One year after its inception, the Responsible Budget Coalition is still fighting hard for a sustainable state budget solution. Will lawmakers ever listen?
The Responsible Budget Coalition will celebrate its one-year anniversary this coming week. It's a milestone the group --which includes community organizations, social service providers, unions (including the SEIU Illinois Council, which sponsors this website), and faith-based organizations -- would have preferred not to reach.
For 52 weeks, the coalition has called on Illinois' General Assembly to pass a fair and balanced budget. This spring, they organized one of the largest statehouse rallies in Springfield history, bringing together thousands of teachers, students, state workers, health care providers, and concerned citizens in support of a sustainable solution to the crisis. Elected officials, worried about the political repercussions any bold action might have, completely ignored the call-to-action and punted instead, passing a FY 2011 state spending plan that is "balanced" only in the most generous sense of the word.
With the legislature scheduled to return to Springfield in just a few short months, that means RBC and its allies have to redouble their efforts. Yesterday morning at Chicago's Spertus Institute, the coalition got down to work, hosting a leadership summit titled "A Better Illinois." The turnout was small by design; roughly 200 heavy hitters from government, heath care, human services, education, and business were invited to review the basics of the budget mess and discuss the best approaches for closing the deficit.
The Center for Tax and Budget Accountability's Ralph Martire provided the bleak financial overview, which is a story Progress Illinois readers know well. Lawmakers left Springfield after passing a budget framework that relied heavily on borrowing and one-time revenue sources and handed off most of the cutting decisions to Gov. Pat Quinn. He proceeded to slash an additional $1.4 billion from a general revenue fund that was already too low; Illinois' spending, taken as a percentage of state gross domestic product, is the sixth lowest in the country and has not kept up with inflation over the past decade. Worse still, the state has no real plan to make this year's pension payment or pay down nearly $6 billion it owes in unpaid bills.
The cuts are most acute in the Department of Human Services (DHS), which lost close to $600 million in grant money this year. Adjusted for inflation, the department is working with over $1 billion less than they had just 10 years ago. And roughly 54 percent of DHS funding covers mental health and development disability services that are not available in the private sector. It's either the state government or nothing for those vulnerable citizens. "Our financial bankruptcy," Martire said, "is forcing the state to engage in morally-bankrupt policy decisions." Listen:
Anti-tax critics in Illinois argue that the state overspends (it does not) and overtaxes (it does not). Dean Baker, the summit's keynote speaker and co-director of the Center for Economic and Policy Research, has seen this rhetoric used in other states, as well. Usually, Baker says, it comes from legislators and advocates who are already hostile to safety net spending and unions. "They are seizing on the [economic] situation," he said:
Still, in the economic and political climate that Illinois faces today, those criticisms carry weight. The Democrats, who have controlled the statehouse for a decade, have been put on the defensive, especially because so many have chosen not to explain to voters the benefits of comprehensive tax reform, which would close a significant portion of the deficit while also providing tax fairness, property tax relief, and a pathway to education funding reform. That missed opportunity is especially frustrating for Cook County Assessor James Houlihan, a former legislator who has seen up-close the toll our over-reliance on property taxes has taken in some Cook County communities, particularly those in Chicago's South Suburbs. "We have very little energy now to talk about how we should fund schools," he said. Listen:
The encouraging news is that the General Assembly, if it decides to, has plenty of sensible options to raise revenue and make the investments it needs to make. They can champion legislation, for example, to modernize the sales tax. Houlihan himself has issued a report that estimated Illinois could generate $1 billion annually if it lowered the sales tax to 3.25 percent but expanded it to a wider range of discretionary services, which now make up roughly 44 percent of all transactions statewide and aren't used by the poorest taxpayers. They could also raise the state's absurdly low income tax and pair it with offsets for middle- and working-class people, as HB 174 would.
Dean Baker proposed one nifty idea yesterday that Green Party gubernatorial candidate Rich Whitney has included on his campaign platform: imposing a tax on speculative financial transactions taking place at the Chicago Mercantile Exchange and the Chicago Board Options Exchange. Slapping a miniscule tax on these trades, which don't even qualify as useful market activities, could raise billions. The idea has even been embraced by those left-wing ideologues at the International Monetary Fund. (Whitney says the state should levy a tax sufficient to raise $4.5 billion per year.)
Of course, any of these legislative actions will require decisive action from elected officials. As the RBC sees it, they can play a role in strengthening those flimsy backbones. "Taxes will not get done without leadership," said John Bouman, president of the Sargent Shriver National Center on Poverty Law. "The public will tolerate [the changes] and understand it if they are lead."