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Legislative "Ying Yangs" have Ralf Seiffe asking about the state's current fiscal problems, "Since 1995, Ying told us that Illinois’ tax revenues and collections have doubled from $33.7 to more than $66 billion. Those two dots made sense, connecting with my perception of Illinois’ growth over the last decade. An economy providing its politicians an extra $3 billion a year would seem to provide Illinois politicians a handsome revenue stream with which to do their duty."

Saturday, March 19, 2005

By Ralf Seiffe

OPINION - Democrats criticize the President and his officers for failing to “connect the dots”.

Whether that’s true or not, the concept makes sense so I wondered how local government would fare under the same scrutiny. Over the last several weeks I attended several official meetings of local governmental units to see how they collected the information from which to forge public policy.

I saw a lot of dots at those meetings. Here’s a report on just one.

Our political leaders have told us there is a serious “structural” problem with the state’s finances. The situation is so bad that the politicians have reached out to voters and taxpayers to take their pulse.

This outreach has taken the form of “The Speaker’s Bipartisan Summit on State Finances and the Budget”.

The “Speaker” refers to Michael Madigan, the emperor of Illinois politics but he did not appear at the meeting. Instead, he sent his seconds, state representatives Karen May (D-Highland Park), Elaine Nekritz (D-Northbrook) and Kathy Ryg (D-Vernon Hills), liberal Democrats all, representing wealthy, northern suburbs. Their districts send a lot of dots to Springfield.

As one who thinks our leaders could afford to pay more attention to their constituents, I found this consultative approach refreshing. Two financial experts accompanied the three governists and they provided reprints of their formal presentation to the crowd in Northbrook’s palatial village hall.

The day’s program started with the two experts explaining the state’s financial condition. One appeared as the “ying” of state finances explaining the revenue side, while the other expert served as the “yang”, concentrating on state spending.

It soon became clear that their agenda was to characterize Illinois’ fiscal problems as a “structural” revenue problem.

The presentation was designed to provide just enough information for voters to conclude that a big tax increase is justified. The unstated message was that we have no choice but to raise taxes massively, presumably along the lines of House Bill 750.

After listening to the presentation--and connecting the dots--I came to exactly the opposite conclusion.

With the same data, see if you can connect the dots, too. Ying told us that Illinois’s revenues have risen at an rate of 11.2% while expenses have far outpaced those funds.

For example, education budgets have increased by 18.5%; debt service in an era of crashing interest rates by 34.4% and state pensions by a whopping 52.3%! My conclusion is that expenses are growing at multiples of revenues and that Representatives May, Nekritz and Ryg, as stewards of the state’s purse, had some explaining to do.

Here are some more dots. Since 1995, Ying told us that Illinois’ tax revenues and collections have doubled from $33.7 to more than $66 billion. Those two dots made sense, connecting with my perception of Illinois’ growth over the last decade. An economy providing its politicians an extra $3 billion a year would seem to provide Illinois politicians a handsome revenue stream with which to do their duty.

Apparently not. Yang told us that the state, among other things, has run up a very large unfunded pension liability.

A decade ago this problem became so severe--$90 billion in the hole--that the legislature created a rescue plan to amortize the debt. Now, after 10 years of reform, we have an unfunded liability that will cost taxpayers $286 billion to rectify. I had some trouble comprehending these dots.

With the formal presentation over, I expected that the elected officials would take the opportunity to explain what they were doing to help control runaway state spending. Either they forgot to tell us or they are not doing much. Those dots were easy to connect.

Mesdames May, Nekritz and Ryg did have a mission, however. Ostensibly, the lawmakers held the summit to listen to “community leaders, business owners, labor officials, community advocates…” etc. to gather evidence on the effects of their budget decisions.

Rather than gathering a wide swath opinion, the legislators heard their client organizations whine about how heartless and cheap Illinois taxpayers are.

All tolled, more than two dozen “human services” contractors packed the hall and paraded in front of these high state officials charged with allocating the public’s resources. This mewling went on interminably as one state beneficiary group after another complained that their state contacts were not providing them with the prices they wanted.

Yet, with this ample opportunity, our representatives issued not a peep of skepticism, not a penetrating question nor even a raised eyebrow.

Nevertheless, it was worthwhile sitting through this catalog of misery because the best dot connecting came late in the program.

One speaker, seeking his own increase supported his case by noting that, in 1963, Illinois was considered a leader in human services.

I checked the Ying-Yang’s presentation and found these dots: In 1963, Illinois had only a 2% sales tax. Since then, we’ve increased that tax more than 300% in most jurisdictions. In 1969, we added an income tax on individuals and corporations. We imposed a “replacement” tax. We printed lottery tickets and launched gambling boats to synthesize tax revenues.

Yet after all that, the state is essentially insolvent, its appetite for taxes is unsated and it is cutting services. It is taking a year to pay bills and it’s failing to pay the true cost of state employees.

Here’s the biggest set of dots to connect.

The Ying-Yangs told us the state spends more than every penny it collects. Three legislators offered no plan to slow spending. An infinite parade of contractors continuously lobbies for more state funding. In the face of all this, the politicians tell us they need to raise taxes, just one more time. Not only will we fix the vacuum in Springfield, they say, we will pay your property taxes.

Hard as I try, I just can’t connect these dots.

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Ralf Seiffe advises business start-ups and product launches from Chicago, Illinois and is a political analyst and columnist for the Illinois Leader.