Budget Woes, Out-Migration Color Illinois Gov. Race

Budget Woes, Out-Migration Color Illinois Gov. Race
AP Photo/Charles Rex Arbogast
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What’s going on in Illinois?

Pundits like to point to the recent Republican primary challenge to incumbent Gov. Bruce Rauner as a “sexy” story of party infighting. Or the fact that the 2018 governor’s race will almost certainly be the most expensive in U.S. history.

But what’s playing out in Illinois, a state with the biggest pension crisis in the nation and the country’s worst outmigration problem, isn’t about party politics or campaign coffers.

It’s about something much simpler than that, and much more important: faith in the future.

People here are wondering: Should I stay or should I go?

The state’s population has been shrinking for four consecutive years. Last year, 115,000 people on net made the choice to relocate. As a result of its rapid out-migration, Illinois dropped from the fifth-largest state to the sixth-largest, falling behind Pennsylvania.

But a lot of people here aren’t in a position to leave. They have work, families and lives built in Illinois, and they’re wondering how to improve their quality of life. It’s a fundamental struggle, and it plays out in two policy arenas: jobs and take-home pay.

Illinois’ economy has picked up recently, but it’s still lagging the rest of the country. A 2017 report showed Illinois had the worst income growth of any state in the nation. And the fact that Illinoisans are shouldering one of the nation’s highest state and local tax burdens doesn’t help.

People with white-collar jobs in Chicago and the suburbs are getting by, some of them quite well. But many households are struggling, particularly those in blue-collar areas. Many downstate communities are still reeling from the recession that began nearly a decade ago.

People are sick of hearing about the state’s problems, because they’ve already been shouldering the effects of those problems for years. Illinoisans know their state has major issues – now they want to know who’s going to fix it, and how.

As they look for answers and solutions, they’re facing two divergent paths forward.

On one hand, Democratic gubernatorial nominee J.B. Pritzker is pitching a “temporary” increase to the current flat income tax, with exemptions for low-income and middle-class earners (it’s unclear who is included in this group, but there you go). This is meant to buy time until lawmakers figure out how to pass a progressive income tax, one of the crown jewels of the policy platform upon which Pritzker is running.

On the other hand, Rauner is preaching what got him elected in 2014: pro-growth economic reforms, including lower taxes, and taking on the state’s most reviled political boss: Democratic House Speaker Mike Madigan.

No matter who gets elected, Illinois will never have enough money to fund core government services and cover its monumental pension obligations if politicians don’t address spending growth: From 2008-2015, state spending grew 25 percent times faster than incomes.

Politicians come and go, but problems like the ones Illinois is facing don’t go away on their own. The people of the state know what’s going on. Now what they need is simple: hope.

Things look bleak right now. But enact a few reforms, and all of the sudden Illinois looks like a totally different place.

Illinois has some of the most unfair laws in the region when it comes to negotiating with government worker unions. That, in turn, drives up the cost of operating government. But by taking a page from neighboring states – all of which have enacted laws that help rein in government worker union costs and power, including strike prohibitions and limits on what can be negotiated into government worker contracts – Illinoisans would see their state and local governments become more efficient and cost-effective.

Illinois’ pension debt has soared to $250 billion, affecting not only taxpayers but the men and women who have been promised a pension in retirement. Taxpayers continue to pour in more and more money to the system, yet debt continues to pile up. There will never be enough money to properly fund government pensions in Illinois, which is why the state should expand the 401(k)-style pension plan already offered to university workers to the rest of state government employees. Long-term, lawmakers must enact a constitutional amendment to allow for foundational pension reforms.

And ultimately, Illinois needs real fiscal responsibility. The state hasn’t had a truly balanced budget for more than 15 years. A spending cap that ties government spending growth to what taxpayers can afford would provide certainty to the budgeting process, and would stave off future tax hikes.

These changes aren’t easy, and they certainly aren’t sexy. They don’t capture the public imagination in the Land of Lincoln. But maybe, it’s finally time they should.

Hilary Gowins is vice president of communications for the Illinois Policy Institute, a think tank that promotes free markets and limited government.

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