There is no way to tax our way out of the hole we are in. If Illinois raises taxes, it will merely send more business to other states, and keep existing business from hiring or investing.
Public Employee unions led us to this condition. Cutting their pay and benefits is what we need to lead us out. Of course, the these unions owning both Quinn and Hynes lock, stock and barrel, don’t look for them to cut the proper items. Look for them to borrow and bounce checks.
After months of spending cuts and layoffs, states are drawing up plans for tax increases and an even larger round of service reductions next year as budget shortfalls continue to widen.
In hard-hit Michigan, Democratic Gov. Jennifer Granholm directed state agencies last week to plan for 20% budget cuts for the fiscal year beginning Oct. 1, 2010, on top of 10% cuts made to balance the current budget.
Indiana Republican Gov. Mitch Daniels said last week that revenue for the first four months of the fiscal year was 7.4%, or $309 million, below forecasts. He ordered state agencies to cut spending by 10%, on top of 5% cuts at the beginning of the current fiscal year.
A report Wednesday from the nonpartisan Pew Center on the States warned of “fiscal peril” in clusters of Midwestern and Western states, the result of widespread foreclosures, rising unemployment and poor financial management. The report cited Illinois, Michigan, Wisconsin, California, Oregon, Nevada and Arizona. Florida, New Jersey and Rhode Island also were in bad shape financially, the Pew report said.
Some economists and lawmakers are pressing for another round of federal stimulus aid to states and localities.
The liberal Center on Budget and Policy Priorities said Wednesday that, without more federal help, state budget cuts will shave nearly a percentage point off growth in U.S. gross domestic product, eliminating roughly 900,000 jobs in fiscal 2011, which for most states begins on July 1, 2010.
Shaving 900,000 public sector jobs is only fair. In Illinois, where the State Employee/capita number is actually pretty low, the gravy is in the massive number of grants. Public employees have had their ride on the gravy train.
It’s time for taxpayers to have a breather. A 10-year breather.