If there’s something you'd think two super-rich candidates for Illinois governor would know about, it’s money. But neither Bruce Rauner, the Republican incumbent, nor J.B. Pritzker, his newly nominated Democratic opponent, spend much time talking about how to fix Illinois’ notorious budget mess.
Admittedly, the budget isn’t likely to rile up partisans for a primary election like attacks on President Donald Trump or the Chicago political machine. But without some fiscal plan, almost all of the candidates’ other promises could evaporate.
Setting a budget will be one of the first tasks for the governor who gets sworn in next January, and given the size of Illinois’ fiscal problems, it's a task that will likely consume a huge amount of his time. After all, the three major credit agencies all rate Illinois’ bonds just one notch above junk status. At this point even a small economic downturn or some other hiccup could trigger a downgrade, which would cause a big sell-off of Illinois debt and undoubtedly require the state to pay higher interest rates on it.
Illinois’ troubled history of deficit spending and budget standoffs has led to a $9.3 billion backlog in unpaid bills for day-to-day services. In the long term, it must close a $130 billion unfunded pension liability.
If anyone doubts that Illinois’ budget problems can overshadow the rest of a governor’s agenda, they could look at the budget-related drama that has consumed Springfield in recent years.
A two-year budget standoff hobbled Rauner’s administration until last summer. The governor took office in 2015 just days after a temporary income tax expired, but Rauner, a former venture capitalist, opposed another increase to make up the lost revenue. Instead, he said that a tax increase should be paired with several policy changes he championed. Many of those sought to weaken labor unions, which was a nonstarter for the Democrats who control the legislature.
Illinois limped on without a budget for two years -- the only state to ever do so -- while its unpaid bills skyrocketed. The impasse devastated social service agencies and state-run universities. It caused enough damage, especially downstate, that several Republican lawmakers joined Democrats to push through their own budget that included a tax hike, and to override Rauner’s veto of it.
The budget defeat set off a tumultuous summer for the governor.
He purged his staff twice, leaving a governor who had never before held elected office without a lot of political expertise at his side. Then he signed an abortion rights law that, among other things, provided for public funding of abortions. Social conservatives in the legislature abandoned him, just months after moderates voted to override his veto on the budget. Major campaign contributors left him too. One of Rauner’s most outspoken critics was state Rep. Jeanne Ives, who hastily assembled a primary challenge to Rauner, backed by a former Rauner donor. She came within 4 percentage points of beating him.
“To those of you around the state of Illinois who wanted to send me a message, let me be clear: I have heard you,” Rauner said during his victory speech on Tuesday. “For those of you who are disgusted by our system of corruption and insider dealing -- and that’s virtually all of us in the state of Illinois -- let’s come together in the name of common sense. We cannot keep spending and taxing and relying on career politicians if we expect a better tomorroow," added the governor, who has contributed more than $50 million of his own money to his campaign.
Lowering taxes is one of Rauner’s top campaign themes. “We can’t tax our way out of our problems,” he often says on the stump.
But after four years, the governor has yet to propose a budget that would make that feasible.
His latest budget proposal, which he announced last month, calls for a reduction of 0.25 percentage points in residents' income taxes. He described it as the first step in a multiyear process to bring tax rates down. But the pension changes he wants to make to pay for that initial cut would almost certainly lead to legal challenges and, in any event, would take years to materialize.
The governor also relentlessly criticizes Mike Madigan, the Democratic speaker of the Illinois House. Madigan, a ward boss from the southwest side of Chicago, is the longest-serving legislative leader in the country. He became speaker in 1983 and has only given up the position for two years since. Madigan is also the head of the Illinois Democratic Party. He’s frustrated governors of both parties over the years by blocking major initiatives, and he emerged as Rauner’s chief nemesis during the recent budget standoff as well.
In an interview with Governing two weeks ago, Rauner called Madigan “the tip of the spear of the corruption” in Illinois government.
“He manages the General Assembly. He controls the Democratic Party. And he has a property tax appeal law firm that he owns on the side. So he can set tax policy for the state, and force property taxes in Illinois to be as high as any state in America, and then he can become wealthy by charging business owners in Chicago to use his law firm to reduce their property taxes. That’s corrupt. It’s like a mafia protection racket,” the governor said.
Rauner returned to that familiar theme during his Election Night speech, as he tried to link Pritzker to the unpopular speaker.
“Pritzker is Mike Madigan’s hand-picked candidate, and, if he is elected, he will give total control of our state over to the machine,” Rauner said. “If that happens, turn out the lights because we know exactly where they’re headed: higher taxes and more corruption.”
On taxes, Pritzker has called for Illinois to change its income tax from a flat tax, where everyone pays the same rate, to a progressive tax scheme, where people who make more money pay a higher rate.
Making the change won’t be easy because it requires amending the state constitution. Lawmakers would have to pass it and then send it along to voters for approval.
“Let’s institute a progressive income tax so we can lower the burden on the middle class and those striving to get there,” he said Tuesday.
Pritzker, an heir to the Hyatt Hotel fortune and a venture capitalist, has already spent more than $70 million of his own money on his campaign. He didn’t mention during the rally that the new tax scheme would have to raise more money than the current system in order to pay for many of the costly new programs he proposed. But his campaign website alludes to that possibility.
“It’s time for Illinois to modernize our tax code -- and to do that, we must fairly raise revenue,” it states.
Pritzker himself has left the door open to bringing in more money through the income tax -- but only if the plan doesn’t raise rates on “middle-class families.”
Likewise, Pritzker Tuesday called for Illinois to “legalize, tax and regulate marijuana.” But again, he described it primarily as a way to address racial disparities in the criminal justice system -- not to raise revenue for the state. His campaign claims that legalizing pot could bring in $350 million to $700 million to the state.
Throughout the campaign, Pritzker, like most Democrats, criticized how Rauner handled the budget standoff.
As Pritzker moved to the general election, though, he told supporters, “This campaign is not just about the failed policies of a failed governor who thinks that lifting up the people of Illinois is a government expense rather than an investment in the future.”
Instead, Pritzker said, he wanted to focus on issues such as increasing school funding especially for poorer communities, creating a universal health care system with a public option for buying insurance and ending government policies -- like impounding people’s cars for unpaid parking tickets -- that disproportionately hurt the poor.
But all of those would likely require Illinois to get its finances in order first.
This is part of the Politics newsletter. Subscribe for free.