The State of Illinois is facing a budget deficit of $12.8 billion between now and June of 2011.* This is a budget deficit that we, the people and the politicians of the State of Illinois, have brought on ourselves. The politicians have been spending more money than the State collects for years. As I noted before, Rod Blagojevich came up with the perfect way to increase spending without violating his campaign promises to not raise taxes: Don’t pay the bills. And the legislators let him do it.
We the people were at fault, too. We knew what Blagojevich was doing, and we re-elected him. We knew what the other politicians were doing, too, and we kept re-electing them.
On February 21, the Civic Federation, an Illinois watchdog group founded in 1894 by, among others, Jane Addams, issued a series of recommendations of what it would take to pay down most of the deficit by June of 2011. The Chicago Sun-Times summarized the Civic Federation’s recommendations:
"The Civic Federation recommends that the state income tax be increased from 3 percent to 5 percent for individuals, that retirees' pension and Social Security checks be taxed for the first time at the same rate as workers' paychecks, and the tax on cigarettes be raised by another $1 per pack. The group also favors getting rid of $181 million in corporate tax breaks.
Those tax increases, which would generate more than $8 billion, should come only if the state first can persuade its unionized employees to pay more toward their pensions and health care, cut pension benefits for new workers and reduce overall spending by $2.1 billion to 2007 levels. Medicaid programs and elementary and secondary schools would be spared from those cuts to avoid sacrificing federal stimulus dollars, [Civic Federation President Lawrence] Msall said."
The Sun-Times backed the idea of a tax increase, "a significant tax increase" in the Sun-Times’ own words. In fact, the Sun-Times seemed willing to raise taxes even before the legislature cuts spending:
"While there's much to praise in the Civic Federation's recommendations today, it's regrettable that they insist on a full $2.5 billion in cuts before there can be any tax increase. …
We favor spending cuts, too, but not if they become an insurmountable precondition to a tax increase."
I have previously said I would favor a tax increase so Illinois could pay off its debts and start paying its bills on time, but I also said I was not in favor of a permanent tax increase. I did not favor a permanent tax increase, or at least not much of one, because I was worried that, if the tax increase was not temporary, our politicians in Springfield would just go into debt again from a new higher level.
But after reading this article in Sunday’s Chicago Tribune, I wonder if we should raise taxes – at all. While I still think it would be better to raise taxes temporarily so we could pay off our bills, I am not sure our legislators can be trusted to do that. Let me explain.
Currently, each state legislator can award two four-year scholarships to state universities each year. Most legislators break these up and award eight one-year scholarships each year.
Technically, these are not scholarships; they are tuition waivers. The effect for the student is the same, but for the state colleges that these students go to, it is worse. If these were scholarships, the students would get the money and would then pay it to the college. With a waiver, however, the student’s fees are waived. He or she doesn’t have to pay anything – and the schools don’t get anything. In other words, the universities have to pick up the tab for the legislators’ "generosity".**
But this situation is worse than even this because of the abuses in the program, which have been legion. The Chicago Tribune looked at the records and found scholarships going to (i) campaign contributors, (ii) fellow elected officials, (iii) campaign workers, (iv) party loyalists, (v) contributors to ward and township organizations, and more.
In other words, at a time when Illinois has a huge budget deficit, and huge ethical problems, we have a program which burdens our already hard-pressed public universities with students for whom they get no money so legislators can give gifts to their friends.
Clearly, something needs to be done. But last week the Illinois Senate voted down a bill (proposed, to my embarrassment, by a Democrat) that would have abolished these waivers. Instead, they passed a bill that merely prohibits legislators from giving waivers to children of campaign contributors. That took care of category (i). But this bill would still allow scholarships to be given to children of people in categories (ii) through (v) and whoever else a legislator might want to give a favor to, as long as it is not a direct campaign contributor.
In other words, even in the midst of a financial and ethical crisis, we cannot trust our legislators to do one little thing right. Part of the fault is ours; we elected them. But the point remains: If we cannot trust our legislators to stop giving scholarships to children of other elected officials, campaign workers, party loyalists, and contributors to ward and township organizations, how can we trust them to use any tax dollars we might give them to actually pay down our bills?
I’m not sure we can. And that is why I am now leaning against even a temporary tax increase.
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* At this point, Illinois has 16 months to deal with this $12.8 billion deficit. Of course, the politicians in Springfield knew about the deficit in the spring of 2009, before the fiscal year even started. At that point they had a full 24 months to deal with it. But nobody had the courage to do anything. Even though the Democrats had enough votes to do whatever they wanted (and often did), Speaker Madigan wouldn’t, and still won’t, do anything on taxes unless the Republicans vote for them, too. Republicans on the other hand, said it has been the Democrats, in the legislature and the governor’s office, who have been approving the spending plans for the last seven years, so it was up to them to solve it. And everybody seemed more worried about the primary elections coming up in February of 2010 than fixing the state’s financial condition.
** Some legislators defend the scholarship program on the ground they give the waivers to students who need the help and who might not be able to go to college otherwise. While that may be true for some legislators, it is not a justification for the program as a whole. Needy students can, and should, be helped by Illinois State Scholarship Commission. While some legislators may give out waivers fairly, enough of them do not that the program stinks from an ethical point of view. It needs to end.
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