Money Problems

Ralph Martire has an interesting piece on his view of Illinois' budget situation in today's Chicago Sun-Times. Here are a couple of excerpts:

Fom a state government perspective, the new year certainly came in with a bang. The gubernatorial primary is hitting its stride, the General Assembly has a shortened, fast-track session, and the governor just proposed a significant capital improvement plan calling for a $3.2 billion infrastructure investment. Meanwhile, continuing a 15-year trend, the Illinois private sector is creating more low- than high-paying jobs that either provide reduced or no health benefits. Making matters worse, the feds are cutting Medicaid, pushing costs down to the state as demand for the program increases....

The funny thing about borrowing to fund services is, the debt has to be repaid, with interest, from tax revenue growth. The prospects for that happening aren't good. If state revenue growth this year hits the Commission on Government Forecasting and Accountability estimate, it will still fall short of inflation by almost $400 million. That means there won't even be enough revenue next year to sustain the services funded with taxes this year, much less cover the cost of services currently financed with debt...

Martire concludes with the following statements:

This fiscal uncertainty clouds the fact that the governor's proposed capital investment program, like his solid commitment to ensuring families and seniors have access to health care, addresses real needs in Illinois. Since that's the case, let's design a tax system that has the capacity to meet these needs in a sustainable fashion. A combination of modernizing the sales tax by including some services, increasing the income tax, reducing property taxes and providing targeted tax relief to middle- and low-income workers, will generate the recurring revenue needed to fund the state's priorities, while maintaining Illinois' competitive advantage of being a low tax state. Doesn't that sound better than betting the rent on number 13?

Feel free to think about or discuss.

To post a comment, visit Dome-icile