Chicago's Civic Federation has proposed a reasonable and balanced approach to extract Illinois from its current financial mess.
The problem is trusting the current state government to do anything that's reasonable and balanced.
The federation unveiled a five-year plan this week that would allow the state to pay off its $5.4 billion backlog of unpaid bills and would also avoid extreme budget cuts.
The plan calls for extending the temporary income taxes that are scheduled to expire at the end of this year for one year and then eliminating those taxes over the next four years. In addition the plan calls for taxing retirement income. Illinois is one of three states that exempts pension income from income taxes and one of 27 states that doesn't tax Social Security income.
Coupled with the pension reform proposal approved by the legislature, the Federation's plan ``would finally allow the state to move beyond what has become a perpetual fiscal crisis,'' Civic President Laurence Msall said.
The expiration of the lame duck tax rates at the end of this year will cause the state to lose more than $1.7 billion in tax revenues next year and more than $4 billion in fiscal year 2016. Gov. Pat Quinn has yet to unveil his plan for the taxes, although most expect the issue won't be addressed until after the November elections.
The tax issue is sure to be controversial and taxing the income of retirees will not be an easy sell.
The Federation should be applauded for putting forth a well-reasoned plan.
But the plan ignores this reality: Taxpayers have no reason to trust state government.
For example, when the lame duck tax increases were pushed through in 2011, Democratic leaders promised that the money would be used to pay off the backlog of bills and that pension reform would be addressed. Pension reform was delayed for nearly three years and while the backlog of bills has been reduced, it is far from eliminated.
Instead, we see a myriad of examples where state money has simply been wasted – the latest being Gov. Pat Quinn's questionable spending of $55 million to reduce violence in Chicago neighborhoods. In numerous ways, the state has used taxpayer money to continue its free-spending ways.
The Federation plan – at its most basic – is asking taxpayers to bail out state government for poor management in the past.
The issue boils down to a simple question: Given the state's track record, why should taxpayers trust our state government to use hard-earned taxpayer dollars wisely?