Free Markets, Free People


A tale of two states

I’ve been mentioning what’s going on in the state of New Jersey as a positive example of what is necessary to reign in government and government spending.  Hard decisions have been made there and, in an epic battle with public service unions (specifically the teacher’s union) Governor Chris Christie seems to be prevailing.

Not so in Illinois where, amazingly, the public service unions held a big rally yesterday and chanted “raise my taxes”.

Any guess why?

Thousands of protesters bused down by labor unions and social service advocates rallied at the Capitol today in an attempt to pressure state lawmakers into raising the income tax to avoid more budget cuts.  A spokesman for Illinois Secretary of State Jesse White estimated the rally crowd at 15,000, with more than 12,000 marching around the building. That would appear to make it the largest Capitol protest since the Equal Rights Amendment crowds a quarter-century ago. Bus after bus pulled up on streets surrounding the Capitol complex and dumped sign-waving protesters clad in purple, green, red and blue shirts that represented a show of strength from a variety of public employee unions and dozens of groups that formed what they named the “Responsible Budget Coalition.”

“Responsible Budget Coalition” my foot.  “I want my job, benefits and perks unchanged coalition” is more like it.

Their goal, of course, is to pressure Illinois lawmakers into raising income taxes to continue spending at the level that is leading Illinois into bankruptcy.

Illinois has a $13 billion dollar budget deficit.  $2 billion in cuts to education have been proposed.   But Democratic Governor Pat Quinn would rather raise income taxes thantake on his base (public service unions such as the teacher’s union) by make those hard and tough choices necessary to reign in the deficit.  And, one assumes, because Illinois educators have done such a great job in the past (ranking 32nd out of 50 in 2005-06 and dropping 3 more to 35th isn 2006-2007).

So Quinn has come up with a budget plan that rests on “5 pillars” :

Creating Jobs, Cutting Costs, Strategic Borrowing, Continued Federal Assistance and Increased State Revenues.

Quinn claims he can create 439,000 jobs in the next 6 years by using $6 billion.  The same “shovel ready” game plan that’s worked so well on a national level is now the panacea for Illinois unemployment.  He also is going to give small businesses a $2,500 tax credit for employees they hire.  Yeah, that’ll cover the cost of new hire, won’t it?  In fact, his entire jobs creation plan is a recreation of the Obama plan which has done zip to spur job creation.

But now we get to the fun part – Cutting costs (well, not really).

Cutting Costs

State Employees and Operations – The Governor’s plan includes more than $203 million in savings through employee furlough days, renegotiated employee contracts, employee health insurance savings and additional travel restrictions. The state will also change the way it does business, including reviewing, reducing or re-bidding all contracts over $1 million; historic procurement reform; and consolidating state office spaces.

Pension Stabilization – The state’s current public pension system costs are growing significantly, adding to the mounting deficit. Without bold reform, the system will fall apart, forever disrupting thousands of lives. Stabilizing the system so that existing employees and retirees will keep their current benefits, while new hires become part of a streamlined pension system will save approximately $300 million in the first year.

Health and Human Services – Services such as home care for older adults, child care and community mental health services will be reduced by $276 million. Scaling back prescription drug assistance and group health coverage for state retirees, combined with a managed care pilot program for seniors and adults with disabilities who are enrolled in Medicaid will save the state $325 million.

Performance Metrics – The state will implement rigorous performance metrics that will improve accountability and performance, and will make sure programs run more efficiently. A new Web-based system will be designed for collecting and reporting performance updates.

Education – Education will see approximately $1.3 billion cut from general state aid, special education, student transportation, grants and universities.

Now – this is a state with a $13 billion dollar deficit – correct? Count up the “savings” and cuts proposed here. Approximately $2.2 billion dollars. $2.2 billion in “savings”.  [As an aside - note the cuts in health care.]

So what about the rest of the deficit number? Well, of course, the answer is “strategic borrowing”. Oh, and an increase in the state’s income tax by 33%.

The excuse?

Well the state “owes” vendors, providers, colleges and universities $5 billion dollars, and it is high time the taxpayers paid these bills. Additionally, the Governor, knowing very well that Democrats have now become the party of public service employees (and that necessarily means preserving their jobs, salaries, benefits and perks) contends it is the duty of the Illinois tax payer to cough it up for education:

Governor Quinn challenged lawmakers to pass a 1 percent income tax surcharge to support education. The surcharge will help restore educational funding, while also enabling the state to get caught up on the millions of dollars owed to public schools, community colleges and universities.   “We can’t afford to deny reality or delay action any longer. We don’t have time for any more partisan battles, parliamentary maneuvers or political expediency,” said Governor Quinn. “As we tackle this budget, let’s remember: We are fighting for our children, our communities, and the future of our state.”

