As most Illinois blogger and internet political mavens know, Rich Miller’s Capitol Fax is the epicenter of Illinois’ political “inside baseball.”

Rich has been doing yeoman’s work reporting/blogging on the fiscal mess in Illinois. I think it’s fair to say that his commentary in his latest “fiscal” post shows that he leans in favor of revenue increases (tax hikes). This is not an insane position, given the absurd fiscal condition of Illinois (and local) government.

I commented on one his earlier posts, and he gave some reasonable replies countering my suggestions (Spending Freeze and Local Government cutbacks). Fair enough. There certainly is room for debate.

The comment below is my response to Rich Miller’s latest post on fiscal matters.

Rich,

As an advocate of smaller government and very skeptical of tax increases, I must say that you are (unfortunately) probably correct that some form of revenue increase for the state is necessary.

The last time I commented on this issue, you took exception to two ideas that I floated. One is that we cut taxes at one level to ameliorate any increases at another level.

You responded with something along the lines of “that’s a local issue.”

It is and it isn’t. Take the FAKE tax swap of HB750. Many legislators have owned up to the fact that they could zero out the education portion of the property tax tomorrow.

It isn’t a “local tax.” It is a state tax “collected locally” for a “state purpose” (education) This is why that “48th in state aid” line is such a load of crap.

A fake tax swap would be a disaster in terms of policy, politics, and economics.

An honest tax swap (permanent, substantial property tax relief in exchange for higher income taxes and a broader sales tax base) would be one solution that might fix state fiscal problems while simultaneously assisting struggling property owners and the real estate industry.

If that was enacted, the need for immediate cuts in local government feather-bedding, particularly in the education monopoly, would be one result.

If people are to be serious about “fixing” the fiscal disaster that is Illinois, going after both state and local solutions simultaneously is good politics and good policy.

Another solution I proposed was a freeze on spending increases. Your reply was that there are so many built in mandated increases (1.e. pensions and Medicaid), that to freeze spending would require dramatic cuts in other programs.

Again, you are correct, up to a point. Your analysis is spot on, save for the idea that there is nothing to cut.

If we are to be serious about fixing Illinois budget woes with out taxing every remaining business or entrepreneur out of the state, why shouldn’t all the players (Dems, Reps, advocacy groups, public employees, etc.) have some skin in the game?

Let’s open up every budget item. Every Chicago School district dime, every state dime, every state and local salary, every increase in pension liability, every contract, and really see if there is “nothing to cut.”

The idea that a spending freeze (including a LEVY FREEZE on EVERY LOCAL ENTITY) is impossible doesn’t pass the common sense test. Negotiating a temporary tax increase in exchange for a temporary freeze (2 year) and permanent 100% transparency for every future dime in every gov. entity is a deal that the citizens of Illinois might swallow.

If every business has had to lay off (or forgo hiring) employees, and every citizen has had to cut back on personal spending, then the government can do the same.

If there was a party in Illinois actually running on such a platform in this environment, it might actually get some votes.

Too bad there is no such party.

Once you admit what’s broken, fixing things shouldn’t be that hard.