Chicago Sun-Times Editorial: Finally, a little honesty in Springfield/Chicago Sun-Times Editorial - Quinn's brave 1st step to fixing state's woes

Chicago Sun-Times Editorial: Finally, a little honesty in Springfield
Copyright by The Chicago Sun-Times
March 19, 2009
http://www.suntimes.com/news/commentary/1485007,CST-EDT-edit19.article


Finally, a little honesty in Springfield. In his budget address Wednesday, Gov. Quinn spoke to us as adults.
He did not sugarcoat the state's predicament. He did not offer a bunch of financial gimmicks that will amount to nothing. He didn't waste precious time demonizing opponents.

For years, Illinois residents were treated to such nonsense by former Gov. Rod Blagojevich.

Thankfully, those days are over.

Instead, Quinn spoke with refreshing candor, laying out a picture of a state suffering under the weight of an unprecedented $11.6 billion deficit.

To dig out, Quinn proposed a series of new taxes and fees, along with significant reforms that, it is hoped, will reduce costs long-term.

This page has already expressed support for Quinn's deeply unpopular income tax increase.

No one wants it, but Illinois needs it desperately. For years, state revenue has not matched expenses -- and not simply because of reckless spending.

The state's deficit is fueled, in part, by the deep recession, but the hole has been with us for years, growing exponentially as the state ignored its Medicaid bills and its mounting state employee pension obligations.

An income tax increase will help us begin to recover. Without it, no one would be spared by the budget ax. We'd lose teachers, health-care coverage, a veterans' home, state police officers and college grants for thousands of students.

But Quinn isn't stopping there, and that's why we can back this budget. His tax and fee increases are matched by major reforms that thoughtful, good government groups have pushed for years.

These include $1.3 billion in budget cuts, including administrative cuts and a 2 percent reduction in grant programs.

And, most significantly, Quinn proposed major changes to the state employee pension system.

Simply put, Illinois cannot afford its pension system long-term, and it's time to modernize.

To bring down future costs, Quinn is pushing a two-tiered pension system, with more modest benefits for new hires to better reflect reality in the private sector, including a higher retirement age. Quinn also wants current workers to contribute more toward their pensions and health care. Retirees also would pay more for health care.

The increased costs for current employees may never fly -- that may very well violate the state constitution. And the other proposals will likely be fought tooth and nail by state workers and their unions.

It's hard to blame them. State workers have come to expect these benefits, and many work tough jobs under trying conditions. But changing the pension system to align better with the private sector is the fair and prudent action to take.

State workers are also feeling besieged because voters see the state's $73 billion unfunded pension liability and think overly generous benefits are largely to blame. That's not the case. The bill is high because the Legislature has failed to fully pay its pension bills for 30 years.

Switching to a two-tiered system would reduce future pension costs but it wouldn't lower the $73 billion already owed.

For that reason, we were disappointed to see that Quinn wants to make only a $1.5 billion pension payment for next year. Under a 1995 law, the state is supposed to pay $4 billion. That's unfair to state employees who have faithfully paid their share. The state must either pay that bill or revise the payment schedule. A more reasonable schedule might lower the annual payment to a flat rate -- it increases each year -- and extend it over a longer period of time.

Quinn's budget isn't perfect; he said so himself. But he courageously started the conversation that Illinois has been avoiding for years. It's now up to state legislators -- the ones who actually get to pass the budget -- to follow his lead.





Chicago Sun-Times Editorial - Quinn's brave 1st step to fixing state's woes
Copyright by THe Chicago Sun-Times
March 16, 2009
http://www.suntimes.com/news/commentary/1478278,CST-EDT-edit16.article


Our new governor said Friday that he's willing to do the unthinkable: Raise income taxes.
On Wednesday, he intends to lay out his tax hike plan.

No one wants a tax increase, yet Quinn is doing it anyway.

That's called leadership.

We applaud Quinn for taking a deeply unpopular but crucial step toward finally putting Illinois' financial house in order.

The latest deficit number is a staggering $11.5 billion. That's fueled by a tanking economy but also by Illinois' long history of failing to pay its Medicaid bills and its massive, growing pension debt.

Simply put, Illinois does not have enough revenue to pay its bills -- and it can't be all chalked up to reckless spending. That remains a major issue, and we'll detail what needs to change below. But Illinois will never cut its way to solvency, as the chart below indicates.

The graphic, compliments of the Center for Tax and Budget Accountability in Chicago, lays out the long-term reality in Illinois. It projects Illinois spending and revenues going forward, accounting only for inflation and population growth. It assumes no growth in programs.

The bottom line: It shows an ever-widening gap between what the state will spend and its tax revenue.

Other, compelling reasons also bolster the case for an income tax increase in Illinois, from the current 3 percent to at least 4 percent:

• • Illinois' total state and local tax and fee burden as a percentage of personal income is among the lowest of all states, according to 2006 data collected by the Federation of Tax Administrators and distributed by CTBA.

• • Illinois has not raised its income tax rate in 20 years. At the same time, the state's tax base has been hurt as high-paying manufacturing jobs have been replaced by lower-paying service jobs.

• • The state's unfunded pension liability, likely the highest in the nation, is now more than $73 billion.

• • The alternative to a tax increase is devastating budget cuts, which will inevitably lead to job losses, potentially prolonging the recession.

But an income tax increase alone isn't enough. Illinois now has one of the country's more regressive tax systems. It's time to shift the burden to those who can pay more. Quinn looks headed in that direction, saying Friday his plan includes a tax cut for lower income workers.

The tax increase -- which should go to pay for current expenses, not new ones -- must be coupled with major budget cuts and real reforms, several of which were outlined by the Civic Federation, another reputable Chicago research group.

The state must bring down costs for its overly generous pension system, starting with more modest benefits for new workers and potentially requiring current employees to contribute more. It must also consider scaling back free health care for retirees and improve management of the Medicaid program.

The challenges are enormous, but not insurmountable. Kudos to Gov. Quinn for taking the first step.