Pritzker’s $42 billion budget relies on progressive tax, fails to tackle Illinois’ structural problems
Wirepoints’ analysis finds Pritzker’s 2021 budget unbalanced and lacking the reforms needed to get Illinois back on track.
SPRINGFIELD (2/19/20) – Gov. Pritzker has unveiled his $42 billion state budget for 2021. The budget increases spending by $2 billion, or 4 percent, over 2020 and relies on the passage of a progressive tax amendment to appear balanced. The governor once again rejected any attempt to get retirement debts under control through a pension amendment, insisting instead that a progressive income tax is a panacea to Illinois’ problems.
“This budget doesn’t tackle Illinois’ deep problems. This is not a budget for a state that is just one notch from a junk credit rating. It’s not a budget that deals with the nation’s worst pension crisis, the 2nd-highest property taxes, the 2nd-worst rate of out-migration and falling real home values,” says Ted Dabrowski, President of Wirepoints.
“Giving billions more to a political class that has proven to be the most corrupt in the nation will only invite more abuse.”
Wirepoints’ analysis finds the budget accelerates Illinois’ downward slide by embracing the same policies that have driven Illinoisans out for years, while rejecting the structural reforms Illinois needs. Here are some key facts:
- Pritzker’s 2021 budget is not balanced even if the governor’s $1.4 billion in progressive tax revenues are included. The state’s statutory retirement payments will still be about $4 billion short of what’s actuarially needed for pensions and short another $2-3 billion for retiree health insurance debts. As a result, the state will accrue billions more in debt outside of the budget, just as it has done for years.
- The governor reports $225 million in savings due to “operational efficiencies, possible agency consolidations, and the elimination of excess boards and commissions.” That amount represents less than one percent of the 2021 budget and is dwarfed by the overall $2 billion increase in the budget.
- Pritzker promises to make a near-$500 million “historic investment” in preK-12 education. That increase comes despite the fact that Illinois’ total per-student spending is already the highest in the Midwest. Illinois spends 30 percent more than Wisconsin per student and 50 percent more than Indiana.
- The governor’s attempts to shore up a “rainy day” fund with $100 million falls far short of what Illinois needs. Illinois is grouped with New Jersey as the two least-prepared states in the country for a recession. The amount represents less than 0.25 percent of the budget and is meaningless as long as the state is burdened with billions in unpaid bills.
“Governor Pritzker complains that a constitutional amendment for pensions is a ‘fantasy’ because it would be thrown out under federal law. He’s either dishonest or uninformed, because recent experiences in Rhode Island and Arizona prove otherwise. The real fantasy is expecting Illinois to right its fiscal ship without real pension reform, which requires either a constitutional amendment or bankruptcy,” says Mark Glennon, Executive Editor of Wirepoints.
In his speech, Pritzker also said that if the progressive tax amendment is voted down, state discretionary spending will have to be “inevitably cut” by 15 percent. If he put that question to voters they’d say they want cuts, but not in the areas Pritzker is threatening.
“Pritzker’s talk of cutting state spending is what Illinois actually needs – but the cuts need to come in the right places. Pritzker is wrong to threaten cuts to the core services Illinoisans need. Instead, he should champion structural reforms: the consolidation of local governments, a push for a pension amendment, a drop in labor costs and a significant reduction in mandates on municipalities,” says Dabrowski.