for future generations we must act. The “Taxpayer Bargain” is the only budget proposal without punishing tax increases.

We’ve been asked, “Why make this effort when your plan won’t have a chance of passing, especially in the House.” The answer is simple: We are obligated, as elected members of the General Assembly, to do what’s right, regardless of the political probabilities.

Remember the results the last time taxes were raised without reforms: People fled the state, prosperity and opportunity were diminished as jobs were lost and businesses closed or moved away. There is another way. Intrigued? We created a website www.taxpayerbargain.com where we are continually adding details of the “Taxpayer Bargain.” Our challenge is to save our state. The “Taxpayer Bargain” is how to do it without asking for one more dime from you.

TAKE ACTION

Click Here to contact your state senator and representative and ask them to support and co-sponsor the 15 bills that are needed to deliver a no-tax-increase-balanced-budget to the governor.



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Steve Rauschenberger: There is Too Little Interest in Addressing the State’s Budget Fundamentals

A couple of weeks ago I had the opportunity to talk with former state Senator Steve Rauschenberger, an old friend and former boss. When I first met him during his first campaign back in 1992, the political operative I was with made a prediction to me after the meeting: Steve is not going to play along — he’s going to be a problem for the GOP establishment. And he was.

Along with four other senators elected the same year, Steve became part of what was called the “Fab Five”: Peter Fitzgerald, Chris Lauzen, Pat O’Malley, and Dave Syverson. Only Syverson remains in the Illinois Senate today. The group was outspoken and critical of both parties when it came to important policies.

Then Senate President James “Pate” Philip made Steve chairman of the senate’s Appropriation Committee, and Rauschenberger became a respected expert on the budget. In addition, Steve excelled in an understanding of electric deregulation, telecom legislation, and the state’s health care industry. You don’t get that deep into technical issues such as those without ability and commitment.

In the senate Rauschenberger was a critic of both Governors Jim Edgar and George Ryan, but once Rod Blagojevich took office, Edgar and Ryan looked a whole lot better by comparison. Under Blagojevich, Steve explained, any commitments to restraints were tossed out and mismanagement took hold and both spending and debt skyrocketed.

Curious to hear what Steve had to say about the state budget drama today, I called him. Sure enough, he summed up the state of the state nicely.

When it comes to spending money, he explained, the state is like a raging drug addict that is incapable of dealing with his addiction. Increasing the supply of drugs is as foolhardy as giving the state more money. That addict needs to be committed to a clinic where he can get treatment and break his addiction.

When it comes to state spending, there are three places you’re going to have to look: Medicaid, education, and pensions. On the phone, Steve said there were four areas — he divided up K-12 and higher ed.

When I told him I figured Medicaid was going to be tough to get money from as we transition out of Obamacare, he disagreed. Medicaid payments to hospitals are too high in Illinois, Steve explained, and then he confirmed another one of my recent comments to friends regarding hospital construction. The Rush-Copley near me recently put on a new lobby and facade. Not long ago I learned that some of the floors of a hospital in DuPage County were being laid with marble from Asia. I was correct that the hospital business was thriving, but wrong about Medicaid — it indeed can be cut according to Rauchenbeger.

Eventually the pensions are going to have to be cut off from the state budget, Steve said, as there is no legal requirement for taxpayers to keep funding the system. The proliferation of six-figure pensions for retired state employees is (and these are my words) legalized theft.

As for the K-12 and the state colleges and universities, there has been little discipline when it comes to spending for many decades. It’s for the kids, don’t you know, and uh, the young adults attending college.

On the topic of the budgetary standoff between Governor Bruce Rauner and House Speaker Mike Madigan, Steve then compared the state’s budget to a machine. Government programs operate like an engine, and when there is something wrong with the engine, just adding more fuel (through tax increases) solves nothing.

You have to fix the engine to balance the budget. In some policy areas the only adjustment needed will be the turning of a few dials. In other areas, a tune-up. Still others, a complete overall is absolutely required. Unfortunately, he said, right now there seems to be little interest in addressing the fundamentals.

When Illinois Senators Kyle McCarter (R-Vandalia) and Dan McConchie (R-Lake Zurich) introduced their “Taxpayer Bargain” budget proposal a few weeks ago they described it as strong medicine for a very sick state.

After talking with Steve Rauschenberger, it looks like major surgery will be required along with that strong medicine.


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