Guest columnist Ralph Martire: Gimmicks, you say? Pritzker plan is sound fiscal policy
Attaining bipartisan consensus on any major issue has become increasingly difficult. For the most part, all public discourse has devolved into political posturing to gain electoral advantage. Engaging in honest intellectual debate to find a common path forward has become a quaint, bygone vestige of the past.
Still, when Gov. JB Pritzker proposed a general fund budget for fiscal year 2023 that included, among other things, tax relief and a focus on being more fiscally responsible - which happen to be cornerstones of the Republican playbook - you'd think there would be some members of the GOP who would engage constructively on moving that agenda forward.
You'd be wrong.
Instead, the Republican response to date has been typical partisan rhetoric, casting the governor's proposal as nothing more than election year gimmickry.
That is unfortunate, because from a fiscal responsibility standpoint there's much to like in what Pritzker put on the table, starting with how he proposes to use the unexpected on-budget surplus that's materialized in the current fiscal year. Initially, general fund revenue for FY 2022 was pegged at $44.39 billion. Now estimates are it'll hit $47.79 billion, which creates an "on-budget" surplus of $3.4 billion. That just means current-year revenue will exceed current-year spending. It doesn't provide a complete picture, because it doesn't factor in the accumulated deficit of $6.4 billion - read that as unpaid bills - that carried forward from last year into FY 2022.
Having an unexpected on-budget surplus occur in an election year creates some fiscal danger, because the overriding political temptation would be to ignore the accumulated deficit altogether and simply fritter the entire surplus away on new spending. You know, the type of government largesse that appeals to voters and generates ribbon-cutting ceremonies. But Pritzker really didn't give in to that temptation.
Yes, he did propose using $1.6 billion of the surplus on additional spending for FY 2022. However, $1.128 billion (more than 70% of that) isn't for "new" spending at all but rather earmarked to pay bills Illinois already owes
Even better, Pritzker wants to dedicate a portion of the surplus to prepay $500 million worth of "unfunded liabilities" (debt owed to public pension systems), saving taxpayers around $1.8 billion in interest costs. This will be the first time any governor, Democrat or Republican, devoted surplus revenue to prepaying Illinois' pension debt. That's something credit rating agencies will love.
To top things off, Pritzker called for depositing $800 million in Illinois' Rainy Day Fund, which is used for unexpected financial challenges.
Former Gov. Bruce Rauner depleted that fund in FY 2017 and it hasn't been replenished since.
Recognizing economic challenges the pandemic - and current jump in inflation - have caused for families, Pritzker proposed using a portion of the surplus to provide one-year tax relief by: pausing the automatic gas tax increase tied to inflation; eliminating the local sales tax on groceries; and providing property tax relief to homeowners.
The biggest policy shortcoming with the proposed tax relief is that it isn't targeted solely to low- and middle-income folks who really need it. Illinois would get significantly more bang for its tax-relief buck if it instead expanded its Earned Income Tax Credit, or created a means-tested child tax credit, thereby ensuring the full dollar value of the tax relief went to families with the greatest needs.
Bottom line, though, is while the governor's proposal may not be perfect, it merits bipartisan support that it hasn't received.
• Ralph Martire, rmartire@ctbaonline.org, is executive director of the Center for Tax and Budget Accountability, a fiscal policy think tank, and the Arthur Rubloff Professor of Public Policy at Roosevelt University.