Can Illinois prosper without a tax hike? Watch Tillman and Berkowitz discuss a Policy Revolution.

I spoke with John Tillman, CEO of the Illinois Policy Institute ("IPI"), just a few days before the Illinois primaries.  The IPI is a nonpartisan research organization that supports free- market principles and liberty- based public policy initiatives. Tillman has the title CEO, but he also is the IPI's chief salesman, marketing liberty and free markets. There is no point in generating big ideas unless you take the time to sell them.

The Holy Trinity of big spenders: Blago, Bush and Obama

Tillman told me in November, 2008, just before Obama was elected President, that he thought "free markets" were underpriced and a good buy. Looks as though CEO Tillman was right. Under John's new leadership during the last few years, the free- market IPI's budget has grown 12- fold from about 100K to 1.2 million dollars, and its number of employees has grown from two to twelve. Moreover, the IPI's chief fundraisers have been the Holy Trinity of big spenders: the impeached and indicted Gov. Rod Blagojevich, former President George W. Bush and the White House's current occupant, Barack Obama.  Timing is everything when starting a think tank.

I am sure that every time the Obama Administration proposes another big spending "stimulus program," or bailout of private or public entities, John Tillman deposits a few more donor checks. But more impressive than the growth in the IPI's inputs or budget size is the growth in its output. If you visit the website, you'll see that the organization publishes new insightful, analytical thoughts on public policy virtually daily.

Easy readability at the IPI's website for non-experts in public policy

Because its leader comes out of a private sector sales background, when the IPI publishes in- depth, detailed, somewhat arcane analyses, such as how to deal with Illinois' 80 to 90 billion dollar unfunded pension liabilities, it always posts on its web site a one or two- page executive summary, making the site very readable for the non-expert audience. It is a "Go to site" for those interested in using free- market, liberty- oriented, transparent approaches to solve the problems facing government. [The IPI is complementary to another very worthwhile local free market oriented organization--The Heartland Institute, which in a sense laid the groundwork for the IPI and will be the subject of a separate essay.]

Tax and spending limitations

The IPI's primary focus is on state and local government entities, and especially Illinois, but it also ventures into the federal arena. Not surprisingly, given its philosophical bent, none of the IPI's public policy solutions involve a tax increase.  Indeed, in the "long run" Tillman wants not just to cut, but actually to abolish, some taxes, such as the state income tax.

On the spending side, the IPI would like to limit, statutorily, if not constitutionally, growth in state spending to a rate that reflects population growth and inflation in Illinois, or about 2.4 % per year in recent history. Further, the IPI believes that any necessary capital projects could be covered by that 2.4%.  Natural revenue growth, when you include the good times and bad times, has averaged about 4.8 % per year in Illinois, said Tillman.  

Running surpluses to pay down state government debt

I am simplifying the IPI's analysis, but the difference between 2.4 % per year spending growth and 4.8% per year revenue growth is the core ingredient to how the state digs its way out of the unfunded pension liability problem. In short, run current and future budget surpluses to make up for past budget profligacy and spending excesses. And, use those surpluses to pay down the pension debt. 

Of course, there are many state legislators and at least one and maybe two or three current candidates for governor who would not be ready to limit state spending growth to 2.4 % per year. Heck, the Illinois Education Association  (a big statewide teachers' union), which gave a big, last- minute, campaign donation to Republican gubernatorial candidate Kirk Dillard, probably thinks state education spending alone requires all of the 2.4% growth in state spending.  John Tillman, meet the IEA and Sen. Kirk Dillard (Hinsdale) (who is still vying with Sen. Bill Brady (Bloomington) for the Republican Guv nomination as absentee and provisional ballots continue to be counted).

A four billion dollar state budget deficit?

Tillman was making big news when he suggested the Illinois state budget deficit for fiscal 2011 is only four billion dollars, not the twelve billion dollars that Governor Quinn asserts and many of the mainstream media report. 

But, Tillman then gave himself some wiggle room, stating, "we have somewhere between a four and eight billion dollar deficit, depending on what you do with the pension situation...what you are doing with ongoing spending and what you do to opt out of the structural spending increases that the federal stimulus program created." That's a mouthful but this stuff is complicated. You try to keep it simple.  

Parking carryover, unpaid bills

So, I asked John, "What happens if we have a carryover deficit from fiscal year 2010 of four billion dollars in unpaid bills? How does that affect 2011?

Tillman said, "You park that number [4 billion dollars] there and then you start to figure out how can I get my current year in balance."

The IPI State Budget Deficit Solution 

That invited this follow-up, "What do you do with that four billion dollar carryover, you borrow? Tillman responded:

Well, we'll come back to that, I am going to try to keep this simple. You have the carryover debt, you have to deal with that... the first step is, how much money do you have coming in and how much are you going to spend and we should spend less than what is coming in. That's not how people are discussing this 12 to 18 billion dollar deficit. They are locking in spending and what I am saying is that you can't do that. That's why we are going to come out in March with a very specific proposal that will show department by department where you can cut and we are going to make somewhere between two and one half and three billion dollars in spending reform and cut recommendations [which] combined with our pension reform proposal will put the budget in balance without a tax increase, combined with some asset sales and perhaps some limited borrowing-we'll see if that's necessary--in the end, by the time this study is done-- but we believe you can go forward without a tax hike. [Watch Tillman and Berkowitz here] from about 18:30 to 19:20]

Well, what do you think? Did Tillman deal, in a latter portion of the show,  with that four billion dollar carryover from 2010 that he "parked."  Or, does the above deal with that? 

Watching the Compleat Tillman Policy Revolution

So, to get all your questions answered, [Watch Public Affairs with Jeff Berkowitz featuring  John Tillman]. You might even find out about that "parked carryover."  It really is a "public policy revolution" that Tillman has in mind.

Public policy revolution? Yes, I borrowed that from Dan Proft, a candidate for Governor in the recent Republican Primary. Proft may have come in sixth out of six candidates, but he won over many hearts and minds in the battleground of ideas.  A battle that Tillman continues to fight.

Take a look at both Tillman and Proft. Whether you are on the right, left or in the center, you won't regret it. With Governor Quinn's budget speech in March kicking off the gubernatorial general election campaign, those shows are as good as any to understand the big ideas that are likely to comprise the foundation for the Republicans fiscal arguments over the next nine months--as we move toward Decision 2010 for Illinois.  We'll cover the Democrats fiscal arguments separately.                      


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