Illinois needs stricter spending, not more taxes

It's no secret that Illinois' finances are a disaster. But as a new administration takes charge, expect the situation to get worse before it gets better.

The current state budget is filled with land mines. There were no provisions to reduce the state's backlog of unpaid bills, and the backlog has increased to $5.4 billion from $4.6 billion already this fiscal year. The budget was propped up with a short-term loan of $650 million - money that will have to be repaid next year. Even with the loan and extra tax revenue, the budget still spent $700 million more than the state will take in. And, if that's not bad enough, the governor's office recently admitted that $470 million in essential operating expenses were overlooked in the budget.

All of this is just what has been publicly reported. More is likely to be found.

Meanwhile, Illinois families are eagerly awaiting the tax relief they were promised when state taxes were increased in 2011. The personal income tax rate dropped to 3.75 percent from 5 percent on Jan. 1. Remember that this "phase out" of the income tax increase was proposed and approved by the state's Democrats.

The phaseout will bring with it a day of reckoning. Politicians will use the "dire" budget to rationalize that the promised tax relief should be eliminated or postponed, but that's the wrong approach.

More tax money won't solve Springfield's problems; the challenge before Gov.-elect Bruce Rauner is to immediately reduce the cost of state government.

The governor can control and restrict state agency spending without legislative approval. Rauner should direct state agencies to limit spending to levels below the appropriation level. Doing more with less - as Illinois families have had to - is key. Think: getting some extra miles out of existing equipment or supplies, or eliminating discretionary activities.

Many agencies, by statute, are permitted, but not required, to do certain tasks. For example, the law allows the Department of Agriculture to promote activities such as fairs and livestock shows, or to promote products such as gasohol or ginseng, or to issue grants. Similarly, the law empowers the Department of Commerce and Economic Opportunity to administer green cities and smart cities grant programs, and a River Edge Redevelopment Zone assistance program. Neither agency is required to do these things, and when funds are scarce, spending on discretionary programs like these must be questioned.

The new governor can also institute a moratorium on new spending commitments, such as new project approvals, the issuance of discretionary grants and the entry into new tax-credit agreements. In the midst of a budget crisis, Illinois should not spend millions of dollars on tax credits to keep companies here. It would be more prudent for the state to get its fiscal house in order so these companies don't have to be paid to stay.

The budgetary challenges Rauner will face between January and June 2015 are just a dress rehearsal for next year's fiscal year budget, which starts in July.

Rauner will have more say and control over the next fiscal year's budget, and he should take full advantage of that. Next summer the state's contract with the American Federation of State, County and Municipal Employees - the union representing state workers - expires, and Rauner must negotiate a contract that restricts the growth of state payrolls. He needs to truly reform Illinois' public pension system, re-evaluate the subsidies given to municipal governments and spend health care dollars more wisely. As far as new revenue, it's time to eliminate tax breaks for special interests - especially tax carve-outs.

None of this will be easy, and fingers deserve to be pointed at lawmakers who used the additional $31.6 billion in tax-hike revenue to increase spending rather than pay down Illinois' backlog of bills.

We can't change the past, but we can change our expectations and demands for the future. This is why allowing the 2011 tax increase to sunset as promised and changing the cost of state government is a must. Politicians' spendthrift habits will not change if we give the General Assembly more money. It's time to end bailouts. State officials have not earned the right to demand more from the hardworking people of Illinois.

• John Tillman, a resident of Golf, is CEO of the Illinois Policy Institute.