Preposterous demands for Illinois tax increase

rally.jpg

Tribune photo by Abel Uribe / April 21, 2010

Thousands of people march around the State Capitol in Springfield, Ill. during a pro-tax rally on Wednesday.

The headline read "Thousands rally at Illinois Capitol -- for a tax
increase." A subhead could have read, "Millions more stay at home,
fuming at the very idea."

Last week's Springfield rally of 15,000
"teachers, students, state workers, health care providers, and concerned
citizens" organized by the Responsible Budget Coalition shouted "Raise
my taxes" -- which was a neat public relations trick to get front page
coverage, but slightly deceptive since they should have been shouting
"raise your taxes, too."

The coalition is composed of some 200
organizations, some of which receive little or no direct benefit from a
tax increase, such as the League of Women Voters of Illinois, and some
social service organizations struggling to stay afloat. Others are
clearly self-serving, although they claim that they speak for the
"children, the elderly, the handicapped and the homeless," such as
government employees unions.

They were there under the
misimpression that an income tax increase could preserve state-funded
services. How big an increase? Not much, according to the coalition. Its
"Fair Solution to the Illinois Budget Crisis" platform states, "The
individual income tax rate would amount to just two cents on the dollar"
which, compared with other states is "very reasonable." But that two
cents amounts to a 67 percent increase, not a tiny amount in anyone's
book. (Some news reports, call it only a 1 percent or 2 percent
increase. They should say a 1 or 2 percentage point increase, a vast
difference.)

A more realistic perspective comes from
IllinoIsIsBroke.com, a coalition of "business executives, civic
organizations and social service agencies, small business owners and
employees, parents and students" assembled by the Civic Committee of the
Commercial Club of Chicago. To cover the state's fiscal year 2010
deficit, it said, the personal income tax rate would have to increase to
8.2 percent, from 3 percent. Someone with taxable income of $50,000
would see his state tax bill jump to $4,100 from $1,500, a 173 percent
increase. Not many of us have that kind of money lying around. Even for
the best of causes.

So, along comes the Illinois Policy Institute,
boldly asserting that the budget can be balanced without any tax
increase. Bring labor costs, including government pensions, down into
the range of the private sector. Set better priorities and realign
spending "to improve the public welfare, not the welfare of specific
groups."

That would leave a fiscal year 2011 alternate budget of
$21.3 billion. That's not chicken feed; state government would be far
from shutting down, as alarmists would have it. True, some programs,
such as the Illinois Deaf and Hard of Hearing Commission, would be
zeroed out. As a hearing-impaired person who checked out its Web site, I
can attest that despite its good work, I wouldn't demand that
everyone's taxes be raised to keep it going.

The institute's
alternative budget would reduce health and human services spending by
$2.6 billion, but those services still would get the biggest budget
slice, $11 billion. While the institute also would cut education
expenditures, its alternate budget would dedicate a greater share (38
percent) of state spending to schools than Gov.
Pat Quinn
's (33 percent).

The institute notes the state owes
$6 billion in unpaid bills, has the second-lowest bond rating in the
nation and an $80 billion unfunded pension liability despite ever-higher
annual state pension contributions. Yet, Quinn's 2011 budget still
spends $4.6 billion more than the state takes in, the institute said.
This can't continue. The institute's alternate budget is premised on the
legislature and Quinn cutting expenses. You could say that's dubious
when they can't get rid of one of the state's biggest giveaways -- free
bus and train rides for seniors.

The guessing is that lawmakers,
saving their hides, will pass a temporary budget, waiting until after
the November election to do what's necessary. Here, I would agree with
Maria Whelan, president of Illinois Action for Children, who told the
Springfield pro-tax rally: "We demand a responsible budget, And shame on
every elected official who is too big a chicken to take on their
leaders. Shame on them."

Agreeing that legislators are chicken
could be a good place for us to start.

This column also appeared in the Chicago Tribune.

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