Greising: Pritzker Needs to Go All the Way on a Fiscal Fix
BGA President David Greising writes a regular column for Crain's Chicago Business.
Illinois now is on its second consecutive governor with a fortune estimated in the billionaire range—a little less than that for Bruce Rauner, apparently, and a lot more than that for J.B. Pritzker.
Whatever their political differences might be, the two have at least one shared trait. Both, it turns out, have paid to broadcast campaign-style commercials at a stage early in their terms when a normal pol has switched to full governing mode.
For Rauner, almost from day one we had a string of commercials demonizing House Speaker Michael Madigan. As time went on, and a budget impasse went into its second year, the commercials backfired on Rauner. They reminded us that it takes two stubborn and ineffective officeholders to make an impasse, and Rauner was part of that dysfunctional pair.
Now Pritzker has taken to the airwaves, just weeks into his own term in office. His version of the perpetual campaign is intended to promote his new progressive tax. In a touch similar to Rauner's ads, Pritzker's feature their own hobgoblin: a passing view of Rauner, meant to serve in the video as the living embodiment of all that has gone wrong in Illinois government.
The main purpose of the commercial is to extol the virtues of the signature proposal of Pritzker's gubernatorial campaign. As a candidate, Pritzker offered no details about how this idea might actually work; as a governor, he needs to sell both the concept and the details of his plan.
Supermajorities in both houses of the Illinois Legislature indicate Pritzker should be able to pass the constitutional amendment that will push the progressive tax into law. But with a change this big—one that will transform the nature of Illinois' revenue collection for generations—Pritzker needs to play a longer game and seek buy-in, or at least an understanding of the plan, even from his political opponents.
Until now, Illinois has had a flat tax. Pritzker's progressive tax plan would change that, probably never to turn back. The big headline-grabber: People earning $1 million or more will pay 7.95 percent of their total income, enough for the governor to raise an extra $3.4 billion in taxes.
Here's the hard part for Pritzker: To whatever extent the Pritzker plan spells relief for the state's fiscal mess, the help won't be coming until November 2020. And the wait for Pritzker's plan could be costly, given that the spending plans connected to his budget far exceed the revenue projections under the current system.
The state already faces a $3.2 billion budget deficit, $8.5 billion of unpaid bills and $134 billion in unfunded pension liabilities. Pritzker's critics say those numbers will get worse because conventional tax hikes under the flat-tax system won't be enough to compensate for Pritzker's spending plans.
Pritzker's plan may or may not pass intact. And whatever does pass may or may not help address the state's fiscal mess.
All of which adds up to this: So long as the governor is considering a change to the Illinois Constitution, he should not stop with just one. If the process takes roughly 18 months, as experts say, the state cannot afford for the fixes to come one at a time.
And what needs to be fixed? There are several issues. The rules governing the creation of electoral maps should be fixed. But the one that bears the most direct correlation to Pritzker's progressive tax amendment is this: the clause that has protected pensions from any meaningful reforms for decades now.
The Illinois Constitution's best-known codicil is the one that declares pensions are a contract that can never be "diminished or impaired." Those words have stood in the way of several fair-minded reform plans, including one passed by the Democratic-led Legislature in 2013 that the Illinois Supreme Court later killed.
Adding a change to the pension clause, alongside the plan for reform of the tax system, would constitute a classic negotiating strategy: The progressive tax appeals to liberals and the pension fix to more fiscally conservative voters.
The pension fix also makes good policy in its own right. Chicago Mayor Rahm Emanuel even called for it late last year, in the waning days of his mayoralty.
Pritzker may not need a package deal of constitutional reforms. He probably can get the votes to pass his tax amendment without a pension fix, too. But the progressive tax alone won't solve the state's fiscal problems. And passing both amendments together would be a good sign that voters in all income brackets can look forward to some measure of relief from their new governor.
If Pritzker can pull that off, there are plenty of commercials he can make—in order to boast about his success.