Over the last decade Illinois has experienced remarkable growth; unfortunately it is not the type of growth that promotes prosperity: General Revenue Fund spending has grown by $10 billion, the state’s unfunded pension liability has almost tripled, our Medicaid liability has doubled and our unpaid bills total $5 billion.
How did we get here?
The recent debate on HB 4654, which requires means testing for eligibility in the Seniors Ride Free program, provides some insight. At a time when school districts and social service agencies are slashing budgets and our mounting state debt threatens to handcuff future generations, there are still lawmakers who think we can afford to give millionaire senior citizens free rides.
Illinois is, by any definition, insolvent and yet we have lawmakers who seem unwilling or incapable of accepting current fiscal realities. It’s as if Springfield is Detroit and our leaders are the American auto executives of the 70s and 80s who refused to accept the reality of the Japanese threat.
In fact, two of the best books on the American auto industry, The Reckoning by David Halberstam and The Decline and Fall of the American Automobile Industry by Brock Yates provide haunting parallels to Illinois’ current political and economic crisis.
In a brilliant (and unfortunately relevant) chapter entitled The Detroit Mind, Yates describes a culture so conforming, so myopic and so isolated from the real world that it produced leaders “unresponsive to true corporate needs much less the demands of their customers.”
The equivalent is The Springfield Mind which is defined by an insatiable appetite to spend with little concern for the revenues needed to sustain its bloated mass. It is common practice to introduce spending proposals without ever voting on how to pay them.
Just as it was easy for “The Big Three” to thrive in an uncompetitive environment, the entrenched Titans of Springfield found it easy to govern in a state flush with cash. There was never concern that times might change. Halberstam could have been writing of Springfield when he noted Detroit’s inability to imagine, let alone prepare for change:
Powerful, successful, and conventional, typical of the corporate class, they believed that tomorrow would be like today because it always had been like today and because they wanted it to be like today.
As we know, change did come for the American auto industry and most of it was not good: increased oil prices, unmarketable products and declining revenues, unsustainable and unfunded pension liabilities and health care costs and an entrenched corporate culture not well suited to an ever competitive market. Sound familiar!
Detroit tried to change, but as Halberstam indicates, it was not easy:
It was an industry desperately trying to improve itself. But to take a giant industry, one that had grown careless and sloppy over more than twenty-five years of virtual domestic monopoly, and restructure it under combat conditions was not easily accomplished.
Obviously, change did not come fast enough to save Detroit and its demise should serve as a paradigm for Illinois lawmakers. What’s needed is a complete reformation of the process, particularly the budget process.
If there is a silver lining to our current economic crisis, it is that it provides the opportunity to reinvent government and fundamentally change how Springfield operates. We have to institutionalize the one reform that can prevent future meltdowns of this magnitude: spending restraint. In short, we must make it harder for lawmakers to spend your money.
The Taxpayer’s Fiscal Charter that I am proposing does just that. It is a realistic and responsible approach to reforming the way we do business in Springfield. At its core, the Charter is about the responsible fiscal stewardship of your tax dollars:
The Charter
1. A two year freeze on discretionary spending. No new programs and no expansion of existing programs for two years.
2. After the two year freeze, there shall be no new programs and no expansion of existing programs until the state’s annual payment cycle for existing obligations is 30 days.
3. Furthermore, there shall be no new programs and no expansion of existing programs without a full pension payment per the 1995 plan implemented by Governor Edgar.
4. The implementation of Pay As You Go. Any new spending initiative must be accompanied by the revenue (or specified cuts) necessary to sustain the proposal.
5. No unfunded mandates to schools or other units of government. If any proposal is important enough to mandate, then it should be important enough to fund.
6. The implementation of The Truth in Accounting Act which requires the publication of the State’s estimated income, balance sheet, cash flow and surplus or deficit prior to passing any appropriation bills. It also requires the electronic publication of all appropriation bills 72 hours before any vote is taken.
While this Charter will not solve the philosophical debate of “more taxes” vs. “more cuts,” it will ensure that once that debate is settled, our state’s expenditures will not exceed our revenues.
In the conclusion of The Reckoning Halberstam noted that America had failed to prepare for the coming global economy:
No country, including America, was ever to be as rich as America had been from 1945 to 1975, and other nations were following the Japanese into middle-class existence, which meant that life for most Americans was bound to become leaner. But in the middle of 1986, there seemed little awareness of this, let alone concern about it. Few were discussing how best to adjust the nation to an age of somewhat diminished expectations, or how to marshal its abundant resources for survival in a harsh, unforgiving new world, or how to spread the inevitable sacrifices equitably.
Let us heed the warning provided by Detroit’s downfall. Let us do more than discuss change. Let us meet this crisis head on by enacting policies which restore the public’s trust in our government and provide the foundation for the growth of our state. Together, we can change Springfield and begin the slow and steady process of building a prosperous Illinois for the generations that follow.
