Civic Federation backs Pritzker budget
It might be a ‘rickety financial bridge,’ says gov’t watchdog, but it should get state where it needs to go on a progressive income tax
The old rickety bridge across the Mississippi River, on the right, and the new bridge opened last year between Savanna and Sabula, Iowa: a metaphor for Illinois state finances? (Facebook/Explore Savanna)
By Ted Cox
A business-oriented government watchdog has announced its support for Gov. Pritzker’s 2020 budget.
The Civic Federation released a report Thursday on the budget for the 2020 fiscal year proposed by Gov. Pritzker in February. Put together by the federation’s Institute for Illinois’s Fiscal Sustainability, it finds fault with some proposals — most prominently a “partial pension holiday” the governor abandoned earlier this month — but generally finds it “represents a workable short-term plan to move Illinois forward,” according to a news release announcing the report.
“As proposed, the budget represents a relatively rickety financial bridge — though it has been significantly strengthened in recent days,” said Civic Federation President Laurence Msall.
Msall was referring to Pritzker’s decision earlier this month that a $1.5 billion state tax windfall reported in April brightened the financial picture enough to enable him to cancel a seven-year delay in a deadline to meet pension obligations.
Otherwise, the government watchdog would have felt compelled to reject the budget proposal. “The Civic Federation would have been unable to support that proposal, because it would have further jeopardized the financial condition of Illinois’s severely underfunded retirement systems,” Thursday’s release stated.
While the report didn’t minimize the state’s financial challenges, it generally reflected optimism that the budget will get the state to what Pritzker has called the firm financial footing to be provided by a graduated income tax, which he calls simply a “fair tax.”
The report points out that “a graduated tax could not be implemented until January 2021 at the earliest because of Illinois’s lengthy constitutional amendment process. The governor has described his FY2020 budget recommendation as a bridge to financial stability based on a graduated tax.”
“The governor has described his proposed budget as a bridge to financial stability, based on expected implementation of a graduated income tax structure in 2021 and resulting infusion of new revenues,” according to the federation, although it “has continued to express concerns that state and local fiscal conditions are deteriorating at a pace that requires more immediate attention.”
“The General Assembly is approaching the deadline to pass several components upon which this budget and the governor’s long-term plan rely, and revenue projections attached to many of the proposals remain uncertain,” Msall said. “Accordingly, we encourage the governor and General Assembly to develop a comprehensive Plan B that does not involve shorting the state’s pensions or running up the backlog of bills.”
The budget as currently presented would appear to do that, although the federation continued to advocate its own recommendations, “including limiting net agency spending, consolidating and streamlining units of local government (including pension funds) and restructuring Illinois’s public university system, among others.”
It also cautioned that immediate short-term solutions, “including taxes on recreational cannabis and sports betting, may be difficult to implement in a short time frame with adequate attention to social costs and are based on accelerating future revenues.” Those proposals are facing deadlines requiring they be passed this month before the legislative session ends May 31.
“The state of Illinois is not alone in its financial challenges,” Msall said. “Communities across the state are struggling under the weight of their pension and debt obligations. The Civic Federation calls on the governor and General Assembly to build on the proposed budget to move more directly and effectively in its assistance to and consolidation of local governments throughout Illinois.”
Yet while April’s $1.5 billion tax windfall “might not be sustainable,” the federation announced it was “encouraged” by the overall plan as a way to get from here to there financially.
Which reminded us at One Illinois of the rickety bridge we saw replaced a year ago in Savanna along the Mississippi River. “If you’ve ever had a chance to go over that old bridge, it was a little scary,” Savanna Mayor Chris Lain said at the time. “It definitely wasn’t built for the cars we’ve got today or semi-truck traffic. It was built for what they had back in 1920, and things have changed. If you were passing a truck when you were headed over to Iowa, it was a little frightening.”
But state and federal investment led to a new $81 million bridge, opened last year, allowing for the old erector-set-style bridge to be blown up and dropped into the Mississippi River for deconstruction.
Perhaps the state can arrange some kind of similarly explosive ceremony when the current flat income tax is replaced.