The editors of the Wall Street Journal weigh in on Illinois’s budget:
In Illinois, Democrats spent the long weekend coaxing Republican legislators to join their suicide pact to raise taxes to plug a $6 billion deficit and pay down a $15 billion backlog of bills. And don’t forget the $130 billion unfunded pension liability—none of which will be solved by the $5 billion tax hike. GOP Governor Bruce Rauner vetoed the bill on Tuesday but may be overridden.
After credit-rating agencies threatened to downgrade the state debt to junk, Mr. Rauner proposed raising the state’s income tax to 4.95% from 3.75% and the corporate income rate to 9.5% from 7.75% for four years. In return he asked for a property tax freeze and modest reforms to workers compensation. Yet Mr. Rauner already signed off on a huge property tax hike in Chicago—homeowner bills have increased by a quarter in two years—to pay for teacher pensions.
But Illinois’s legislature refused to compromise. Now the budget they’ve enacted, no doubt overriding the governor’s veto, barely scratches the surface of Illinois’s problems. What’s the source of those problems?
Anemic revenue and economic growth can’t keep up with entitlement spending. The state’s GDP has ticked up by a mere 0.8% annually over the last four years compared to 2% nationwide and 1.4% in the Great Lakes region. Since 2010 more than 520,000 Illinois residents on net have fled to other states. (See the nearby chart for some state comparisons.)
The editorial goes on to consider Connecticut’s and New Jersey’s similar problems. Of course, there are some differences. Connecticut is the richest state in the Union on a per capita basis and both Connecticut and New Jersey are growing rather than contracting as Illinois is.
