The primary election is over, and it is time for the governor and members of the general assembly to develop a business plan for the State of Illinois.
The state’s fiscal house is in shambles because our elected leaders have consistently ignored the constitutional mandate for a balanced budget. The state is insolvent. If our state were a private concern, it would be in bankruptcy.
The statehouse talk will quickly turn to tax increases to solve the state’s fiscal failings. But before they increase taxes, they need to demonstrate the kind of fiscal discipline exhibited by the private sector these last two years. They need to create a balanced budget, pay down debt and promote job growth, which will spur more revenue.
State budgeters have acted as if somehow their programs and obligations have been immune to the consequences of the second worst economic downturn in the last century. State government leaders should have made real budget reductions years ago. Deferring and denying is no longer an option. It is time for action.
Cutting the Budget
Controlling spending requires an intense focus on expenses associated with three key budget areas: healthcare, pensions and corrections.
- Healthcare. Healthcare expense is the largest and fastest-growing budget item. It must be reined in. State officials need look no further than the business community for advice: Pay more attention to the root causes that drive healthcare expenses, and focus on fundamentals such as guaranteeing primary care doctors, managed care, early detection and healthy lifestyles. Benefits must be restructured and reduced.
- Pension Reform. The state can no longer sustain the generous public employee retirement plans that have been granted and routinely enhanced by several generations of lawmakers. The state’s huge underfunded public employee pension obligation alone should qualify Illinois as a legitimate deadbeat for failure to meet what every other employer recognizes as a fundamental cost of doing business. Such neglect would put a private sector employer in jail.
The existing public sector retirement programs are unaffordable. Private sector employers started restructuring their pension programs over a decade ago, and it’s time for government to do the same. The state should establish a two-tier system that aligns pension plans for newly hired employees to match what the state is actually willing to pay.
- Prison Reform. Illinois has too many people incarcerated. The prison population must be reduced by rethinking the criminal sentencing laws for non-violent offenders and directing attention to root causes. For example, it is less costly for taxpayers to pay for a person’s drug rehabilitation than for his or her prison cell. Ensuring that person has a job after prison is most effective.
Investing in Jobs
As every business knows, balancing the budget is not only about cutting expenses. Investment is crucial. The state’s business plan needs to prioritize job generation that will spur economic growth, private sector investment and tax generation. For example, the state should:
- Embrace a sense of urgency about funding the capital improvement projects allowed by last summer’s state legislation. Construction jobs yield high returns both in the building and in subsequent development. The projects are part of a five-year plan, but they should be accelerated.
- Ramp up private sector initiatives that will provide jobs and stimulate the economy. If state agencies accelerate permitting and rulings, that will reduce delays and encourage investments.
- Prioritize changes that would boost important sectors of the economy. For example, the state needs to build more high-voltage transmission lines to serve the growing wind energy market, develop a modernized telecommunications law, and nurture international trade.
Our political leadership must recognize that when free enterprise is allowed to flourish, state revenue will grow. They should not seek tax increases until they have demonstrated their mettle by coming up with a plan that works for the state this year and beyond. iBi