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Mike Lawrence: The Compelling Challenge Of Rehabbing Illinois


The following is an op-ed written by Mike Lawrence for the Institute of Government and Public Affairs at the University of Illinois.  Lawrence was a longtime journalist, Press Secretary for Gov. Jim Edgar and later directed the Paul Simon Public Policy Institute.

Gov. Pat Quinn and Bruce Rauner are having a brawl -- trash-talk and all. So, it's less likely with every gouge and grunt, that either will focus on rescuing Illinois until after the election -- if then.

Just two months after the final low blow, the whopping "temporary" increase enacted by Quinn and Democratic lawmakers in 2011 will slide from 5 percent to 3.75 for individuals and from 7 to 5.25 for corporations without legislative and gubernatorial intervention. State Comptroller Judy Topinka warns of a $2-billion collapse that will further erode funding for education and vital human services as leaders grapple with pensions and other accumulated obligations.

To the bloodied victor in the Quinn-Rauner battle will go the spoils and the toil. In addition to addressing the foreboding budgetary "heart attack" colorfully articulated by Topinka, the winner should dedicate his stewardship to rehabbing the buckling knees of a once-proud giant among states. He and legislative chieftains must summon rare statesmanship, courage and creativity.

To chart their course they can reference a roadmap crafted by J. Thomas Johnson and James D. Nowlan, long-respected practitioners and former presidents of the Illinois Taxpayers' Federation.  In their new book, "Fixing Illinois," they make the case and the call for comprehensive reforms.

State government must overhaul an outdated tax structure that reflects the manufacturing-muscled economy of 1969 instead of its service dominated successor. In particular, it needs to broaden tax bases instead of raise rates. By extending the sales tax to most services, exclusive of health care, it can raise billions, help revive and stabilize state finances and lower the rates on consumer purchases. Similarly, the income tax base can be broadened by including retirement benefits exceeding, say, $50,000 or $75,000. Politically painful, yes, but can Illinois policymakers justify maintaining any or all of the 67 percent income tax increase imposed on working families while sparing those with handsome retirement incomes?

Just as important, the governor and legislature should spend more strategically. As a recent audit highlighted, the state has misspent millions by failing to purge Medicaid rolls of ineligibles. It slights effective community-based networks of education, training and substance abuse services that would keep offenders out of far costlier prison cells. Other targets for frugality abound.

Leaders, too, must encourage businesses to grow and locate here by re-establishing fiscal integrity in Springfield, dumping unduly cumbersome regulation and revising worker's compensation laws that make us less competitive with other states.

Optimally, for political as well as policy reasons, these reforms should be approached collectively rather than piecemeal. For example, it becomes more palatable for a governor and lawmakers to tax services if they simultaneously make it easier to start and expand a business and cut spending as well.

Conventional wisdom envisions that if Quinn wins, he and Democratic legislators will quickly extend the income tax rates they set four years ago. If they stop there, they will have squandered yet another opportunity for reform.

If Rauner triumphs, House Speaker Michael J. Madigan and Senate President John J. Cullerton undoubtedly will challenge the rookie governor to prove he has the smarts and moxie he has advertised while deriding Democratic helmsmanship. They will welcome the consolation of watching Republican legislators, who have carped from the sidelines, being pressured by a Republican chief executive to support unpopular revenue increases and budget cuts. Many predict gridlock and chaos.  But a Rauner governorship could produce sweeping regulatory reforms and other business-friendly moves that would provide cover for squeamish GOP legislators.

In any event, our beleaguered state needs an election aftermath much, much more inspiring than the slugfest we are enduring now.

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