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Illinois Shows What Not to Do

April 18, 2012 by Four Percent

Steven Malanga, City Journal In January 2011, facing a forbidding budget deficit and a backlog of unpaid bills, Illinois officials decided that a massive tax increase would lay the groundwork for the state’s recovery. As Barbara Flynn Currie, the majority leader in the state house of representatives, said at the time, the nearly $7 billion in new revenues would allow Illinois to “pay our old bills and deal with the structural deficit.” The taxes passed with little controversy. Several weeks later, Wisconsin governor Scott Walker proposed fixing state and local fiscal problems by narrowing public-sector workers’ collective bargaining rights and requiring them to contribute more to their pension and health-care benefits. His reforms, which took months to become law, provoked an occupation of the capitol and set off a national debate. Little more than a year has passed, and Illinois is right back where it started: the state’s unpaid bills now top $9 billion. Meantime, Wisconsin’s state and local governments have made substantial strides toward long-term budget stability. The different fiscal outlooks of the neighboring states illustrate a crucial fact in today’s budget wars: you can’t tax your way to a better future. That’s because the promises made by previous generations of politicians to public employees and special interests have become, as one northeastern mayor colorfully put it, the “Pac-Man” of budgets, gobbling up revenues faster than governments can raise them. Read More