Closing the year for many people means holiday presents, and good times, but for Illinois Gov. J.B. Pritzker the holidays will be a grim reminder of the failure to pass his graduated income tax proposal to raise an expected $3 billion dollars to shore up the sagging finances of his state, and in particular to help pay public pension, but that fell flat after a highly financed campaign against it by billionaire hedge fund and CEO of Citadel, with ads falsifying many claims, such as taxing retirement income, and was roundly defeated by voters in November.
Pritzker, himself a billionaire, spent more than $56 million, and still lost, with only 46.7 percent of the vote, in a battle of billionaires, and which The Chicago Tribune Editorial page belittled him as being lazy and as the old trope goes, a “tax and spend” Democrat.
Not one to lie down and roll over, he shot back: “I’ve reached out to the General Assembly, in particular to the Republicans, because they have a special responsibility here, having worked so hard to defeat the fair tax, to step up to the plate, tell us how they’re going to balance the budget, given that we have a $3.9 billion deficit, and you know about half of that has come from structural challenges that the state has.”
“Illinois House Republican Leader Jim Durkin, of Western Springs, took aim at Pritzker, Senate President Don Harmon, D-Oak Park, and Speaker Michael Madigan, saying in a statement the three were “repeatedly warned about the dire shortfalls in the fantasy budget that relied upon the passage of the graduated tax and a ‘fingers crossed’ hope for a federal bailout.”
“Instead of living within our means, they attempted to trick voters into raising taxes, and were sorely rejected by Democrat, Republican and Independent voters across the state,” Durkin’s statement continued, according to the Chicago Tribune.
Taking the city will not be easy for Pritzker who put an excess amount of political capital in the effort, and now with the state facing much needed dollars, he announced a week ago that there was going to be $711 million in reductions, only the beginning to fill the $3.9 billion deficit or the current fiscal year which has overjoyed some of his critics who have long called for state hiring freezes, unpaid furlough days and a reduction for retirement funds for one year, among other ideas.
For many of those ideas, they seem more like graduate school exercises rather than reality based ideas, that don’t take into account those living on the expectation of state payments, and as we have all seen from the past, temporary reductions in payments can quickly be like the ghosts of Christmas past coming back to haunt us.
On the chopping block for many is a reduction in social services which we’ve seen before with the Bruce Rauner administration that left many of these agencies begging, or being forced to limit or end services for battered women shelters and drug and alcohol treatment centers, to name but two.
The Belleville News Democrat reported that “Having gotten wind of possible cuts months ago, southwestern Illinois agencies have already started planning for more bad news in the near future.
It won’t be the first time Renae Storey, vice president for the southern region of Children’s Home and Aid, will have worked through a fiscal crisis. She remembers the budget impasse under Gov. Bruce Rauner and how it affected the statewide child and family advocacy nonprofit.”
“We know that cutting any part of human services will be detrimental to families, and it will be detrimental to the state budget because more costly alternatives would probably happen later,” Storey said.
They also reported that “One of the organization’s programs, for instance, has reduced the number of St. Clair County children going into the juvenile justice system each year from 90 to 10 since 2005. The cost of one year in juvenile corrections costs $160,000, whereas Redeploy Illinois costs roughly $10,000 per child.
“We know there may be cuts coming, but we’d like to have a seat at the table so we can help inform the lawmakers and the governor’s office about how important these services are,” Storey said.
That request should be part of the effort in planning the cuts, along with lawmakers on both sides of the political divide to make a good part effort to minimize the pains of budget cuts.
Of course, the blame game is part and parcel of politics, and with some justification on the part of Pritzker, and his critics who are in a “told you so” mode that gives little and takes much.
The governor has said that he will negotiate with unions on $75 million in personnel cuts, and we can only hope that level of cooperation will continue.
While this has much traction from some, like Andy Shaw of the Better Government Association, others disagree, notably Roberta Lynch, the executive director of the American Federation of State, County and Municipal Employees, who said according to the Chicago Sun Times “it is grossly unjust to suggest that frontline state employees who have already sacrificed so much in our current public health crisis should bear an outsized share of the burden of fixing the state’s fiscal crisis as well.
“Moreover, it is counterproductive in the extreme to target these employees at a time when the need for state services and the demands on state government are greater than ever.”
With a reduction of about 10,000 fewer incarcerated people, projected savings are expected to net $25.4 million, but as reported “the remainder will come from $45.6 million in operational and grant reductions to corrections, Illinois State Police and other agencies.”
On the federal level, Pritzker, like many states hit hard with a loss of revenue from Covid 19, had hoped for help from Congress, that Republicans had fought tooth and nail describing them as “bailouts” a political ploy for attacking blue states.
In particular schools need those federal bucks, and as the governor had noted earlier, “Our schools and our public safety and health care deserve more investments, not less.”
Unfortunately, the $2.3 trillion bill passed on Monday did not contain the contentious state and local money that Pritzker wanted, and some voices from Washington are doubting that the incoming Biden administration may be capable of getting it passed either.
With a nearly $4 billion budget deficit for 2021, there is also a projected deficit of $4.8 billion in fiscal year 2022, with a slight reduction to $4.2 billion by FY 2026, in no doubt caused by the continuing pandemic; but, also a continuing backlog of bills projected to increase from an approximate $10.1 billion for FY 2021 to $33 billion, over the next five years.
Pritzker plans to borrow another $2 billion from the Federal Reserve’s municipal liquidity fund, which was created to help governments, after earlier borrowing $1.2 billion from the program and repaying $200 million, Bloomberg News reported, and the Tribune reiterated.
“The state had originally authorized borrowing $5 billion from the program. Loans must be repaid over a three-year period, and state officials had planned on using new federal stimulus funds for state and local governments to repay the borrowings.”
Even these may have had their day since Sen. Pat Toomey, R.Pa. wants to do away with them saying their time has come and gone. As MSNBC reported “Toomey said he fully supported the wide-ranging credit programs launched by the central bank in March in response to the burgeoning pandemic. But he contended that they should be wound down at the end of December and congressional approval must be required again before restarting them.”
In defense he added, “I voted for that. I supported that because I thought we were in such an emergency. We are clearly not in a financial crisis at this point."
Such “Cassandra” like moves like his were prevented by Democratic leaders fearing that President Biden might lose a resource, while others questioned what Toomey designated as a crisis.
Needles to say 2021 for Illinois finances will be at a crisis point, and we hope that both sides of the aisle can work together to create a plan, now that the graduated tax horse has left the barn.
