FAILING GRADE FOR QUINN
The increased taxation and spending that’s taking place under Governor Pat Quinn’s watch has earned him a failing grade on the Cato Institute’s recently issued biennial fiscal report card on state budget actions.
Quinn was one of five governors to receive an “F” from the Cato Institute. The report graded 48 governors’ fiscal policies (excluding two because of insufficient time in office and, in Alaska’s case, budget “peculiarities”), with more positive scores being directed to those who cut taxes and spending the most. Governors received lower scores if their fiscal policies relied more heavily on increasing taxes and spending.
According to the report, Quinn has adopted tax-and-spend policies that mirror his predecessor, Rod Blagojevich—”the same approach that earned Blagojevich an ‘F’ grade from Cato in 2008.”
TOO MUCH RELIANCE ON TAXES
The Cato Institute highlighted Quinn’s reliance on taxes to shore up the state budget, including the 2011 income tax increase pushed by Quinn and his fellow Democrats, which increased income taxes, corporate taxes, and estate taxes.
Cato noted, “The 2011 Illinois tax increase was by far the largest increase of any state in many years.” Not only did the individual income tax rate increase from 3 to 5 percent, the corporate tax rate was increased from 4.8 to 7 percent.
The Cato Institute points out that “Businesses in Illinois pay an extra 2.5 percentage point charge on top of the basic rate, which brings the overall rate on corporate income to 9.5 percent.”
Additionally, in 2012 Quinn signed legislation pushed by state Democrats to increase cigarette taxes by $1 per pack.
SPENDING ALSO IRRESPONSIBLE
However, the Cato Institute also underscored that “Governor Quinn’s spending policies are similarly irresponsible.”
The report noted that state spending has increased more quickly than in many other states over the last several years, and criticized the Governor’s “penchant for issuing debt to paper over the state’s budget problems.”
In the past, Quinn pressed lawmakers to approve the issuance of $7 billion in bonds as a way to pay the state’s overdue bills and meet Illinois pension obligations.
SAVINGS TARGETS MUST BE ACHIEVED
The state’s backlog of unpaid bills could shrink by the time the fiscal year ends next year, according to a detailed analysis of the Illinois budget by the non-partisan Civic Federation; however, that will happen only if savings targets in the state budget are achieved.
And, that’s a big “if” according to the report, which declares: “Illinois’ fiscal condition remains perilous.”
“A Review of the Operating Budget for the Current Fiscal Year” conducted by the Institute for Illinois’ Fiscal Sustainability at the Civic Federation says the state could reduce its backlog of unpaid bills by about $1.3 billion, but only if it meets targeted Medicaid savings and achieves significant cuts in health insurance costs.
The Quinn Administration is moving too slowly in implementing Medicaid savings to meet the budget goals—$350 million in projected savings are in jeopardy because of delays in implementing reforms designed to scrub the Medicaid rolls of persons who don’t meet the program’s eligibility requirements.
The budget also assumed a $250 million savings in the state’s health insurance obligations, in part by eliminating free health insurance for retirees with 20 or more years of service. Those savings have not been implemented by the Quinn Administration because collective bargaining talks have stalled with the state’s largest employee union.
The report also declared the state budget “incomplete” because it “only funds approximately half a year for group insurance and does not include $300 million of the resources needed for full funding of Medicaid costs.”
The Civic Federation, like other financial watchdogs, continued to sound the alarms over the state’s rising retirement costs. They noted that pension payments now total $6.65 billion, a $910 million increase from the previous year. Pension-related payments now represent more than 20% of the state’s General Funds expenditures.