In a speech originally scheduled for February 19th, Illinois Governor Pat Quinn provided a five-year fiscal blueprint in his budget address today stating, “Illinois is in a stronger financial position now than we were five years ago and now is the time to end the era of fiscal cliffs and secure Illinois’ long-term financial future,” The plan, which may be more of a political vehicle than a governance strategy, includes $38.575 billion in revenue and $38.095 billion in expenditures for the upcoming fiscal year.
The big political football is Quinn’s recommendation to maintain the state’s current income tax rates. This is a critical because when it was enacted in 2011, it was the largest tax hike in state history and was hailed publicly as a cure for the state’s massive $9 billion backlog of bills. Illinois Statehouse insiders knew even then that it wouldn’t be enough. If allowed to end on December 31, 2014, the loss in revenue would create at least a $1.9 billion hole in the state budget.
To make that palatable, Quinn constantly emphasized property tax relief, increased investment in education and a listing of the consequences that would arise if not for his plan. The plan/speech highlights specifically included:
• Providing every homeowner in Illinois with an annual, guaranteed, $500 property tax refund;
• Doubling the state Earned Income Tax Credit by the end of his five-year plan;
• Tax cuts for businesses that provide job training;
• Not imposing taxing retirement income; and
• Build a “rainy day” fund to address any future economic downturns and/or other fiscal emergencies.
Quinn tried to cover himself from criticism that his administration wants to only tax their way out of the problem. He stated that since he became governor, he has enacted historic spending cuts that totaled $5.7 billion, reduced the backlog of bills to $5 billion and reduced overall spending to levels below 2008. He promised that his blueprint would continue incorporating strong fiscal controls to “make sure Illinois lives within its means for years to come.” Quinn also dished out some programmatic fodder, including:
• Investing $1.5 billion in a ‘Birth to Five’ early childhood initiative;
• Doubling the state investment in the Monetary Assistance Program (MAP) college scholarship program;
• Investing $6 billion in classroom spending and modernizing classrooms across the state; and
• To the cheers of government pork lovers, forming a bipartisan working group to develop a new five-year capital plan.
To a great extent, the ‘dirty work’ of crafting a 2015 budget will be done by the General Assembly between now and the end of May. But the highlights of this address were not directed towards the members of the Illinois House and Senate. They were really intended for Quinn’s core constituencies and at the Bruce Rauner gubernatorial campaign. Quinn’s core backers may/should like this plan, but it is 100% guaranteed that Rauner won’t (and voters will definitely know why - soon and often).