Doomsday is here for Illinois

‘Doomsday is here for the state of Illinois’

It will take a massive tax increase — and $2 billion more in cuts — to reach solvency, group says


SPRINGFIELD — To become solvent, the state must enact the largest tax-increase package in Illinois history, whack another $2 billion from already starved government programs and wrest major financial concessions from the state’s unionized work force, a nonpartisan government watchdog contends.

In a new analysis of Illinois’ “horrific” finances, the Civic Federation lays out the painful choices awaiting Gov. Quinn and the Legislature as they stare down an epic $12.8 billion budget deficit that has choked the flow of state cash to public universities and schools, transit systems and social-service agencies to the point of economic collapse.

Doomsday is here for the State of Illinois,” said Laurence Msall, the organization’s president.

The Civic Federation recommends that the state income tax be increased from 3 percent to 5 percent for individuals, that retirees’ pension and Social Security checks be taxed for the first time at the same rate as workers’ paychecks, and the tax on cigarettes be raised by another $1 per pack. The group also favors getting rid of $181 million in corporate tax breaks.

Those tax increases, which would generate more than $8 billion, should come only if the state first can persuade its unionized employees to pay more toward their pensions and health care, cut pension benefits for new workers and reduce overall spending by $2.1 billion to 2007 levels. Medicaid programs and elementary and secondary schools would be spared from those cuts to avoid sacrificing federal stimulus dollars, Msall said.

“This is an economically reasonable approach to a horrific situation,” he said.

But AFSCME Council 31, state government’s largest union, has shown no interest in having its members — who have accepted furloughs and deferred pay increases — pay more toward their pensions and health care or in establishing what is known as a two-tier pension system where new employees would receive a less-generous retirement package than existing workers.

“Since this proposal to slash $2 billion exempts education and health care, it would mean reducing human services and public safety,” AFSCME spokesman Anders Lindall said. “We think that’s reckless, especially in a recession that’s driving demand for public services up, not down.”

More…