Policy pro urges Rauner to stick to his guns on reforms
Democrats in the General Assembly have accused Gov. Bruce Rauner of trying to push nonbudgetary reforms through in this year’s budget negotiations, but the Illinois Policy Institute’s Michael Lucci contends that Rauner’s cost-cutting measures are a necessary part of any successful budget.
“The truth is it’s impossible to pass a budget without making decisions about Rauner’s original reform agenda,” Lucci, the institute’s vice president of policy, wrote on the group's website. “The problem for legislative Democrats is that tackling these reforms would upset the status quo.”
Rauner has called for several measures from his Turnaround Agenda, which features 40 key reforms. While Democrats have accused him of upsetting budget talks, Lucci says six key reforms could save the state billions, freeing up revenue and addressing the causes of the state’s monetary shortfall.
Collective bargaining in Illinois generates higher payroll and work rules costs than many other states face, and the Heritage Foundation recently said the state could save between $2 billion and $10 billion per year by reducing the powers granted to unions. Similarly, Illinois has stringent prevailing wage laws that require it to pay high wages to construction workers on many public projects. The institute’s research points to savings of $600 million for state and local governments if prevailing wage laws are changed to comparable levels of nearby states.
Rauner has often cited workers’ compensation reform as a key goal for making Illinois more attractive to private businesses. According to Lucci, workers’ comp drives up state and local government spending in Illinois by $1 billion each year -- a figure that could drop to $300 million through reform, he said.
Rauner's agenda also seeks to tackle government inefficiencies, working to reform state procurement rules and allow Illinoisans to vote to consolidate their local units of government. lllinois has more than 7,000 such units -- by far the most in the country -- and reducing their number would cut administration costs.
One of Rauner’s biggest priorities has been pension reform, with the state accruing $9.1 billion in interest on its pension debt every year. Lucci points to pension debt as one of the key factors driving huge tax hikes and argues that those hikes will continue without reforms.
“These cost drivers are directly related to the budget, and these are all direct budget issues,” Lucci wrote. “And there are still more Rauner reform items that would bring savings by controlling spending. Without such spending reforms, the only option is to raise taxes again and again. If there’s a criticism to be made of Rauner’s agenda it’s that he dropped too many commonsense reforms to try to reach a deal.”
In addition to combating high levels of spending, Rauner’s reforms could spur economic growth and generate higher revenues. A poll conducted for the institute found that a majority of Illinoisans -- 64 percent -- do not want to see their income taxes go up. Rauner believes that his reform agenda will spike Illinois’ slow economic growth, which has seen personal income gains lag significantly behind those of Indiana.
According to Lucci, while Indiana’s annual personal income growth hit $705 billion in 2016, Illinois’ grew to just $667 billion. Had Illinois hit Indiana’s growth levels, residents would have earned an extra $38 billion, and the state would have garnered a further $4 billion in tax revenue. Lucci called for Rauner to continue to push for reforms and not agree to a budget deal without them.
“Rauner should stick to his guns and require that the budget be balanced through spending reforms, not through tax increases,” Lucci wrote. “The people of Illinois would be with him, and it’s the fair thing to do. Too many special interests have grown rich as a result of government spending. This time, Illinois politicians should put taxpayers first, and require special interests to make some sacrifices.”
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