The mistake of tying fund approval to property tax freeze

 
By Ralph Martire
Posted4/14/2017 1:00 AM

Last week, Gov. Rauner shot down another proposal to fund public services in the current fiscal year. Sponsored by state Rep. Greg Harris, a Chicago Democrat, the initiative would have tapped available special funds to cover $258 million in social service costs and $559 million in higher education funding -- primarily MAP grants for low-income students, but also some operating revenue for community colleges ($36 million) and universities ($159 million). In a Facebook video explaining why he won't support this proposal, the governor made three key points.

First, he maintained he'd oppose any stopgap funding that wasn't coupled with a "permanent property tax freeze to protect the hardworking taxpayers of Illinois." Which begs the question, protects them from what, exactly -- adequate levels of police and fire protection? Or maybe from having clean streets and access to things like public parks and libraries. I say that, because property taxes are a purely local revenue source, used by municipalities and counties to fund the aforesaid services, the cost of which grow every single year -- much like the cost of goods and services provided by the private sector.

 

Hence, permanently freezing property taxes would, over time, degrade the level of public safety, streets and sanitation services and other quality-of-life public goods local governments provide.

Perhaps the governor wants "to protect" local taxpayers from funding an adequate education for children. See, the reason property taxes are higher in Illinois than most other states has nothing to do with local governments gouging taxpayers for exorbitant levels of police and fire protection, or lavish libraries and parks. It has everything to do with Illinois ranking dead last in the nation in the portion of K-12 funding covered by the state -- thereby compelling local schools to over-rely on property tax revenues to educate the kids they serve. Heck, the governor's own commission on education funding reform noted Illinois was some $4 billion or more short on funding K-12 education to an adequate level. Meaning if the goal is effectively reducing property taxes, the governor should forget the freeze and instead focus on raising the tax revenue needed for the state to invest an adequate amount in public education.

Second, the governor's Facebook video lambasted stopgap initiatives as keeping "universities, community colleges and social service agencies on the verge of collapse with no permanent funding." Which is true; however, failure to provide any additional funding for higher-ed and social services will move them from the "verge" of collapse to actually collapsing. Indeed, higher education currently receives 64 percent less in annual funding than in FY2015, the last time Illinois enacted a full General Fund budget. And social service agencies aren't living high off the hog, either. In fact, funding for social services in the current fiscal year will run about $1.36 billion less than in FY2015. So, while one-time funding for higher-ed and social services is neither ideal nor adequate, it's clearly needed.

Finally, the governor's Facebook missive admonished Springfield to end its fixation on "stopgaps", and instead "pass real and lasting solutions" to Illinois' budget problems. Hard to disagree with that. Unfortunately, when the governor had the chance to back his rhetoric up by supporting the bipartisan "grand bargain" pieced together by Senate President John Cullerton, a Chicago Democrat, and Minority Leader Christine Radogno, a Republican from Lemont, he instead chose to crater it. Which begs another question: is the governor truly interested in making the political compromises needed to, in his words, "pass real and lasting solutions?" Or is the governor's real endgame more accurately revealed by his insistence on a permanent property tax freeze? Because just as such a freeze would degrade the capacity of municipalities and the like to provide local services, the failure to pass a comprehensive General Fund budget for Illinois has already materially degraded the state's capacity to fund the public services it has the primary obligation to provide.

Ralph Martire is executive director of the Center for Tax and Budget Accountability, a bipartisan fiscal policy think tank. rmartire@ctbaonline.org

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