By: Ted Dabrowski and John Klingner

With Illinois’ decline in full display for the nation to see, proposals for fiscal and spending reforms should dominate the campaign and political landscape. After all, virtually every budget and economic trend in Illinois is pointing towards insolvency sometime in the near future.

But that’s not the case, certainly not on the campaign trail. Some ads are trying to make pension reform proposals toxic, while others promote billions more in tax hikes and fees. Both worsen the burden on Illinoisans and perpetuate Illinois’ crisis.

The majority of ads are attack ads. Almost entirely missing from the airwaves are the reform proposals Illinoisans desperately need.

The situation is just as bad legislatively. Financial and accounting gimmicks keep the games going. Whether it’s creating shell structures to borrow more or issuing bonds to pay down unpaid bills, lawmakers continue to hide the state’s deepening problems from Illinoisans.

It’s time candidates were challenged on their actual policy proposals. Illinoisans should demand that candidates clearly state their plans to make Illinois’ economy vibrant, its tax burden smaller and its government less corrupt.

If their answers sound like the same old things Illinois’ been doing for the last thirty years, Illinoisans should consider themselves warned.

The decline in Illinois has gone on long enough – certainly long enough to know the status quo isn’t working. To demonstrate, we’ve put together a list of trends that capture much of Illinois’ collapse.

The list could be much longer and more depressing, but the ten items below encapsulate just how desperately Illinois and its residents need reforms.

Ten trends

The first four trends revolve around the state’s chronic budget deficits. Illinois’ budget is being swallowed by out-of-control Medicaid, pension and state worker costs that far exceed Illinoisans ability to pay for them.

1. Medicaid. Medicaid is supposed to be a safety net for our most vulnerable populations – children, seniors and disabled adults. They should be our priority. Instead, enrollment in Medicaid has ballooned to include 3.1 million Illinoisans – nearly 25 percent of the population. The program is now collapsing under its own weight and those being squeezed out of access to health care are, ironically, Illinois’ most vulnerable.

Booming enrollments, including 675,000 able-bodied, single adults, have led to booming expenditures. Medicaid spending more than doubled between 2000 and 2018 and now consumes more than 20 percent of the state’s general budget. Medicaid, combined with ever-rising pension costs, threatens to bankrupt Illinois.

Lawmakers should scrub the Medicaid rolls to ensure only eligible people receive services, request a block grant from the Federal government, and implement work requirements for single, able-bodied adults so Medicaid can focus on those most in need. Most importantly, Illinois needs jobs and a thriving economy. Financial independence is the best way to get people off Medicaid.

2. State worker salaries. State AFSCME worker salaries continue to grow in good times and bad. Meanwhile, the private sector earnings that pay for state workers have stagnated.

State worker salaries grew more than 40 percent between 2005 and 2015, the last year AFSCME had a contract with the state. During that same period, median private-sector earnings in Illinois grew only 11 percent, half the rate of inflation.  

The governor’s last, best contract offer to AFSCME – which calls for a salary freeze and for workers to pay for 40 percent of their healthcare costs – would cut down on the disparity between state worker compensation and taxpayers’ ability to pay for those benefits.

3. Pension promises. Total pension benefits owed to state workers and retirees are swamping the Illinois economy and taxpayers’ ability to pay for them. Benefits grew 1,061 percent between 1987 and 2016. That’s eight times more than household income growth (127 percent) and nearly ten times more than inflation (111 percent) over the period.

A full fourth of the state’s general budget now goes to pay for pension costs. And according to projections, things will remain that way for the next 25 years.

Salary freezes, headcount reductions, consolidation of governments, the elimination of pensionable perks, and restructuring/bankruptcy options – all need to be implemented until a constitutional change can be made.

4. Unpaid bills. Illinois politicians have spent more than they take in year after year. It’s why Illinois has been running an unpaid bill backlog since at least 2001, the last time Illinois had a truly balanced budget.

Unpaid bills reached as high as $9 billion in 2013, three years before the recent budget impasse even began. At their peak, unpaid bills hit a high of $16.7 billion.

Today, the backlog is back below $10 billion, but don’t let that number fool you. It’s only lower because the state borrowed $6 billion from the bond market to pay down the bills. In the end, the state borrowed from the mortgage to pay down the credit card.

