Don’t Ask Responsible States to Bail Out Reckless

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Wisconsin’s neighbor to the south is at it again. 

This time, Illinois is using the COVID-19 pandemic as an excuse for seeking a federal bailout to extricate itself from its own long-standing—and self-created—fiscal mess. 

What does one have to do with the other? Nothing.

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Yet, the House recently passed a new $3 trillion coronavirus-relief package that includes $1 trillion for state and local governments. 

Illinois lawmakers would like to get their hands on a large chunk of that money, not so much to fight the virus, but to force taxpayers from other states, including Wisconsin, to rescue them from the budgetary nightmare they created.

You have to give Illinois credit for one thing; namely, sheer brazenness

Weeks before the House released its most recent stimulus proposal, Illinois state Senate President Don Harmon asked that the federal government pony up more than $41.6 billion for his state (of which only $2.6 billion would apply to coronavirus-related costs). 

That eye-popping amount is on top of the nearly $5 billion Illinois already has been allocated under the Coronavirus Aid, Relief and Economic Security (CARES) Act.

Most of the rest would be used for Illinois’ general budget needs, including $10 billion for its pension debt

Even the hometown Chicago Tribune, in a scathing editorial, characterized Harmon’s request as “shameless,” “dishonest,” and “beyond galling.”

To illustrate just how shameless it is, a comparison of Illinois’ and Wisconsin’s public pension systems is warranted. 

For starters, Wisconsin’s pension plan is fully funded, whereas Illinois faces unfunded liabilities of somewhere between $137 billion and $469 billion, depending on whom you ask.

There are several reasons for that vast disparity, but one, according to Elizabeth Bauer writing in Forbes magazine, is that “Wisconsin’s cost-of-living adjustments are dependent on favorable investment returns, and, far more crucially, retirees’ benefits are similarly reduced in down years.” 

That contrasts with Illinois retirees, who are guaranteed a 3% cost-of-living increase every year.

In 2011, when Wisconsin faced a $3.6 billion budget deficit, then-Gov. Scott Walker and the state Legislature advanced Act 10, a bill that, among other things, set collective-bargaining limits between public sector unions and their employers. 

Despite vociferous opposition at the state and national level, the measure became law, eliminating the deficit and saving government entities and school districts (aka taxpayers) billions of dollars in subsequent years.

Put simply, Wisconsin’s retirees receive less generous, but much more sustainable, benefits and have for decades. 

That necessarily raises the question: Given the contrast, is it even remotely fair that those same retirees, plus the rest of Wisconsin taxpayers, be forced to pick up a substantial piece of the tab for Illinois’ reckless behavior

To ask the question is to answer it: A thousand times, no.

It gets even worse with an eye to the future. While Wisconsin’s Gov. Tony Evers recently announced a 5% cut in state spending for the current fiscal year due to expected COVID-19-related revenue losses, Illinois has doubled down on its commitment to profligate spending.  

Its legislature just adopted a record-high $40 billion budget for fiscal 2021. It includes a 24 percent pay raise between 2019 and 2024 for Chicago teachers and pension costs that equals almost one-third of the state’s own-sourced revenues. That would result in a $6 billion or $7 billion deficit, on top of a  current-year deficit of $2.7 billion and a $3.4 billion deficit for the last budget cycle. 

How can Illinois even do that when its own state constitution requires a balanced budget? It can’t, except by filling budget holes through steep increases in taxation, borrowing huge sums—and a federal bailout.

Its chronic deficit spending, among other factors, led George Mason University’s Mercatus Center in late 2018 to rank Illinois as being in the worst fiscal condition of any state in the country. 

While Illinois has routinely  raised taxes, Wisconsin cut taxes by $13 billion over the past decade, according to its nonpartisan Legislative Fiscal  Bureau.

As a result of Wisconsin policymakers’ willingness to stand up to special interests, exercise fiscal responsibility, and lower the tax burden on Wisconsinites, the Badger State entered the current crisis with $655 million in its rainy-day fund and a predicted $189 million budget surplus. 

These revenues cushioned the fiscal blow when COVID-19 struck.

States that keep their budgetary houses in order should not be liable for the budgetary recklessness and occasional malfeasance of their neighbors. 

It’s immoral to force taxpayers who have already paid their fair share to bail out officials in another state who spent like there was no tomorrow.


Read the Original Article Here

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