Wheaton faces another funding cut as the State Crisis trickles down

At the most recent City Council meeting (May 4) the council passed a resolution. As we all know, the financial crisis in Illinois has "trickled down" to municipalities. As a consequence the State has reduced funding to municipalities during several recent years.

The state has a spending problem. A recent Pew study stated the following: Tax revenues in Illinois are up 22.5 percent over pre-recession highs, while 30 other states are collecting less tax revenue today than they were before the recession began. Pew’s study revealed that during the recession era, Illinois increased state tax revenue more than any state but one. Yet, Illinois is in even worse financial condition today. Think about that! It's clear to me that the legislature has been wasting our tax money.

The income tax increase of 2011 did not improve the situation because the State Legislature under Madigan and the "leadership" of former Governor Quinn and recent predecessors did nothing to alleviate it. A substantial portion of the income tax increase of 2011 was used for a variety of purposes which did nothing to reduce the problem. Here is what the politicians said in 2011, when they raised the personal income tax from 3% to 5%, and the corporate tax rate from 4.8% to 7%:

Governor Pat Quinn: "We have some temporary tax increases that are designed to pay our bills, get Illinois back on fiscal sound footing and make sure that our state has a strong economy."

House Majority Leader Barbara Flynn Currie: "…the point of this income tax increase is not to expand programs, not to do brand new things in Illinois state government, it is only intended to pay our old bills and deal with the structural deficit."

Senate President John Cullerton: "The purpose of this bill is to raise enough money so that we can continue to pay our pensions without borrowing the money, to pay off our debt, to have enough money to pay the interest on that debt......:"

But the above didn't happen. In fact, for the fiscal years 2011 -2014 the state actually collected nearly $26 Billion addditional from this tax hike, and the politicians spent it all. And yet, the pension problem is as bad, or worse than it was in 2010. Yet, this is what  House Deputy Majority Leader Lou Lang said about the problem in 2014: "I don’t think there’s anyone in this building who doesn't believe we need to extend the income tax increase." So he and many others in the legislature preferred, and continue to prefer to raise taxes rather than control spending. The recent State Supreme Court ruling on public pensions merely underscores what many have assumed to be true.

Some have said that Illinois didn't have a tax problem. It had a spending problem. Sadly, that is true. Funds were collected and poorly spent. Pension obligations were ignored, with the expectation that future politicians would simply raise taxes on the residents to cover the tab. That day is coming. How bad is it? Truth in Accounting says that the tax burden on each taxpayer in Illinois for unfunded pensions is $45,000. Yes, you got that right. Each taxpayer in Illinois is on the hook for $45,000! Yet, the politicians have been driving people out of the state. Illinois lost 3.5% of the population in recent years and most did not die here.

I suggest Illinois residents use reality, not the promises and baloney of the legislature when we think about what's coming. Back in 1989 the state hiked income tax rates with the assurance the increase was "temporary" and only necessary to get the state through a financial problem. But tax rates never came down and were made permanent in 1993. Ever since 1989 the politicians have preferred to spend your money, and that includes the revenue of the Illinois Lottery which has been used to help cover certain expenses. There is no question in my mind that the legislature will spend every dollar of the middle class if they get the opportunity. Yet, many of these politicians are rich. Madigan, for example. One would think it should be difficult for public servants who are acting as fiduciaries on the behalf of all of us to get rich and run their side businesses, but not in Illinois. Thanks in part to cronyism, nepotism and very generous retirement benefits which allow double and triple dipping.

While Illinois politicians have prospered, the rest of us have not. The state has the worst job creation record in the Midwest since the 2011 income-tax increase. The population has decreased about 3.5%. In other words, fewer of us are paying to cover those taxes. Simultaneously, local property-tax rates have increased. The legislature now has a plan to transfer suburban and other public school costs to local communities, further increasing tax rates. Of course, with a diminishing population, those costs will continue to be shared by fewer and fewer of us. The Chicago Tribune recent cautioned that Illinois could become a "ghost state."

Wheaton's Resolution
"Resolution Supports Preservation of Local Funds The Council unanimously backed a resolution expressing the City’s support in retaining the local distribution of the State of Illinois’s Local Government Distribution Fund (LGDF). Governor Rauner has proposed reducing the amount of funding the City receives by 50%, which would result in a $2.6 million reduction in General Fund revenues. This is the equivalent of a 7% reduction in overall revenue to the City’s General Fund. This sizable reduction could require the City to significantly reduce City staffing levels or capital improvement projects in the City. Through this resolution, the City expressed its opposition to the state’s proposed reduction in revenue distribution."

Wheaton's resolution is all well and good, but Wheaton will need to find ways to replace an overall 7% revenue decrease. That will probably require both  higher taxes and service cuts. When the pain comes, I hope Wheaton residents remember who it is that created this financial crises.