In a recent editorial, the Wall Street Journal wrote a disastrous economic prescription for Illinois, one that calls for a "big bang" of the sort that has blown up Kansas' budget and turned that state into a poster child for reckless and short-sighted financial management.
That shouldn't come as a surprise since the Journal's editorial writers were tireless cheerleaders for the Kansas plan, which slashed income taxes to the bone, largely for the benefit of wealthy households and profitable corporations.
Instead of the "shot of adrenaline" to the economy that Kansas Gov. Sam Brownback promised, the tax cuts have been a drag on Kansas' economy. The state is scraping by on reserve funds, and when those are gone it will be forced to make emergency cuts to state services, or to raise new revenue.
Illinois should not go down the same path as Kansas. It's time for us to move forward -- not backward.
To get Illinois' economy back on track, the right move is for lawmakers to maintain current income tax rates and invest in engines of growth like our schools and universities and our roads and bridges, while making sure we continue to support community-based services for our most vulnerable residents. We simply can't do that if we allow the rates to drop, as planned, on Jan. 1 and then slash taxes even more like the Wall Street Journal editorial writers propose. In fact, we'd be halting the progress we've made recently and starting a backwards slide.
That's because the new revenue levels we enacted in 2011 have made the state's financial situation substantially better than it would otherwise be. We've been able to make substantial progress paying down our bills, and lawmakers finally covered our mandated pension payments.
Recognizing that increasing revenue was a critical step for the state, the companies that rate the credit worthiness of states raised the outlook on Illinois' credit rating, which plays a big role in determining how much interest the state has to pay when it borrows.
Unfortunately, Illinois lawmakers have taken a step down the road that the Wall Street Journal envisions. Since they failed to extend current tax rates during the last legislative session, Illinois will lose about $2 billion in revenue this year and likely over $5 billion next year, when the personal income tax rate is set to drop from to 3.75 percent from 5 percent, and corporate rates to 5.25 percent from 7 percent.
Families and communities have borne the brunt of lawmakers' refusal to maintain the status quo. State funding of our public schools is now billions of dollars below the recommended levels. The Department of Children and Family Services has been cut by nearly one-quarter, undermining one of the state's most basic responsibilities -- protecting our children from harm. And 25,000 fewer children are now able to attend preschool each year.
When the state loses billions more of revenue a year if current rates are allowed to expire, the cuts will only get worse. To balance the budget in the next fiscal year without steady revenue, we estimate lawmakers would have to cut most programs by upwards of 25 percent.
The major credit rating agencies are also taking a dim view of where Illinois is headed. All three -- Standard & Poor's, Moody's and Fitch warned that the state's credit rating -- already the worst among the 50 states -- could be downgraded to a record-low level.
Even so, the Wall Street Journal would like to see income tax rates cut back to 3 percent --below what even the most conservative Illinois policymakers are calling for.
The Journal's "big bang" would wreak economic havoc on Illinois families and businesses. Allowing the current tax rates to expire and then be cut further would result in even deeper cuts. The result? More crowded classrooms, higher tuition, potholed roads, crumbling bridges, and police and fire department starved of funding.
The Wall Street Journal is wrong to call its plan a "big bang," since that event was creative, bringing the universe to life. Instead, what it proposes would be more like a meteor strike, threatening a cataclysm for thousands of Illinois families and businesses.