Gov. Bruce Rauner didn’t completely close the door to higher taxes last week during a speech at the University of Chicago, but he made it very clear with what he said and did that he wants huge state budget cuts.
“We have every reason to thrive,” Rauner said. He then laid out his reasoning for why the state is on a “fundamentally unsustainable path,” pointing his finger at the “policies and the politics mostly coming out of Springfield [which are] really at the core of the problem.”
“The politicians want to talk about, ‘Well, let’s raise the income tax to fix the debt or the problem,’ ” Rauner said. “Raising taxes will come nowhere near to fixing the problem and, in fact, will make part of the problem worse and just kick the can down the road. ... This is the critical lesson that we’re seeing. We’re on an unsustainable path. We need fundamental structural change, and raising taxes alone in itself isn’t going to fix the problem – and in a lot of ways it’s going to make it worse.”
Rauner said the budget was “out of control” and the state has suffered “complete mismanagement.”
“Just raising taxes to try to fix that? No chance. No chance,” Rauner said.
Notice how he said “just raising taxes,” and “raising taxes alone.” Those usually are phrases uttered by politicians who are keeping the door open for higher revenues, however slightly.
But what is crystal clear is he won’t ask for any more revenues without first making deep and even drastic cuts.
He pointed to flat population growth and flat job growth as the roots of the problem. Without “booming” growth, he said, Illinois never can dig itself out of the hole it’s in. And Rauner always has said that high taxes are a hindrance to growth.
Rauner singled out two items for his chopping block. First up, Medicaid spending.
“When you realize our job growth is flat, how do you pay for it?” Rauner said of Medicaid. “I want to do that, but that is not sustainable.” Medicaid, which pays for everything from childbirth to nursing home care, consumes a quarter of the state’s operating budget; and despite some real reforms almost two years ago, costs continue to rise. That’s a problem when next fiscal year’s budget deficit is being pegged at a whopping $9 billion.
Rauner also claimed state employees make too much money, saying that they earn more than private sector workers (which AFSCME rejects, pointing to a recent University of Illinois study) and are the third highest paid in the country. The numbers of state workers are declining, Rauner said, but payroll costs are still increasing. Their health insurance is based on “low contributions” from workers but has a high cost. So while workers aren’t chipping in much, “you’re chipping in a lot,” he told his audience.
AFSCME’s contract expires later this year, and those negotiations are going to be rougher than we’ve ever seen. Governors going back at least to Dan Walker have done what they could to try to appease the union and win its support, but Rauner repeated his contention that those mutually beneficial relationships were “corrupt.”
Also last week, Rauner announced he hired Donna Arduin to be the state’s new chief financial officer. Arduin is infamous for her ideological position that tax cuts and budget cuts are key to turning around state economies. Her consulting business partner is Arthur Laffer, whose economic theories were used by former President Ronald Reagan to justify tax cuts during a recession and a major defense buildup.
Arduin’s consulting firm’s most recent high-profile project was Kansas, where tax cuts have created gaping budget holes and a sputtering economy. Rauner said during a campaign debate he didn’t want to follow Kansas’ lead; but, for now anyway, he seems to be heading at least partially in that direction.
Arduin also is credited for the job she did in California under Republican Gov. Arnold Schwarzenegger. But it took hiss Democratic successor, Jerry Brown, to cut programs to the bone, which finally convinced Californians to support higher taxes. California now has a budget surplus.
She has had successes, Michigan and Florida being two of them. But those successes came with a whole lot of pain inflicted on the poor.
Illinois voters clearly wanted a change last November. They’re gonna get it.
• Rich Miller also publishes Capitol Fax, a daily political newsletter, and CapitolFax.com.