IPI: State could balance budget, pay bills without tax hike

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Illinois could balance its budget and pay off its backlog of bills without a tax increase. That’s according to the nonpartisan Illinois Policy Institute.

While lawmakers in Springfield are negotiating a potential budget agreement that balances the state’s books largely on tax increases, Illinois Policy’s plan attacks the largesse of state and local government.

In its “Budget Solutions” report, Illinois enacts a five-year property tax freeze while eliminating costly state mandates on towns and cities. It eliminates a state subsidy to local governments called the Local Government Distributive Fund that it claims “fuels further spending.” The group says this step alone will save the state $3.4 billion.

Additionally, it creates a new retirement plan for public employees similar to a 401 k, replacing the current system of defined-benefit pensions for $1.65 billion less in annual state payments to the pension plans.

The proposed plan would implement Gov. Bruce Rauner’s final contract offer to the American Federation of State, County and Municipal Employees Union (AFSCME) Council 31; reduce state payrolls by 10 percent; streamline Medicaid spending; and reduce administrative costs at public colleges and universities — producing another $1.1 billion in savings.

“The last thing Illinoisans need right now are more tax hikes,” said vice president of policy Ted Dabrowski. “They need the reforms that make the state more attractive for people and businesses again. If we continue down the path we’ve been going, we’re going to chase more and more people and businesses away from our state.”

He said the solutions will likely be met with pushback by groups that benefit from the status quo and promote higher taxes. The plan does not, however, result in reductions to state services but a large scale back of state-funded perks.

“We don’t want to cut services. What we need to do is scale back on the perks and the number of people that have executive pay,” he said.

In this plan, Dabrowski said Illinois Policy “attacks the pension problem. We ensure that we get comprehensive local property tax reform. It freezes taxes and stops costs from going up on people. We look at state government and get rid of a lot of the bloat, overlap and duplication that exists there.”

Illinois hasn’t had a balanced budget since 2015 when lawmakers in the Democrat-controlled General Assembly failed to come to a compromise with Gov. Bruce Rauner on a number of reforms he believes will make Illinois more competitive to business investment and stem the massive out-migration of citizens to other states.

The Illinois News Network is an independent project of the Illinois Policy Institute.

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