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State Senator McConchie Outlines the Simplicity of the Budget Crisis

Two years after the “temporary” income tax expired, rapacious Springfield lawmakers are once again working toward raising our taxes, supposedly in order to solve the state’s fiscal problems. This time they want to raise the state’s income tax from 3.75 percent to 4.95 percent, raise the corporate tax from 5.25 percent to 7 percent and expand the state’s sales tax to include certain services.

In a partisan line vote, Illinois Senate Democrats passed these ridiculous proposals in SB 9 on Tuesday afternoon by a vote of 32-26.  Most of these lawmakers honestly believe that taking more money from citizens is the solution to the problem they created, instead of living within our means (which is $32+ billion annually).

SB 9 now moves on to the Illinois House.

Yet State Senator Dan McConchie (R-Hawthorn Woods) recently gave a Facebook Live video presentation about the state budget that showed exactly how simple the problem is, as well as how simple the solution is.

The temptation for many is to make this matter of elementary math — addition and subtraction — resemble the complex study of particle physics. Actually, one of the best parallels used to explain the state budget is to compare it to a family budget. If you continue to spend more than you take in you are in for trouble.

As Sen. McConchie points out early on in his presentation, Illinois has set a new U.S. record by not having a state budget for 23 months. While 90 percent of the spending is still happening, the rate of spending is unchecked to the point where the state is falling further into debt at the rate of $15 million dollars a day.

Here’s a simple question: how can 118 state representatives, 59 state senators, a governor and his administration still continue to spend more than we can afford — to the tune of $15 million dollars a day?

According to Sen. McConchie, expected revenues for the fiscal year will be about $32 billion dollars, while expected expenditures will be about $38 billion. Basic math applied: that means the debt burden carried by Illinois families will increase by $6 billion dollars in just one year.

If that isn’t enough, our elected leaders have managed to accumulate $14.3 billion dollars in unpaid bills according to the Illinois Policy Institute.

For those interested in an overview of revenues and spending, Sen. McConchie used a few charts to lay out the details.

As you can see here, 51% of state revenues come via the income tax, 22% sales taxes, 12% Medicaid match by the federal government, and then a mix of other sources such as utility and cigarette taxes.

Sen. McConchie then showed where the money is being spent: 29% health care and family services, Medicaid, etc., 27% K-12 schools, 12% Department of Human Services, 8% higher ed, 5% Department of Corrections, and the other 19% is spread around other state agencies.

Sen. McConchie explained that negotiations continue in Springfield, but unfortunately they began with a discussion about raising taxes, not cutting spending. Sen. McConchie noted that the budget proposal presented by him and Sen. Kyle McCarter (R-Lebanon) focused on showing how the state could live within its means by cutting spending. Their “Taxpayers Bargain” budget does not contain any tax increases.

Also on the table is a massive expansion of gambling, which the Illinois Family Institute has shown to be a boondoggle every time it takes place.

Sen. McConchie did say that there are some good things happening, such as local government consolidation, procurement reform, and workers compensation reform.

Again, it is simple, just like basic math. The problem is a lack of leadership and courage to take on what is, at its core, a political problem:

The forces arrayed in support of spending are organized and well-funded and as a result, they practically own (through campaign contributions) most members of the General Assembly. Illinoisans calling for spending cuts are out-gunned despite the fact that they are not outnumbered. There are far more families and businesses suffering under an already heavy tax burden than there are beneficiaries of tax dollars.

That is also simple math: Illinois is losing population and businesses to other states because of its high tax burden.

Therefore, solving that political problem mentioned above is merely a matter of educating and activating enough of the taxpayers so their voices are heard above the din of the tax-eaters.

Bruce Rauner, who began campaigning for governor in 2013, has had four years to use his considerable wealth to do just that: educate and activate. His failure to do so is easily explained through the old but true statement: you can’t solve a problem with the same people who helped create it. Until Governor Rauner stops listening to the wrong people and starts listening to the right people, don’t expect to see any change. For the next year and a half we’ll just see the equivalent of more duct tape commercials paid for by a guy who likes to wear a gimmicky shirt as U.S. Senator Lamar Alexander (R-TN) has done for years.

Take ACTION: Click HERE to tell your state senator and representative to stop expanding Illinois government “revenues” on the backs of hard working citizens and families.  Instead of raising taxes, Illinois leaders must cut wasteful spending and roll back the regulations and taxes that stand in the way of real, long term growth.

Ask your state lawmakers to vote against any legislative proposal that would increase any tax burden for Illinois citizens.

The Illinois Family Institute applauds Illinois Senator Dan McConchie’s work to help inform Illinoisans about the fundamentals of our state budget crisis.

