A writer must “know and have an ever-present consciousness that this world is a world of fools and rogues… tormented with envy, consumed with vanity; selfish, false, cruel, cursed with illusions… He should free himself of all doctrines, theories, etiquettes, politics…” —Ambrose Bierce (1842-1914?). “The nobility of the writer's occupation lies in resisting oppression, thus in accepting isolation” —Albert Camus (1913-1960). “What are you gonna do” —Bertha Brown (1895-1987).
What about addressing the real causes of Illinois’ fiscal problems: Tax Policy, Revenue and Pension Debt?
“The [Illinois] public sector has… continued to be
a drag on the state’s labor market, with government employment in the state
down twice as much as nationally on a year ago basis. A greater reliance on
unpredictable federal funding is one of several pressing fiscal issues facing
the state, which has such severe budget troubles of its own that it cannot
continue current services, provide promised benefits, and invest in education
and infrastructure while keeping tax rates unchanged. The state’s severely unfunded
pension system is the biggest impediment to a sustainable budget. While many
states have unfunded pensions, Illinois’ situation is especially bleak. The
shortfall of its five retirement systems is estimated to be $97 billion.
Collectively, they have a funding ratio of 39%, the lowest in the nation and
about half of what is considered healthy…” (from a report prepared by Moody’s Analytics/ Economic & Consumer Credit Analytics for
the Commission on Government Forecasting and Accountability). The state’s “severely unfunded pension system” is
one of the effects of past legislators’ malfeasance. Shouldn’t current Illinois
·The current “Pension Ramp”
does not work for the five public pension systems. The “Ramp” entails larger
payments today as a result of the 1995 funding law –
Public Act 88-0593 – to pay the pensions systems what the state owes. The pension debt needs to be amortized for a longer frame
of time “just
like a home loan that is amortized.” Though the initial payment will be greater
in the beginning, over the long term it will become a reduced cost and a
smaller percentage of the overall Illinois budget as it is paid off throughout
the years (Executive Director
Ralph Martire, Center for Tax and Budget Accountability).
·“For over 40 years Illinois
borrowed against what it owes the pension systems to pay for public services – like education… The reason
Illinois borrowed from the pensions was to paper over the consequences of its
poor tax policy, which is so flawed that after adjusting solely for inflation
and population growth, the cost of maintaining services from one year to the
next grows at a rate greater than state revenue. Rather than fix things by
engaging the politically-difficult task of reforming tax policy, elected
officials have consistently chosen the politically-expedient path of borrowing
from pensions to pay for schools and, well, everything else” (Ralph Martire,
Bad tax policy equals poor education funding).
·“The State shall
provide for an efficient system of high quality public educational institutions
and services… The State has the primary responsibility for financing the
system of public education” (Article X, Section 1 Constitution of the State of
of mismanagement and failure to match contributions are the predominant reasons
that the state’s pension systems are suffering to the degree that they are
today. Years of pension holidays, continually borrowing against the systems
without a plan for repayment and a severe economic recession, which caused
investments to plummet, further exacerbated the problem” (Senate President John
Cullerton, Pension Promise Paradigms). Thus,there needs to be a
required “actuarially-sound” annual payment from the state to the pension
systems and not a constitutional challenge that breaks a contract with public
employees, via so-called “pension reform.”
·Raising appropriate revenue will
pay the state’s debts, especially the unfunded liabilities that past General
Assemblies had created.
With a constitutional amendment, “given an appropriately designed
graduated-rate structure, Illinois could cut the overall state income tax
burden for 94 percent of all taxpayers—on average providing a tax cut to every
taxpayer with less than $150,000 in base income annually, raise at least $2.4
billion more in revenue, and keep the effective individual income tax rate for
millionaires well below five percent… Illinois taxpayers with the bottom 94
percent of base income collectively would receive an annual tax cut of $1.06
billion… [T]he combined effect of this policy would be a stimulus to the
economy from tax cuts and additional state spending (assuming that the
additional revenue is used to fund current public services that would otherwise
not be funded) that would create at least 36,000 private sector jobs in
communities across Illinois…” (Executive Director Ralph Martire, Center for Tax
and Budget Accountability).
the sales tax base to include selected consumer services will increase the state’s
revenue. Illinois is one of five states with sales taxes on fewer than 20
services (The Center on Budget and Policy Priorities).
·Eliminating the tax loophole for
“Tax Increment Financing Districts” will provide additional revenue.
·Eliminating “Edge Tax Credits”
and other tax loopholes
for large corporations in Illinois will free up further revenue.
·Increasing taxation on the wealthywill produce surplus revenue.
Illinois is in the top 10 of regressive state tax systems where the wealthiest
taxpayers do not pay as much of their incomes in taxes as the poorest and
middle-income wage earners (The Institute on Taxation and Economic Policy).
·A Speculation Sales Tax for Illinois (Bill Barclay, Chicago Political
Economy Group): $1 on contracts traded on Chicago derivative exchanges (Chicago
Mercantile Exchange and Chicago Board Options Exchange) will supply even more