Fw: Arc and Time for A Grand Budget Compromise

[Guest guest]

If this makes as much sense to you, as it does to me, please forward this on to

your State legislators, with a note about how important this is to your family.

Thanks.

Ellen

Ellen Garber Bronfeld

egskb@...

Arc and Time for A Grand Budget Compromise

The Arc of Illinois

January 6, 2011

Leaders in The Arc:

Great commentary from Professor Pollack in todays Chicago Tribune.

Make sure your make your calls to support new revenue today!

Tony auski

The Arc of Illinois

815-464-1832

Time for a grand budget compromise

By Harold Pollack

January 6, 2011Now that a tough election year is over, it's time to address

Illinois' $13 billion deficit. It won't be easy because we the electorate will

have to accept the fact that we are the core of the problem and eliminating our

budget crisis will require painful concessions from everyone.

Almost every budget problem flows from one simple fact: We want blue-state

services, but we want to pay red-state income taxes that don't cover the bills.

People often say, " Illinois is broke. " No, Illinois is a pretty affluent state.

Our state government is in financial distress, because our low and flat state

income tax doesn't raise enough money. This policy produces three predictable

results: desperate budget shenanigans, painful service cuts and excessive tax

burdens imposed on low-income families through other kinds of taxes.

Absent a tax increase, every serious budget analysis concludes that there is no

way to restore fiscal balance without extreme cuts that would be as socially

destructive as they are politically impossible.

Outside pockets of local affluence, Illinois schools are not what they need to

be. Medicaid recipients face serious problems finding medical and dental care.

Nonprofits and charities struggle as they are owed by the state billions of

dollars in unpaid bills.

United Cerebral Palsy ranked Illinois 48th in the quality of Medicaid services

to people with intellectual disabilities. In 2009, the National Alliance on

Mental Illness gave Illinois a grade of " D " for state services. The budget

wasn't the only cause of the low rankings, but money mattered a lot.

I confess my personal stake here. Seven years ago, my mother-in-law dropped

dead. Our family was faced with the sudden responsibility to care for my wife's

medically challenged and intellectually disabled brother. A local nonprofit

provided us with invaluable help in the resulting family crisis. Illinois now

owes that agency millions of dollars. This is a huge problem for that agency and

for many others like it. It is an even bigger problem for families in difficult

circumstances. We know some of these families. Thousands are on long waiting

lists for key services. What other states fail to pay people who care for the

mentally disabled?

Relatively affluent people must pay more. Illinois ranks 40th in the nation in

the income tax we levy on our wealthiest citizens. For every dollar I pay in

federal income taxes, I pay 13 cents to Illinois. That's not enough. Gov. Pat

Quinn's modest tax hike proposals move in the right direction. I would go

further. Voices for Illinois Children, a group of civic, business, community,

academic and philanthropic leaders that seeks to educate opinion leaders and

policymakers on issues facing children and families, proposed raising the basic

state income tax rate to 5 percent from 3 percent. By increasing the standard

exemption and the earned income tax credit and by creating a state child tax

credit, the group's plan would result in lower taxes on families of four making

less than $62,000. It would also cover much of Illinois' current and long-term

deficit. It would improve our bond rating, and thus reduce borrowing costs.

Politicians in Springfield must be more professional and transparent in what

they do. For years, they have passed underfinanced collective bargaining

arrangements, tax giveaways to special interests and more. Growing budget

imbalances only increase the pressure to temporarily bridge the fiscal gap by

kicking the can down the road. And let's face it: It's hard to ask taxpayers to

support desperately needed tax increases when a succession of corrupt

politicians is sent to jail.

One important reform doesn't get much attention because it is so boring. We

desperately need a budget process in which respected, nonpartisan experts have

real standing to publicly evaluate budget numbers, with less focus on meeting

immediate spending or deficits and greater focus on long-term accrued

obligations. During the federal health reform debate, popular provisions died

when the Congressional Budget Office determined that the budget numbers didn't

work out. We need a similar process and a similar political culture in Illinois.

The media must raise their game too. It's easy to write colorful stories about

corrupt politicians and outrages such as the University of Illinois' " clout

list. " It's harder to explain the more important arcane realities of Medicaid

policy. I've read many stories hyping atypical sweetheart pension deals that

imply that our budget problems are caused by lavish retirement packages. In

fact, our immediate difficulties are mainly due to the recession and rising

medical costs.

On the subject of pensions, public employees must give up something too. I

hesitate to write this, because state workers receive so much unfair criticism.

Many accepted lower wages in return for retirement benefits. Some of my friends

in the public sector are now being forced to take unpaid furloughs and other de

facto pay cuts. Teachers and cops did not cause the current economic crisis. And

it was the politicians not these workers or their unions who failed to set aside

the required funds to finance these agreements.

But unfunded retirement obligations are a real problem, one for which public

employees bear some political responsibility. Because public workers influence

the political process, they partly own its results.

Politicians and public workers have faced powerful incentives to kick the can

down the road through backloaded collective bargaining agreements. Many of these

agreements would have been justified had they been properly financed. However,

the incentives that led politicians to backload compensation also led them to

neglect the resulting obligations. For years, virtually every constituency and

interest group chose to leave these problems unaddressed. By some measures,

Illinois leads the states in unfunded public retirement obligations.

Absent some credible process to bring fiscal stability to our retirement benefit

system, there will be increasingly powerful demands to end defined-benefit

public pensions. Unions, too, have a strong stake in fixing these problems.

We need a grand bargain.

We need a more liberal, more fiscally conservative and more transparent process

to managing state money. We must spread the pain and bring mutual accountability

to a broken process. There is no alternative.

Harold Pollack is a professor of social service administration and faculty chair

of the center for health administration studies at the University of Chicago.

Copyright 2011, Chicago Tribune

www.chicagotribune.com/news/opinion/ct-oped-0106-taxes-20110106,0,3904464.story

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