The case for a fair tax grows stronger with Pritzker’s new budget — or budgets

This year, Pritzker is looking for just one heavy lift — and he’s calling on voters to give it to him in November by approving a graduated income tax.

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Gov. J.B. Pritzker delivers his state budget address on Wednesday, Feb. 19, 2020, at the Illinois State Capitol in Springfield.

Gov. J.B. Pritzker delivers his state budget address on Wednesday at the Illinois State Capitol in Springfield.

Justin L. Fowler/The State Journal-Register via AP

Last year, Gov. J.B. Pritzker and the Legislature did a lot of heavy lifting to get the state’s annual budget and finances back on track.

For the sake of a sorely needed capital spending program — to repairs roads and bridges and buildings — they created new and expanded sources of revenue, raising the state’s motor fuel tax, legalizing recreational cannabis and sports betting, and opening the door to more casinos.

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This year, Pritzker is looking for just one more heavy lift — and he’s asking voters to do the lifting.

To finance a budget that best meets Illinois’ financial obligations while living up to its most commendable values, the governor is making the case, harder than ever, for a graduated state income tax.

A proposed constitutional amendment to replace the state’s flat income tax with a graduated one, which would raise additional revenue by asking more of the wealthiest residents and corporations, is on the Nov. 3 ballot. We’re asking Illinoisans to flex their ballot-box muscle and approve it.

Competing state budgets

In his budget speech on Wednesday, Pritzker essentially presented two budgets for Fiscal Year 2020-2021, which begins on July 1 of this year and ends on June 30, 2021.

The first factors in an extra $1.4 billion from that new graduated income tax, assuming the tax will be approved by the voters and kick in on Jan. 1 of next year. The additional revenue would go toward better funding education at all levels, improving public safety and beefing up the Department of Children & Family Services, which cares for the state’s most vulnerable children.

Another $100 million of the extra revenue would be used to more quickly pay down the state’s frightfully high unfunded pension obligation, which now stands at $140 billion. That, we should think, would be good news to public employees who worry about their pensions and to fiscal hawks who worry about the state going broke.

Pritzker would even kick in $100 million of the extra money into a rainy day fund, to which there have been no contributions in more than a decade. He also supports legislation to make annual contributions to the fund mandatory.

A stripped-down alternative

Pritzker’s alternate budget, however, strips out all of that. It lays out a series of grim budget reductions that would become necessary, to his thinking, if the graduated income tax amendment is not approved.

None of these budget reductions would be good for schoolchildren, college students, the disabled, the poor or Illinois’ long-term financial health.

There would be no extra $100 million for those pension funds. Public universities and community colleges, still struggling to recover from underfunding during the years Bruce Rauner was governor, would lose $70.5 million.

Revenue sharing with local governments would be trimmed by $98 million. Even spending on the May 2021 state police cadet class would cut by $3.5 million.

But the true backward nature of this alternate budget can be seen in what would happen to state funding for public education, from kindergarten through high school.

In 2017, the Legislature and Rauner, in a historic bipartisan achievement, created a new school funding formula intended to give kids who attend public schools in poorer communities a fairer shake. The new formula gives property-poor school districts a larger share of any new state money earmarked for education. And, as part of the reform, the state committed at that time to increasing funding for education by $350 million each year until a rough equity is achieved between rich and poor school districts.

But in Pritzker’s alternate budget, that extra funding is reduced — for the first time since the state made this supposed commitment — to just $200 million. It’s an improvement over the pre-2017 era, but it’s hardly enough.

Gov’s critics in fantasyland

No sooner did Pritzker present these two clashing budgets on Wednesday than his critics dismissed his entire argument. The real solution to the state’s financial problems is not a graduated income tax, they said, but a reduction in pensions for current state employees and retirees.

Can we please dismiss this canard for once and for all?

This editorial page has argued for reducing pension benefits as well, but the courts have made clear that iron-clad language in the Illinois Constitution prohibits this. And even a change in the state Constitution for this purpose likely would be impossible, violating provisions of the U.S. Constitution.

Or as Pritzker put it on Wednesday:

“The fantasy of a constitutional amendment to cut retirees’ benefits is just that — a fantasy. The idea that all of this can be fixed with a single silver bullet ignores the protracted legal battle that will ultimately run headlong into the Contracts Clause of the U.S. Constitution.”

The only realistic goal, Pritzker said, should be to pay the pensions “that are owed.”

By presenting two alternate budgets side by side, tangibly demonstrating what’s at stake, Pritzker has made his best argument yet for a graduated income tax.

Our state can continue to thrash around in indecisiveness, as it has for decades. Or it can take a big step in November toward fixing the state’s big problems.

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