Tax retirement income.
How’s that for an idea that’s dead in the water?
Or what about this: Tax access to the internet.
Anybody good with that one?
And yet, in an Illinois that remains in pathetic financial shape, with $129 billion in unfunded pension liabilities and the lowest credit rating of any state, doing the unpopular is the only way forward. We have to share the pain, as made clear in a budget roadmap released Friday by the Civic Federation of Chicago.
When Gov. Bruce Rauner delivers his budget address next week, he’ll be wasting everybody’s time if he fails to move beyond his tired “pro-business” talking points, such as workers’ compensation reform and sticking it to labor unions. If he’s sincere about cutting a budget deal that moves Illinois forward, he’ll signal a willingness to strike a creative grand bargain with Democrats, one that delivers immediate results and spreads the pain around.
The same goes for the Democrats who control the Legislature. You gotta give to get. Show courage.
So, OK, let’s come up for air here and acknowledge reality. This is an election year. Nobody’s going to do anything principled or brave. It will be a big deal, sadly, if the governor and the Legislature can agree on any budget at all.
Tax retirement income? Anybody up for re-election who goes for that had better update their LinkedIn profile first. Talk of a “grand bargain” is so last year.
Why then has the Civic Federation even released this road map to financial solvency? And why are we promoting it here, especially since we by no means endorse all its specifics?
Because it’s good to be reminded what honest financial reform might look like for Illinois, if only we had more skilled elected leaders. The value of the plan is in its uneasy mix of solutions.
The Civic Federation recommends limiting state government spending growth to 2.1 percent a year. It recommends expanding sales taxes to an array of services already taxed in neighboring Wisconsin, such as dry cleaning, landscaping, boat docking and internet access. It recommends raising the gas tax to pay for construction projects.
Under the Civic Federation plan, federally taxed retirement income also would be taxed by the state. Public university campuses might be closed or consolidated. The penalty the state pays on late bills would be reduced. The Chicago Public Schools and all other school districts would be required to pick up the cost of teacher pensions. And a constitutional amendment would be placed on the ballot, no later than the 2020 election, to allow for changes to the state’s employee pension system.
Rauner has expressed support in the past for some of this stuff, such as a hard cap on spending and even the expanded sales tax. And Democrats long have supported a move to a progressive income tax, which the Civic Federation plan also recommends. The Federation calls for a “modestly graduated” tax rate structure — with a maximum spread of 3 percentage points — to raise additional revenue while lowering tax rates for lower income people. This, of course, would require a change in the state Constitution.
What the Civic Federation seems to be saying between the lines is that there is more than one way to skin a cat, and the usual knee-jerk proposed solutions — higher overall taxes, union-busting, term limits and the like — have dominated the debate too long.
Bad politics is destroying good policy.
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