Guest view: Fake reforms are hurting Illinois

By Ben VanMetreMay 25, 2013 

Imagine you earn $34,000 a year. You have more than $9,000 in credit card debt and an awful credit score.

Recognizing your fiscal mess, you meet your financial advisor and say you're finally going to buckle down and cut your spending -- to only $37,000 this year.

This, of course, sounds crazy, considering your purported buckling down is $3,000 more than you have to spend.

But change thousands to billions, and this is exactly how the Illinois state government has been "limiting" its spending in recent years.

Having just gone through tax season, most Illinoisans are well aware of the hurt caused by the $7 billion state income tax increase of 2011.

But few people realize the truth behind the spending limit that was enacted at the same time -- it's a fake.

Democratic leaders paired the 2011 state income tax increase with a spending limit in order to don a cloak of fiscal responsibility.

In describing the measure, House Majority Leader Barbara Flynn Currie, D-Chicago, said "You're talking about a shoe that is definitely going to pinch." But that's far from the truth.

The spending limit was more like putting a size 13 shoe on someone who wears a size 6.

Case in point: Budget season is underway in Springfield. This year, the state is anticipating about $34 billion in revenue.

But the spending limit is $37.5 billion -- $3 billion more than the state will have to spend. Incredibly, next year's "limit" is more than $5 billion higher than the state's expected revenues.

Spending limits are a basic tool of responsible budgeting.

They're supposed to cap the amount of money that a state government can spend each year to encourage government to live within its means.

But Illinois' spendthrift politicians purposefully set the bar too high so they never would trigger a tax rebate provision meant to protect taxpayers from overspending. The end result? Money keeps going out faster than it comes in, and the state's bill backlog grows.

This charade should be a lesson to everyone -- passing fake reforms just perpetuates Illinois' crisis.

Then again, perhaps we should not be surprised. We've gotten next to nothing out of the political class in recent years by way of transformative changes. Politicians are still dithering on pension benefit reforms even though Illinois has the worst pension crisis in the nation.

Attempts at Medicaid restructuring morphed into tax increases in 2012, and now there's talk of expanding the program once again.

Illinoisans are tired of elected officials who promote "fiscal responsibility" while nine times out of 10 oppose the actual wholesale policy changes that would save money and improve outcomes.

The good news is that there is a way out of the mess we face today.

Reviving Illinois' economy will require implementing a multistep plan that returns $7 billion to taxpayers by repealing the 2011 income tax increase; pays down the state's $9.3 billion in unpaid bills by 2016; and improves health care and education to ensure the state's most needy residents receive the support they deserve.

Concurrently, lawmakers must pass a real spending limit that's tied to changes in inflation and population.

This type of spending limit stops the political games by capping spending based on key indicators of growth.

They must also embrace other basic building blocks of good budgeting -- such as a watertight balanced budget amendment.

At the end of the day, fake budget reforms might look good in a press release, but all they do is alleviate pressure for change in the short term in exchange for an even larger crisis in the future.

We can and must demand better.

Ben VanMetre is senior budget and tax analyst at the Illinois Policy Institute, a free market think tank.

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