Macon Reporter

Instead of a constitutional amendment allowing pension reform, Illinois Gov. J.B. Pritzker plans a combination of 15% cuts and 20% tax hikes after voters rejected his “fair tax” amendment at the polls.

“The only realistic path to balancing Illinois’ budget while protecting programs for the state’s most vulnerable residents starts with a constitutional amendment to allow pension reform,” Illinois Policy Institute reported.

Pritzker instead plans to cut all program spending with up to 15% across-the-board cuts. His other idea is to push up to a 20% hike in the flat tax. The $3 billion expected if Pritzker’s progressive tax amendment had been approved by voters was far short of what the state needs to close its fiscal gap.

Lawmakers should send voters a pension amendment to fix the cause of the state’s overspending. Illinois Policy Institute said its budget plan, “Illinois Forward: A 5-year plan for balanced budgets, declining debt, and tax relief,” presents a means to fix state finances without adding to the taxpayers’ burden or eliminating or reducing government services some residents need.

 A range of core services including higher education, public safety, public health programs and other vital services for the poor and vulnerable suffered nearly a 33% decline in spending since fiscal year 200. During the same period, the state had a 501% increase in inflation-adjusted pension spending.

Pension costs continue to rise in the wake of investment losses due to COVID-19’s effects on the market. Original projects put pension as taking almost $11 billion of next year’s budget, the Illinois Policy Institute reported. The Teacher’s Retirement System said its costs were increasing by $310 million over previous projections.

A $7.4 billion budget deficit estimate for this fiscal year came from the Governor’s Office of Management and Budget. Pritzker is required to propose a balanced budget for fiscal year 2022 in February, when he is expected to face another large deficit, the Illinois Policy Institute said.

Pew Charitable Trusts recommended a results-based budgeting strategy to prioritize resources during the pandemic, using strategic budget cuts to balance the budget.

But state lawmakers have mostly ignored data from the Budgeting for Results initiative, which was created in 2010 to measure program performance and outcomes to make spending decisions.

Pension reform that requires a constitutional amendment can preserve workers’ earned benefits. The Illinois Policy Institute said its “hold harmless” pension reform plan would save $2.4 billion the first year and more than $50 billion through 2045 as it fully eliminated the debt over that time.

Illinois imposed a major income tax hike that brought in another $37.4 billion in revenue from 2011 to 2017 – which has since been made a permanent tax hike. But the state’s net debt quadrupled to almost $190 billion from 2011 to 2018.

The 2011 income tax hike cost Illinois 9,300 jobs over four years and $55.8 billion in gross domestic product, the Illinois Policy Institute said. The state’s population continues its six-year decline, with a poll for NPR and the University of Illinois-Springfield revealing the most common reason for leaving is the high tax burden.

Borrowing will not fix the problem, as investors already treat state bonds as junk bonds, Barron’s said, the Illinois Policy Institute reported.

“We are looking to see to what extent Illinois addresses its budget gap through recurring measures rather than just relying on borrowing or other one time sources,” S&P Global Ratings lead Illinois analyst Carol Spain told Bond Buyer.