5 questions, 5 guiding principles for an Illinois ‘grand bargain’ budget framework

Illinois lawmakers need a new approach to budget-making – one that takes into account the state’s financial mess, shows respect for taxpayers, and prioritizes spending to meet the needs of the poorest and most disadvantaged residents.

It’s no secret Illinois has been without a budget for nearly 20 months, and without a balanced budget since 2001. When it comes to passing a budget, the Illinois Senate’s battle cry goes like this: “If not this plan, then what? If not now, then when?” The “any budget” coalition uses this mentality to justify the march toward yet another massive income tax hike that will worsen, rather than improve, Illinois’ dire economic situation. It’s a mindless approach that would not hold water in any business or household in the state.

Politicians should step back, take a breath, and ask some fundamental questions about what the Illinois budget should look like. Here are five fundamental questions Illinois politicians should answer as part of the budget process:

1. Has the framework for past budgets led to good results or bad results? Why? 

2. How much money in total should government take from taxpayers?

3. What should that money be spent on? What’s most important? What’s least important?

4. What fundamental financial changes need to be made so Illinois is not in a constant financial crisis?

5. What fundamental economic changes need to be made so Illinois’ long-term budget projections become more financeable as a result of growth?

These questions would bring clarity to the budgeting process. Illinois’ current budgeting process is a political charade.

Instead of asking fundamental questions, Illinois politicians instead cobble together voting majorities to satisfy a wide range of special interests. Once the politicians and special interests negotiate what they want, the budget-makers then turn to taxpayers, who are simply told to pay up.

Politicians never actually budget or economize because they always assume they can raise taxes. Spending on social services for the needy, government-worker union contracts, tax credits for big businesses, public pensions, and debt payments, to name just a few items, are all lumped in together.

Which of these items should be cut? Which is most important, and which is least important? These questions are never asked outright. But current law and the actions of Illinois’ political class show that government-worker union demands and public pensions take precedence over just about everything else – including students, the disabled and the poor.

The budget should instead be guided by starting principles that answer the five questions above and lay out a financial vision for the state. Here are five guiding principles for a budget deal:

1. Admit the mistakes of the past. Lawmakers must acknowledge the financial mess that has engulfed the state and recognize that more taxes will worsen that mess. Putting off hard decisions is foolish, and continually raising taxes is also a mistake. The state needs a new way forward.

2. Give hope to taxpayers and workers. Politicians working on the budget must accept that people are fleeing Illinois, and taxes are the No. 1 reason people want to leave. A budget constraint should be adopted based on estimates of current revenues. A good deal would prioritize protecting beleaguered taxpayers and underwater homeowners over everything else. Without protecting and maintaining the state’s economic base, Illinois’ future only gets dimmer.

3. Prioritize the most disadvantaged in allocating spending. Given the weakness of the Illinois economy, the state has limited capacity to tax and spend. Social services and educational opportunities for the poorest and most disadvantaged residents should be the focus of that limited spending.

Everything else should be on the table, including but not limited to government-worker union contracts, pensions, bond payments, public works projects, business tax credits, administrative bloat, prevailing wage laws, and procurement processes.

Illinois is in crisis. State spending must prioritize the poor and disadvantaged.

4. Address out-of-control spending drivers. Public pensions and government-worker union contracts are expensive burdens looming large over taxpayers’ heads. Illinois could do everything right and still sink if pensions miss their assumed investment returns and debts spin out of control.

The system of defined-benefit pensions needs to end, and the Illinois Constitution must be changed to allow elected leaders to bring the state’s pension debt under control. Until that happens, Illinois is whistling past the graveyard.

5. Promote economic growth for a sustainable financial future. There is no long-term solution to the state’s financial problems without substantially better economic growth. Many different policies are available that would attract more investment and job creation to the state.

Illinois lawmakers owe it to their constituents to answer basic clarifying questions about the budget process. A set amount of revenue should be decided upon – preferably the amount that is expected to come in without a tax hike. Then politicians should draft a list of spending priorities ranked in order of importance to put against that budget constraint. Lawmakers should be ready to change laws to achieve the spending priorities within the budget constraint.

This is how every household and business approaches a budget. It’s time Illinois’ elected officials did the same.