Half a Loaf: The Budget Deal

. . .is better than none, I guess. Governor Blagojevich was finally able to pass a state budget on time with a party line vote. The budget meets my minimum standard of acceptability: it funds the CTA (by reimbursing the transit system for paratransit services), and manages to direct a little more state money to schools. However, it doesn't include the tax swap provision to shift the burden from property taxes to income taxes, or provide any other revenue enhancing policy. Instead, it raids the state's already shaky pension fund again, contributing less than required and hastening an eventual fiscal crisis.


Without The Hair, G Rod almost looks like a regular guy.

I wish G Rod would just suck it up and raise taxes, but I guess he's too much of a coward. He thinks that holding the line against taxes is the best way to get the stupid people vote. I've got news for ya, Rod, downstate Republicans are not voting for you, no matter what.

I am not running for office, so I'm gonna come right out and say that Illinois needs a tax hike. There's no other way to provide an acceptable level of government services. The shortage of funds is not caused by inefficiency and waste. State government spends about 8% of its government on administration, vs. 16% on average in the private sector. Half as much! School systems are even less wasteful, spending maybe 5% of their funds on administration. It is a myth that goverment can cut costs by eliminating waste.

How is this possible? you ask. Aren't the politicos robbing us blind? Well, yeah, but it's no different in the corporate world. Remember Tyco? Enron? Wherever no one's watching the store, somebody's stealing from the till. That's life. Deal with it.

Also, Illinois is not a big spending state. Ranked by population, we are 41st in per capita spending. And we can't even afford the low level of spending we have. Why? Our tax code is a relic from the industrial age. We tax goods, but not services. This made sense when we were a manufacturing center, but we are rapidly transforming into a service economy. And services, the fastest growing segment of the economy, is excluded from the tax base. Pay a tax when you buy a hot dog, but not when you get a haircut. The result is that taxes are too burdensome on the kinds of businesses that are taxed, as well as on homeowners. Yet the government remains underfunded.

So a real budget would include an income tax hike. And it would ditch the stupid flat tax - Illinois has one tax bracket, at 3%. Which is madness. We should soak the rich! That's what they're there for, ain't it?