R. Eden Martin: Incredible that it’s business -- and politics -- as usual

Wednesday, August 11, 2010

David Vaught, Gov. Pat Quinn’s budget director, told Bloomberg News last week that the governor, if re-elected, would seek to increase the state income tax on personal income from 3 percent to 5 percent next January.

The campaign of his Republican opponent, state Sen. Bill Brady, immediately jumped on this story, commenting that if a tax increase were passed before Brady takes office (if he wins), Brady would “work to roll it back.” U.S. Senate-candidate Mark Kirk issued his own release opposing any tax increase, even though it’s a state issue, not a federal one. Then, Quinn said he was only for a 1 percent increase.

Here we are — only a bit more than three months before the November election — and our state is slipping into fiscal chaos, as are many municipalities. We have a real annual state budget deficit on the order of $14 billion to $15 billion. The state can’t pay its bills. Everybody is owed money — our universities, our schools, our social service agencies, the state’s suppliers. Unfunded retirement-related liabilities associated with the state’s public employees continue to mount.

Yet there is no sense of urgency. The General Assembly has not been called into special session to deal with this emergency. We’ll continue to run up bills and borrow until after the election, or maybe next spring, and then maybe we’ll deal with it — or maybe we won’t. Business as usual.

And politics as usual. Some folks think the state’s budget deficit should be fixed entirely with a tax increase. They don’t mention pension reforms or cost-cutting. Others think it should be fixed entirely by cutting costs — or more borrowing. Some candidates see it as an opportunity either to curry favor with particular constituencies or to tie the albatross of blame around somebody else’s neck. But most see it as something not to talk about. No point in making folks needlessly upset. Cuts would hurt somebody. A tax increase would hurt anybody with income. Maybe the problem will somehow disappear.

If ever there were a time for a different approach — for a bipartisan solution, for reaching across the aisle, for suspending the blame game and putting away the hatchets for a few weeks — it is right now.

Everybody has an interest in getting this cistern cleaned up. Business has a strong interest — since failure to stop the borrowing will bring the state to its knees. Without reforms and cuts, taxes will eventually go up a lot more than Quinn’s budget director is signaling. Investments and jobs will leave the state.

Labor has an even stronger interest. The pensions must be reformed and funding has to get fixed. If a pension fund goes broke, who will pay the pensions? The worker’s contract claim is against the pension fund — not the state. Moreover, the state’s sovereign immunity protects it from all but the smallest claims. Normal creditors’ rights aren’t available.

Are state employees going to keep mindlessly making their contributions into funds that won’t have the money for their pensions when the time comes?

Is it delusional to think that in such an emergency — when so much is at stake — the party leaders might put away their knives long enough to come together and balance the budget? Is it fantasy to think that voters might be mad enough to blame any leader, in any party, who won’t make the effort? Or that voters might (as in New Jersey) be relieved to have some statewide leader tell them the unvarnished truth?

A great American at the time of the revolution said that, “We must all hang together or … we shall all hang separately.”
We have a monumentally serious emergency in Illinois today. If we don’t hang together — and try to fix it together — we’ll all sink together into the state’s fiscal quagmire.

And blame will cease to be relevant — except to the historians.

R. Eden Martin is president of the Civic Committee of The Commercial Club of Chicago and a member of the nonpartisan Illinois is Broke public-education campaign, www.IllinoisisBroke.com.