By Dan Calabrese ——Bio and Archives--July 5, 2017
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You don't hear much about it, partly because national media rarely takes an interest in state-level politics and partly because they don't like to tell you when liberal policies result in abject disaster. But Michael Madigan may be the most malevolent person in American politics, and nothing appears capable of slowing him down.
Madigan is the Speaker of the House in Illinois. He is a Democrat. He is bought and paid for by public employee unions. And during his time as Speaker, spending on pensions and health care benefits for state employees has exploded to the point where it's put Illinois at the brink of complete financial ruin. It's gotten so bad that the state may soon have to stop selling lottery tickets because it can't pay the winners.The Republican governor issued the vetoes hours after the Senate approved the legislation designed to end the nation’s longest state budget holdout since at least the Great Depression. The Illinois House approved the budget measures Sunday. The Democratic-controlled Senate voted 36-18 Tuesday to hike the personal income tax rate by 32 percent from 3.75 percent to just under 5 percent. Corporations would pay 7 percent instead of just over 5 percent. It voted 39-14 to adopt the $36 billion spending plan
Rauner had promised to veto the measures because Democrats who control the General Assembly have yet to agree to his pet issues. Those include statewide property tax relief, cost reductions in workers’ compensation and benefits for state-employee pensions, and an easier process for dissolving or eliminating local governments. It’s now up to the House to vote on override motions. The House is expected to take up the override issue at noon Thursday.By the way, it was our all-propagandist friends at the Associated Press who wrote the excerpted story above. I thought you'd enjoy seeing (check the passage in bold) how the AP's writer editorialized about Rauner's reason for vetoing Madigan's tax hikes, not that it matters since the process of overriding his veto is well underway and likely will be completed tomorrow. Rauner's "pet issues" as the AP calls them are the fundamental reforms Illinois state government needs to avoid being in this crisis situation in perpetuity. And if you really don't understand just how bad things are in Illinois, the Wall Street Journal offers a primer for you:
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In Illinois, Democrats spent the long weekend coaxing Republican legislators to join their suicide pact to raise taxes to plug a $6 billion deficit and pay down a $15 billion backlog of bills. And don’t forget the $130 billion unfunded pension liability—none of which will be solved by the $5 billion tax hike. GOP Governor Bruce Rauner vetoed the bill on Tuesday but may be overridden. After credit-rating agencies threatened to downgrade the state debt to junk, Mr. Rauner proposed raising the state’s income tax to 4.95% from 3.75% and the corporate income rate to 9.5% from 7.75% for four years. In return he asked for a property tax freeze and modest reforms to workers compensation. Yet Mr. Rauner already signed off on a huge property tax hike in Chicago—homeowner bills have increased by a quarter in two years—to pay for teacher pensions. The state legislature is controlled by public unions that refuse to compromise. But the budget crisis became more urgent after a federal judge on Friday ordered the state to make long overdue Medicaid payments, which had been subordinated to pensions and worker pay. While states can’t go bankrupt, Illinois is showing they can default—and that they will prioritize public workers over other creditors.
Pensions will consume about a quarter of Illinois’s general fund this year. Nearly 40% of state education dollars go toward teacher pensions, and the state paid nearly as much into the State Universities Retirement System last year as it spent on higher education. Anemic revenue and economic growth can’t keep up with entitlement spending. The state’s GDP has ticked up by a mere 0.8% annually over the last four years compared to 2% nationwide and 1.4% in the Great Lakes region. Since 2010 more than 520,000 Illinois residents on net have fled to other states.This is the same dynamic that drove the City of Detroit into bankruptcy a few years ago. Pension benefits for retirees were crippling the city's budget, and because the contractual obligation to pay the benefits was so airtight, the only way out was Chapter 9. Unfortunately for Illinois, states can't declare bankruptcy. What they can do, however, is default on obligations. That seems increasingly likely as long as Michael Madigan maintains an ironclad grip on the state's fiscal policies, because without reform of this system there is no way the state will ever generate enough revenue to meet its obligations. That doesn't mean the public employees will be the ones who get screwed. They probably won't, because they are considered sacrosanct by the people with the power in Springfield. What's likely to happen instead is that bondholders, vendors and others who are owed money by the state will get the shaft.
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Dan Calabrese’s column is distributed by HermanCain.com, which can be found at HermanCain
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