We’ll close with a third graph from Sen. McConchie showing that Illinois’ spending problems are nothing new. As bad as this looks, it gets even worse. The above numbers don’t include the pension liabilities created by government employee unions through excessively generous and unrealistic employee contracts. That, too, is a simple problem that can be fixed. But not without leadership and courage.

Here is Senator McConchie’s Video Update:

Making Illinois a place where people want to do business and can afford to raise a family will do more for the bottom line than increasing the tax burden on Illinois citizens.


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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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Senators McCarter and McConchie Provide a Sign of Life in the General Assembly

There is little doubt that many Illinois citizens tune out their state’s political and governmental news because like any soap opera, the characters may change, but the basic drama remains the same. The plot hasn’t advanced much since Governor Bruce Rauner took office, so it’s easy to doze off when the news reports come on the radio.

The main soap opera in Illinois during the past few years has revolved around our lack of a state budget. Things were bad even with a budget, now without one they’re getting worse.

The Illinois governor is charged with a big task. The state’s constitution says that he “shall prepare and submit to the General Assembly … a State budget for the ensuing fiscal year” where the “[p]roposed expenditures shall not exceed funds estimated to be available for the fiscal year as shown in the budget.” In other words, a balanced budget. Rauner claims he has introduced a balanced budget, but experts readily admit the math proves him wrong.

Rauner isn’t the first guy to fail in this duty. We haven’t seen an Illinois governor introduce a balanced budget for a very long time — but at least they proposed a budget. That said, none of the previous governors ran on a platform of getting serious about cleaning up Illinois’ financial mess. Rauner did. We continue to hear about the “turn around agenda,” but evidently that turn around doesn’t begin with a balanced budget proposal.

There actually is good news out there among all the bad. Really, there is. Two no-tax-increase budgets have been introduced during this General Assembly session. The first was produced by the Illinois Policy Institute and announced in February. The details of it — and there are many — can be found by visiting their website.

The other no-tax-increase budget was recently introduced by state Senators Kyle McCarter (R-Vandalia) and Dan McConchie (R-Lake Zurich). So even though our Republican governor didn’t offer a balanced budget, at least two other elected Republicans have.

Senators McCarter and McConchie are calling their proposal a “Taxpayer Bargain.” No doubt the name is in answer to what has been called the “grand bargain” that has made headlines for months. Grand indeed, except for taxpayers, since tax increases are included.

Instead of a tax increase, the Taxpayer Bargain proposal calls for cuts in the state budget. Cuts are the key. As simple as that is, and as basic it is to any business or household, expenditures cannot exceed revenues for long. So regardless of all the cries from tax dollar eating bureaucracies, interest groups, and their allies in the media and the Democratic Party, cuts are not an option.

In fact, with the over-spending that has been going on at the state level for decades, to get to a genuinely balanced budget is not an easy task. It is going to take courage — and as important — a plan to market the proposal across the state.

State Senators Kyle McCarter and Dan McConchie’s are showing courage — and as result, a sign of life in the GOP senate caucus. Their budget, McCarter says, is “strong medicine for a very sick state.”

Listening to a politician talk is typically something people seek to avoid — but I would encourage readers to watch all or at least parts of the series of Facebook videos produced by Sen. McCarter. One by one he is goes through all the sections of the Taxpayer Bargain. And while he discusses some details that are deep in the weeds, over-all it is a good over-view for budget laymen to be introduced to the topic.

In those videos, Sen. McCarter is having a conversation with Illinois taxpayers — one that Rauner and the rest of the Republicans in the General Assembly should’ve started a very long time ago.

So why doesn’t Rauner just adopt the McCarter/McConchie or the IPI budget? Your guess is as good as mine. With a Democrat controlled legislature it probably is a good idea to start negotiations with what is close to an ideal budget. With the mess that this state is in, close to ideal means no tax increases. High taxes have been driving out businesses and taxpayers — and one of the more depressing news items of late is that Illinois tax revenues are actually down so far this year. So if things aren’t bad enough…it’s past time for this soap opera to be cancelled.

Here is the title and headings (as bullet points) provided in a press release announcing the budget plan — note the unique concept of “Taxpayer respect”:

“TAXPAYER BARGAIN” UNIQUE STATE BUDGET PLAN
Balanced, Spending restraint, Taxpayer respect

  • Balanced Budget
  • Cuts
  • Requires Fiscal Responsibility
  • Modernizes Illinois’ Public Pension Systems
  • Medicaid Reforms
  • Reforming How Illinois Does Business
  • Creating a Stable, Predictable Environment to Attract Job Creators to Illinois

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