 

The next three examples revolve around keeping people in Illinois. People are finding it hard to stay due to a lack of jobs, growing tax burdens and high education costs.

5. Manufacturing: Since 2000, Illinois has lost more than 300,000 manufacturing jobs, or nearly a third of its manufacturing base, to other states and countries.

Since the Great Recession, Illinois has recovered just 24,000 manufacturing jobs. Meanwhile, Wisconsin and Indiana, both half the size of Illinois, have recovered over 56,000 and 96,000 jobs, respectively. Michigan has recovered 150,000 jobs.

Every day that lawmakers refuse to pass commonsense reforms to workers’ comp, property taxes and labor rules is another day Illinois becomes less competitive compared to its neighbors. And that means fewer good middle- and working-class jobs for Illinoisans.

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6. Property taxes. Illinoisans’ incomes have been stagnant for years. Between 2000 and 2015, median household incomes increased by just 24 percent, far short of inflation. In contrast, total property taxes across the state have grown 100 percent over the same time period.

The average property tax bill now consumes 6.7 percent of household incomes. That’s up 55 percent compared to 2000. It’s why Illinoisans now pay the highest property taxes in the nation.

Lawmakers can cut tax burdens by enacting a comprehensive property tax freeze. The freeze should remove burdensome state mandates on localities and give communities control over their retirement systems.

7. Higher Ed tuition. A near doubling of higher ed tuitions are pushing thousands of Illinois students out of state each year. In 2014 alone, The New York Times reported Illinois lost a net 14,000 students. That year’s loss was part of a long-term trend.

High tuitions aren’t due to a lack of state funds. The state appropriates far more to higher ed than its neighboring states do. Instead, they’re using tuition dollars to fund more high-paid administrators. Since 2005, the number of university administrators in Illinois has grown 26 percent even as student enrollment has dropped 3 percent.

Too many administrators, executive style pay and excessive pensions are pushing up higher ed costs. Keeping students – Illinois’ future – in the state means bringing down those costs in line with peer states.

 

The last three trends demonstrate the impact of Illinois’ decline. Nothing better captures Illinois’ collapse than the state’s collapse toward a junk rating. Except, of course, the fact that residents are leaving in droves.

8. Credit downgrades. Illinois’ credit rating has been downgraded 21 times by the big three rating agencies since 2009. It’s clear they don’t like what politicians are doing, and yet politicians continue to do the same things.

Illinois was already the nation’s worst-rated state by 2010. Today, it’s just one notch away from being the nation’s first ever junk-rated state.

9. Outmigration. Residents have been leaving at an alarming rate to find better opportunities in other states. From 2000 to 2017, Illinois lost a net of more than 1.3 million people to other states. That’s the equivalent of wiping Aurora, Rockford, Joliet, Naperville, Springfield, Peoria, Elgin, Waukegan, Cicero, Champaign and Bloomington off the map.

It will only get worse without reforms. A 2016 survey by the Paul Simon Institute found that 47 percent of Illinoisans polled said they want to leave the state. Their number one reason for wanting to leave? Taxes.

10. Population loss. What’s worse, domestic outmigration has reached such a high level that births and international immigration no longer offset those losses.

Illinois’ total population has now shrunk four years in a row. That’s a sad distinction shared only with West Virginia.

All the facts above point to a state in steep decline. The single fact that Illinois has actually lost population four years in a row is evidence enough that Illinois is in deep trouble.

Yet all politicians do is offer Illinoisans more of the same. Overborrowing, overspending, higher taxes and corrupt budget practices haven’t turned around Illinois. It’s time to try the opposite.

 

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Dan Miller
2 years ago

As obvious as these factors are in contributing to Illinois’ spiral toward involuntary bankruptcy, Illinois voters later this month will return to power many of the individuals and the party they belong to. This wilful ignorance of the causes of Illinois’ rot is at the heart of all 10 of the factors you helpfully cataloged.

Admin
2 years ago
Reply to  Dan Miller

You are right. It is and has been at the heart of the problem. Our challenge is to change that willful ignorance. That’s what Wirepoints is about – helping residents connect the dots between the state’s failures and what/who residents vote for.

