Washinton View: ‘Deadbeat’ Illinois serves as a warning for Washington
Tuesday, October 25, 2011
The dictionary defines “deadbeat” as someone who deliberately avoids paying their bills. It’s an unflattering label, but for Illinois, it’s now an unofficial new nickname: the Deadbeat State.
Wracked by corruption and drowning in debt, the state of Illinois has surpassed California as the national poster child for fiscal mismanagement. In desperation last January, state lawmakers approved a massive increase in the state’s personal and corporate income taxes.
Individual income taxes rose by 66 percent while corporate taxes increased 45 percent. Lawmakers also approved a two percent cap on spending increases, but acknowledged that higher pension and health care costs would more than absorb those increases, leaving state services and programs high and dry.
Governors of neighboring Indiana and Wisconsin responded by urging Illinois businesses to move their companies — and their jobs — to more business-friendly states.
Despite the tax increases, Illinois still has a $12 billion deficit, nearly half the state’s budget. That doesn’t count more than $60 billion in unfunded pension liabilities.
There simply is not enough money to pay the state’s obligations. In September, the stack of unpaid bills lying on the state comptroller’s desk totaled more than $5 billion.
The state’s solution? Don’t pay the bills. An Illinois newspaper has created a searchable online database of the state’s unpaid bills that is more than 3,000 pages long, listing more than 166,000 unpaid debts, some dating back to 2010.
Illinois’ Anne Johnson is being forced to close her century-old pharmacy because of late state payments. A Chicago funeral home owner may have to stop burying poor people because the state is six months behind in its payments.
Drowning in debt, the state is taking on even more debt. And because every major credit rating agency has downgraded the state, Illinois now pays millions more in interest rates to borrow money.
So, why should we care what happens in Illinois? Because Illinois is a warning to us all.
Illinois is by no means alone in its fiscal crisis. The recession has revealed systemic weaknesses in cities and states across the nation — weaknesses that were masked initially by a strong economy and later by federal stimulus money. But the stimulus money is gone amid record federal deficits.
The U.S. federal government borrows 40 cents of every dollar it spends. Our national debt — the total of our unpaid bills — is nearly $15 trillion. That works out to a $200,000 credit card debt for a family of four. That’s not just an illustration, that’s what American taxpayers actually owe.
According to the U.S. Treasury, taxpayers currently fork out $454 billion a year just to pay the interest on the national debt. In August, the U.S. credit rating was downgraded for the first time in history.
Still, the borrowing and spending continues. Whose fault is it? To a great extent, it’s ours.
We all want cuts, but not to our programs. We call for fiscal restraint from our elected officials but howl when our ox gets gored. But if we are to put our fiscal house in order as a state and as a nation, we must all be willing to take a hit.
In Washington state, lawmakers should again audit tax incentives. Those that don’t pay for themselves, attract new investments or create or preserve jobs should be eliminated.
Gov. Chris Gregoire and legislators need to jettison nonessential services or turn them over to the private sector. Most importantly, they must streamline our state’s costly, complex and overlapping regulations.
Simply put, the cost of permits is out of whack in Washington state and it is killing employers in the private sector, non-profit groups — even other essential services like first responders, hospitals and schools.
Washington state should not slide into the same category as Illinois. Becoming a deadbeat state is not an option.
Don Brunell is president of the Association of Washington Business, Washington state’s chamber of commerce. Visit http://www.awb.org.