Senate urged to scrap proposed one-year spending cap
The one-year spending cap the Illinois Senate put in its “grand bargain” budget is a halfhearted, ineffective attempt at greater fiscal responsibility that panders to disgruntled taxpayers, a public policy group claims.
The non-profit Illinois Policy Institute argues that a spending cap without any effort at reform will result in shortfalls in important budget areas. The Senate plan would put a one-year limit on state spending of $37.9 billion, but without spending reform it is unclear where any budget compromises would be made, the group says.
Even the Senate’s label of the measure is wrong, the institute says, since it is part of a deal that also calls for a tax hike of nearly $7 billion. Plus, a one-year cap would leave lawmakers free to reintroduce unsustainable levels of spending later.
The group argues that the leading causes of increased spending over the past 20 years are pensions, state worker health care and Medicaid, all of which will continue their exponential growth without serious reform.
In comparing state revenues and spending from 2000 with 2015, the institute found a 57 percent increase in revenue that corresponds to a 141 percent increase in Medicaid spending, a 166 percent increase in state employee health care spending and a massive 586 percent increase in state employee pension benefits spending. The figures for state worker health care and pensions represent increases of more than $1 billion and $6.6 billion, respectively.
In the same period, spending for K-12 education rose by just 35 percent, public safety by 12 percent and human services by 10 percent, while spending on higher education fell by 8 percent and spending on culture and the environment dropped 59 percent.
The Illinois Policy Institute said spending on pensions and state worker health care is already crowding out spending on social services, with pensions alone accounting for nearly 25 percent of the entire state budget in 2016, as opposed to just under 3 percent in 1996 and less than 5 percent in 2006.
It argues that any spending cap would lead to an even tighter budgetary squeeze on social services like education, public safety and human services. If there is no reform on pensions and health care, their share of the budget will continue to increase, leaving less room for all other concerns, the group said.
As an alternative to the one-year cap, the institute proposes a permanent cap of $33.4 billion, a figure derived from the governor’s budget team, which projected that that amount would be the total revenue raised by the state in 2018.
This cap would have to be accompanied by serious reforms to the state’s pensions and worker care structures, the group warned, laying out a plan including pension, Medicaid and state worker health care benefits that, in combination with other factors, would allow the state to fill budget holes and still reduce property taxes for Illinois residents, the group said.