Editorial: State’s fiscal mess needs concrete solutions

Rockford Register Star

Published Tuesday, February 19, 2008

Illinois Gov. Rod Blagojevich gives his sixth budget address today and we have to wonder whether he’ll give us an honest assessment of the state’s financial condition or whether he’ll tell us a fairy tale.

Once upon a time — last year — the governor proposed a gross receipts tax, which many considered the largest tax increase in Illinois history. The governor didn’t see it that way and tried to push his proposal through the General Assembly. He got zero support.

The governor’s inability to let go of his idea led the General Assembly to set a record for the longest session in history. We’re not sure it ever ended. There was no closure; just a bunch of patchwork that resulted in a budget that called for a lot of spending yet overestimated revenue.

This year we’re not quite sure what to expect from the governor. He may want to eliminate some tax breaks Illinois business get; he may want to borrow money; he surely won’t ask for any kind of sales or income-tax increase.

But no amount of pixie dust can cover up the fact that Illinois’ finances are in awful shape.

The reality check comes from Comptroller Dan Hynes, who rightly points out that the state is spending more money than it takes in.

Hynes was in Rockford last week to tell the Editorial Board how bad the state’s fiscal condition really is. He’s visited other editorial boards across the state so we could get what he says is a realistic picture before the governor takes to the podium today.

Some of the lowlights of Hynes’ visit:

The state has a deficit of $3.6 billion. That’s an improvement from the nearly $4.2 billion deficit the administration inherited, but, Hynes said, it still means Illinois has the worst deficit in the nation for the fourth year in a row.

The unfunded pension liability is one of the worst in the nation. Hynes said $730 million in new revenue goes toward pensions.

The state ended 2007 owing a record amount of unpaid bills: $1.72 billion. It takes an average of 34 business days to pay its bills, also a record. A “loophole” in state law allows health-care bills to be pushed from one year into the next, which means health-care providers help finance the state’s cash-flow problems.

While other states were positioning themselves to weather an economic downturn that appears to be coming — if it’s not here already — Illinois did nothing to prepare itself for rainy days.

And it looks like it will pour.

In 2007, sales tax revenues grew less than 1 percent. Corporate income taxes were down 5.5 percent. Home sales were down almost 17 percent. Auto sales were down about 25 percent. Unemployment was up to 5.5 percent in December after being just 4.1 percent in December 2006.

Plus, Treasurer Alexi Giannoulias recently said the state is expected to make about $200 million less in its investments.

The governor should keep all that in mind. This is not the time for new programs. It’s time for Illinois to stick to basics, live up to its obligations and control spending. State finances are no different from our own: You can’t spend what you don’t have. Even credit cards have maximums and you can’t borrow your way out of debt.

We believe that one of those basics should be a capital plan to fix the state’s roads, bridges and other infrastructure. The state’s roads are a visible sign of how bad things are. Anyone who has had the alignment of their vehicle thrown out-of-whack after driving over the potholes of a state road has firsthand knowledge.

A capital plan would do more than take the bumps out of roads. It would put people to work, people who pay taxes that would wind up back in the state’s treasury.

That’s a reality. Will the governor address it or will we continue to dwell in Never Land?