Editorial | Booms and busts

Editorial | Booms and busts

Strong economies generate the new revenues that governments at all levels need. State officials should heed the maxim.

Last week's news of a dramatic increase in state tax revenues doesn't begin to address Illinois' many serious financial problems.

But it does demonstrate how a booming national economy — and the tax revenues generated from more people working — can convert budgets that were previously unbalanced into those that are balanced. Or, in Illinois' sad case, almost balanced.

The state of Illinois collected $4 billion in April, a 38 percent increase from April 2018. That's $1.5 billion more than was estimated by state budget officials.

The extra money wiped out all but $166 million from the deficit for the current year. Further, anticipated increases in revenues for the fiscal year that begins July 1 prompted Gov. J.B. Pritzker to reverse his previous unfortunate and unpopular decision to skip $878 million in required pension contributions.

The development was a cause for celebration because Pritzker had conceded the negative consequences of his decision to skip required pension payments.

Skipping $1 in pension payments today means many more dollars will have to be contributed in future years to make up the deficit created by skipping payments. Pritzker said his decision to skip the required payment would have delayed the state's schedule to address its budget underfunding an additional seven years — from 2045 to 2052. But he said skipping $878 million in pension payments was necessary to allow him to spend that money on other programs.

(Actually, Illinois' pension woes are far worse than state officials acknowledge. More important, skipping pension payments is how Illinois got into its current mess. But those are issues for another day.)

The larger point is that additional revenue generated by a growing national economy bailed the state out of a big problem.

So wouldn't it be a good thing if Illinois took measures to make Illinois' economic climate more attractive to job creators rather than rely on national economic trends to push, pull and boost the state's economy.

State budget officials Davis Harris and Alexis Sturm, in announcing the good revenue news, noted that it is the result of national economic trends that won't last forever.

There's no question about that. Economic cycles of recession, recovery, recession, recovery are constant. The only real question surrounding that reality is how severe the recessions will be and how strong the recoveries will be.

Illinois remains especially vulnerable to another recession because it's buried in debt and effectively bankrupt.

So while other states may catch a cold when the economy inevitably flags, Illinois will come down with pneumonia.

Former Gov. Bruce Rauner tried and failed to persuade legislators to lay the groundwork for future economic growth by addressing issues like workers' compensation, unnecessary regulation and high corporate and property taxes. Pritzker has different priorities that include raising taxes and increasing government spending on social programs. He's shown no interest, so far, in addressing a state business climate that's hostile to job creators.

Illinois is barely getting by now. If it doesn't prepare for the next recession, the inevitable decline in tax revenues will cause devastating problems.

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