Difficult decisions must be made

As former Gov. Jim Edgar has noted (Daily Herald, Jan. 26), the recent income tax increase is a necessary step toward resolving the state budget crisis. Prior to enactment of this legislation, the projected General Funds deficit for FY 2012 was estimated at $15 billion. The temporary, four-year tax increase is expected to generate about $7 billion over a full year. It will enable the state to improve its credit rating, reduce the massive backlog of unpaid bills and avert a full-scale fiscal meltdown. But it does not solve the entire problem.

The most important factor underlying the state fiscal crisis has been the recession. General Funds revenue from state sources plummeted by nearly $2 billion in FY 2009 and dropped another $1.7 billion during FY 2010. Over the past two years, responses to the fiscal crisis have included deep spending cuts in many parts of the budget (especially human services), pension reforms that will reduce state contributions by about 20 percent over the next several years, and various types of borrowing. The major missing element has been additional recurring revenue.

A balanced and responsible solution to the state budget crisis must include sustainable revenue, strategic restraints on spending, and meaningful fiscal reforms. Without debt restructuring bonds, the backlog of payments to school districts, state universities, community-based service providers and others will be reduced only gradually.

Additional spending cuts remain inevitable, and setting budget priorities will entail difficult choices. Moreover, a temporary tax increase cannot address the long-term structural deficit. Finally, we need policy decisions that reflect both fiscal and social responsibility, which will require greater budget transparency from both the executive and legislative branches.

Larry Joseph

Voices for Illinois Children

Chicago