What he’s actually fighting for is the continued support of the public service unions.

And thus the well timed astro-turf “populist” uprising among the beneficiaries of misspent Illinois tax dollars.

A tale of two states.  One facing up to the fiscal reality of the day, and the other in the middle of trying to deny reality and maintain the status quo.  Certainly everyone understands that at some point, some tax increases may have to be considered.  But is it too much to ask the state to show some good faith and cut the bloated and costly state apparatus that is unable at this point to run in anything but a deficit?  A $13 billion deficit is no small potatoes for a state budget.  Proposing $2.2 billion in cuts and then wanting to put off $1.3 billion of those with a tax increase doesn’t demonstrate any seriousness at all about cutting the size and cost of state government.

While the bussed in protesters may have been many, according to the report, the Illinois taxpayers are many more.  Time to lay down the law to your lawmakers.  Cut spending.  Take a tip from New Jersey.  Make the hard choices and do the tough job of cutting the size and cost of government.  Otherwise, if the public tantrum the public service unions throw is allowed to work,, you can expect to be on the hook from now on ensuring those jobs, salaries, benefits and perks are forever maintained, while you watch the cost of government continue to spiral out of control.

~McQ


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9 Responses to A tale of two states

  • I can’t decide what ideology describes unions better: Communism or Organized Criminal Syndicate, they are undoubtably well connect with both.
    The behavior model of shaking down the public for protection money all-the-while threatening work stoppages is so apt to both.
    When will the voting public understand the reasoning that created unions has come and gone long ago.
    Unions are only a grossly distorted echo of the past, whose useful functionality has ceased to exist. Unions are simply a leach on society we can no longer sustain.
    Unions are neither capitalist nor in the American ideal of Liberty, independence and personal responsibility.
    Unions represent the opposite: Dependence, a lack of accountability, and an sustainable drag on the economy. that can no longer be justified.

    • In the old days, unions were just labor cartels.

      AFL-CIO, Teamsters, etc. = OPEC.

      The point of unions is to organize low skill labor and FORCE employers to only use the organized labor pool, so they are an attempt at a labor cartel.

      Now, modern unions in some cases act more like PACs. But the fact is, unions were always about force, and they were never more moral or ethical than any other cartel.

  • Well worth taking the sick day to go and make sure your raises, benefits and perks are maintained don’t you think?   I’m sure it was a sick day they all took.   Must have been an interesting day in a lot of union shops yesterday.  “We’re sorry, we’ve all gone to, um, lunch, please call back tomorrow”.

  • Unfortunately, since I live in the “great” state of Illinois, I expect that the only pillars of Gov. Quinn’s plan that will actually come about are the tax hikes and the massive…..  I mean, “strategic” borrowing.  I expect Illinois to act a lot more like California (including the use of IOU’s) than New Jersey.  The Chicago suburbs are becoming a lot more blue, which makes it easier for a Democrat to get elected to a statewide office.  10-15 years ago, the “collar counties” around Chicago were reliably red enough to counter-balance Chicago and at least force a candidate to campaign downstate.  It doesn’t seem to be the case anymore.

  • This conversation should go like this. “You would like me to raise taxes?  Fine, then I’m instituting a immediate and mandatory reduction of all state salaries by 5% in anticipation of the tax increase.  When the tax increase is instituted your 5% salary will be returned, but since the increase is likely to be in excess of that amount you are going to take home even less at that point.
    What’s that?  You don’t want your take home income reduced?  Well then what are you asking for?  Oh… you want me to raise taxes on everyone but you…”

  • It sure sounds like they must suspend the laws of physics and thermodynamics to yield … a free lunch

  • “Strategic borrowing”

    I’m not sure whether Orwell is laughing or rolling in his grave over this term!  Illinois isn’t digging itself deeper into debt: it’s engaging in “strategic borrowing”.

    The amusing thing about all of this is that I try these types of ploys on my wife whenever I want to spend money frivolously invest in leisure activities.  Amazingly enough, it never seems to work. :-)

  • I agree, anyone who belongs to a union in IL should be taxed at the highest rate starting with the first dollar. This is a great idea!!