We marked the first anniversary of Illinois’ “temporary” increase in personal and corporate income taxes on Thursday.
Let’s take a moment and reflect upon the incredible effect our additional contributions have had on our fine state.
Everything is fixed now. Our coffers are overflowing. All the waste has been stricken from our state budgets. We’re running lean and mean. That little problem with the pension? Pfft. It’s fixed. The Land of Lincoln has become the Land of Lincoln Navigators. As fellow Illinoisan Chris “Ludacris” Bridges might say had he been asked, we’re all pulling up with a million trucks; looking, smelling, feeling like a million bucks.
In fact, nothing in the preceding paragraph resembles reality. As well you know, our plight is painfully the opposite. And nothing could be more, well, ludicrous.
Leadership continues to ignore its responsibility to act responsibly with the tax money we send to the sieve that is Springfield. As you may recall, this gentle tug at our wallets was supposed to be a temporary measure – lasting a scant four years.
If Year One is an indicator of what’s left to come, this tax increase isn’t going away anytime soon. It may never end.
Temporary, as defined by Temporary Gov. Pat Quinn and the Democrat-controlled Legislature, more closely resembles permanent.
Calculating the state’s budget deficit is a fool’s game, and I’m not going to play it. So let’s simply examine the amount of money the state owes in what best could be characterized as accounts receivables. And then let’s examine how that debt will change by the end of Illinois’ fiscal year come June.
We ended the 2011 fiscal year, according to Collin Hitt, senior director of government affairs at the Illinois Policy Institute, in the hole to the tune of $5.05 billion – again, billion with a “b.” The hole included all of the state’s unpaid debts. Hitt said that the state owed an additional $1.77 billion “in general funds or delayed Medicaid bills, state insurance bills, and corporate tax refunds.”
That left the state, as per Hitt’s estimate, owing something like $6.818 billion in unpaid and delayed bills.
“That’s because regular, unpaid bills will increase to $5.02 billion,” Hitt said. “On top of that, general fund debts for delayed Medicaid bills, state employee insurance bills and corporate tax refunds will increase to $2.786 billion.”
Uh, yeah. That puts the debt in the neighborhood of $8.288 billion.
Yeah, that’s quite a neighborhood. But the bottom line is, despite every Illinois taxpayer and most businesses digging in a little bit deeper, the state dug itself deeper.
OK, so how could that happen? Well, when you don’t pay your bills, whether you are a regular-old deadbeat or a state led by deadbeats, you eventually pay the piper. Because Illinois couldn’t meet its pension obligations in fiscal 2010 and 2011 and had to float a bond to pay retired state workers, we made up no ground in fiscal 2012. In fact, because of our obligations, we will lose ground, because the debt service alone is, Hitt said, about $500 million.
So when the Legislature congratulated itself for “shaving” about $300 million from this year’s budget, it not only didn’t shave anything, but it also added more debt. How’d they do that? Well, the state modified its policy on paying Medicaid claims. Instead of paying them in a 30-day cycle, they are burying them in the drawer for an additional 150 days and paying these bills on a six-month cycle.
Yes, there was a “cut” to the overall budget, which checked in at about $33.2 billion. But, no, there was no savings. The slow-pay approach put the state another $1 billion to $1.3 billion – again, billion with a “b” – in the hole, year over year.
Brilliant.
• • •
As for our $7 billion: The premise of the governor’s call to increase income taxes a year ago was to attack the issue of the state’s pension fund – specifically that it possessed the seaworthiness of the Hesperus.
Sure, the tax was collected. But, no, it failed to address the state’s hemorrhaging pension system.
“In 2012, not only did the state use ‘temporary’ tax hike revenues to make [payment to government pension funds] – which increases every year – but the state also had to begin servicing the debt on its pension borrowing from the previous two years,” Hitt said. “From 2011 to 2012, the amount of tax revenue used to pay pension costs went from less than $1 billion to nearly $6 billion.
“Pension costs will grow by another $1 billion in 2013, meaning that nearly 100 percent of the $7 billion tax increase will be used for retirement costs.”
The only action that could have addressed the pension problem was a major cost-cutting initiative, and none comes to mind because, of course, none occurred.
Here’s the best part, per Hitt’s analysis: “The governor has released a three-year budget projection that would leave the backlog of bills virtually unchanged. Keep in mind that the tax hike is supposed to begin to sunset in three years. The problem with the governor’s budget proposal is that he says he’ll keep Medicaid funding the same as 2012 – but as we show, 2012 underfunded Medicaid by billions of dollars. So unless he can find a way not only to hold Medicaid bills flat, but to significantly cut costs, his budget will lead to billions more being added to the backlog of unpaid and delayed bills.”
So, let me be the first to wish you happy anniversary, fellow Illinoisans.
• • •
The news from home: As all McHenry County residents learned Thursday, there will – in fact – be a winter season after all.
Quite the change in a matter of 24 hours, as temperatures dropped from the mid-50s to the 20s while as much as 6 inches of snow blanketed the county. The precipitous drop in temperatures was then followed in the wee hours Saturday by readings that dipped as low as minus-2 degrees.
It was not a morning to test the tongue-to-the-flagpole threshold for frostiness.
All of that noted, let me say that there is no sweeter sound than the thrashing of a snow thrower operating in your driveway by someone other than you.
Glorious, really.
And, for the record, there is nothing sexier than a woman who knows how to effectively operate a snow thrower.
Keep up the great work, hon. I think it’ll be a long winter achieved in fewer days.
• • •
And finally … : Keep an eye out this week for the launch of our Election Central content at NWHerald.com. It will serve as the county’s premium resource for news updates from local races, responses from candidates on questions posed by our Editorial Board, and videos of the candidates themselves. It will be, as they say in matters involving the Internets, “robust.”
And, for goodness sake, if you haven’t registered to vote, get moving. The deadline to register to darken the ovals in the primaries is Feb. 22, and the early voting period begins Feb. 27.
Voter turnout in McHenry County was abysmal in 2010 – less than 18 percent. We’re better than that, people. Let’s prove it.
• Chris Krug is executive editor of the Northwest Herald. Contact Chris by calling 815-459-4122, or via email at ckrug@shawmedia.com. Follow @ChrisKrug at Twitter.com.