Advocate
2 years ago
Reply to  Ted Dabrowski

The upcoming elections will be an indication of whether or not the voters accept the wirepoints viewpoint. The voters might also reject such a viewpoint in waves. Time will tell. The two sides could not be more clearly defined. Wirepoints is clearly in the anti-labor camp with Republicans. The Dems in the camp with labor and the party of taxation. Like Wirepoints does, Governor Rauner has been selling the anti-labor message as his MAIN AGENDA for years. You could say two peas in a pod. Rauners policies towards unions have been crystal clear, the voters know where Rauner stands, he… Read more »

Erik
2 years ago
Reply to  Advocate

Advocate – Wirepoints authors are interested only in restoring Illinois to a state of fiscal solvency and economic vibrancy, which of course would be extremely good for “labor”. This site is all about informing the public about the true state of the state, a task few legacy media outlets appear to be interested in. Ben Shapiro coined the phrase “facts don’t care about your feelings”. The horrific state of Illinois finances, and the pain being inflicted by it on Illinois businesses and taxpayers, is a fact. The catastrophic trajectory we find ourselves on is a fact. Only an informed populous… Read more »

Erik
2 years ago
Reply to  Erik

Advocate – A commentor on a previous Wirepoints thread stated ” Pensioners are screwed and they will go down the scorched earth path taking down with them as many taxpayers as possible”. Your pleading for an extend and pretend approach to the crisis leads me to believe that his statement is spot on.

Rick
2 years ago
Reply to  Erik

Pensions aren’t screwed, the bond market makers will just collude with the politicians to create high yield products secured with taxpayer collateral. The taxpayers will be screwed long ahead of any pension. There is money to be made on an ignorant electorate.

Adam
2 years ago
Reply to  Advocate

Advocate comes from the Cap Fax board with all its head in the sand, delusional, self-serving public union people. Rejects such as Oswego Wily who is both a know it all fool and a liar. People who in the end only care about themselves. They enjoy mental gymnastics over at Cap Fax which go against reality and math. Your pensions are doomed. The end.

Adam
2 years ago
Reply to  Advocate

afscme Is corrupt to the core, and is a huge reason why this state is in serious trouble. I look forward to its collapse as math and reality take over. I will very much enjoy it. Corrupt people like Madigan only get elected because of self-serving union voters and too many dumb voters out there as well that do not see that public unions are the problem with the state, and the people the get into office as well. Collapse is coming, and the unions will sink when it hits. Taxpayers (the ones who do not get anything out of… Read more »

Mark M
2 years ago
Reply to  Advocate

Advocate – every one of your comments are little more than narratives, whether they speak to “promises” or “pro-labor” or “anti-labor”, and so on. But Illinois is clearly running out of money, and will be flat broke as broke can be soon as the number of income earners is too small, the size of the debt orders of magnitude too large, and the income notionally available from the income earners is highly migratory. No amount of snowflake narratives will solve the problems. Illinois has a big time math problem, pure and simple. Agree or disagree with Wirepoints, their ten point… Read more »

Adam
2 years ago
Reply to  Mark M

Wow. Advocate just got owned by Mark. Nice. Mark’s comment needs to be posted over at Cap Fax so delusional Rich Miller and his band of bums can see it.

Mr. Common Sense
2 years ago
Reply to  Advocate

Advocate: The state of Illinois is functionally bankrupt. For whatever the reasons, it does not matter at this point in time. You need to get past “Pro Labor, Anti Labor” name calling. This is about fiscal reality, and a basic understanding of 6th grade math. You do realize that Illinois will never be able to pay those ridiculous and obscene pensions….Right? Illinois will never be able to have an economy that will be able generate enough tax revenues for, A. Pay for adequate State services, and B. Pay Pensions, ……at the same time! Those pensions will never be paid in… Read more »

Rick
2 years ago
Reply to  Advocate

Rauner is the best friend of the unions because he has proven himself to be a harmless milquetoast, people hardly knew he was the governor these 4 years. He never even went on national news with this states problems. He should have leveraged Fox and other conservative outlets. He is really a baby wacking free abortions for everyone democrat.