Progressives demand more for social services as Bears stadium deal gains steam

More than a year ago, the Governor’s Office of Management and Budget was projecting a $3.2 billion deficit for what is now the current fiscal year.

Part of the problem was that existing revenues were flat while spending was growing, according to the budget office.

This is a recurring problem in Illinois. The previous fiscal year’s projections were also astonishingly poor. The Chicago-based Civic Federation issued a report last week that delves a bit deeper into why it is a recurring problem.

Next fiscal year’s spending plan achieves balance “through a mixture of modest spending restraint, tweaking existing taxes, and levying new ones,” the Civic Federation reported.

New tax increases, not natural revenue growth from taxation derived from economic expansion, have helped keep the state afloat.

Since the income tax was raised in the summer of 2017, receipts from personal and corporate income taxes and sales taxes have grown 7.4% every year, the group found. That’s above the annual non-Medicaid core expenditures (“K-12 education, human services, transportation, and other services”) of 6.6% annual growth.

Without that 2017 income tax hike, annual income and sales tax growth since then would’ve been just 5.2% — which is well below the 6.6% annual non-Medicaid core spending growth.

“The good news is that over the past decade, the State’s growth in expenditures has essentially been met with commensurate revenue growth,” the Civic Federation reported. “The bad news is that this recent revenue growth is not sustainable.” The state will eventually run out of options, the group predicted.

And while cutting state spending is always mentioned as an option, it’s important to remember some things. The state’s K-12 education funding law mandates annual increases. Medicaid costs rise with medical inflation (which pretty much always outpaces the headline inflation number). And pension costs increase every year. Those three things represent most of the annual spending increases, meaning that other state programs would have to be slashed even further.

Also, keep in mind that spending on core services this coming fiscal year is projected to be 13% lower than it was in fiscal year 2000 under Gov. George Ryan, according to the Center for Tax and Budget Accountability.

This helps explain why progressive groups and legislators are demanding new taxes on the wealthy. With the added fiscal pressures imposed by the Trump administration, on top of the inability of the state to fully fund pretty much any social services program it has, they’re fed up, and more people are recognizing the problem.

The Senate Progressive Caucus, the Affordability and Tax Justice Coalition and the Illinois Revenue Alliance all issued statements in the wake of the House’s passage of the Bears/megaprojects, demanding the same urgency and effort be focused on progressive revenue ideas.

‘Working families deserve to be treated as urgent’

Sen. Karina Villa, D-West Chicago, for example, had this to say about the House action on Bears/megaprojects and its refusal to take up a millionaire’s income tax surcharge: “Illinois families were told there was not enough time to ask the wealthiest few to pay more. Yet there was time to move a Bears package that even the Bears management themselves say still needs changes. When Springfield decides something is urgent, it finds the time. Working families deserve to be treated as urgent too.”

The Affordability and Tax Justice Coalition has several progressive legislators on its executive committee and is pushing bills to create a digital advertising tax, close corporate loopholes and further decouple from federal corporate tax cuts, enact “world wide combined reporting” and “close luxury loopholes for millionaires.” The group demanded that those bills “must now become the central focus of our work for the next four weeks.”

The Illinois Revenue Alliance had this to say: “On May 1st, thousands of Illinoisans will begin losing SNAP benefits, while the ultra-rich and mega developers continue to get tax breaks. [The House’s] vote on the Megaproject bill is proof that when there is political will, there is a way.”

I’ve seen these progressive revenue pushes come and go for decades. But the legislators and the groups behind them seem (to my eyes) much more organized, disciplined and mindful of the requirements needed for passing major legislation than before.

So, this could very well be the biggest story to watch during the rest of the spring legislative session. It would definitely be quite something if a Bears stadium deal helped achieve a decades-long progressive policy goal.

But the Civic Federation warned about another Illinois problem: Economic growth. The state is lagging badly in employment and gross domestic product growth. What we could end up with is continuing the trend of substantially more revenues from ever-lower growth.

Rich Miller also publishes Capitol Fax, a daily political newsletter, and CapitolFax.com.