* Several people sent me this news development yesterday…
California’s first credit upgrade in six years shows how curbs on pension costs, a voter-backed tax boost and an improving economy have allowed it to exit Wall Street’s basement, leaving Illinois as the lowest-rated state.
The higher rating by Standard & Poor’s marks a turnaround for California, which has the world’s ninth-largest economy and was once seen as ungovernable as it faced unrelenting budget gaps and issued IOUs to pay bills. Yesterday’s change came less than a week after Illinois had its score lowered, prompting officials to postpone a $500 million bond issue.
Both states have raised taxes. Both are controlled by Democrats, and both have seen unemployment decline. California Governor Jerry Brown, returning to the office he first held three decades ago, cut long-term retiree obligations, saving as much as $55 billion over 30 years. Illinois has skipped pension fund payments and failed to bolster America’s weakest retirement system, with a deficit that grows $17 million a day. […]
Brown persuaded voters in November to pass the highest statewide sales tax in the U.S. and raised levies on income starting at $250,000, for a temporary $6 billion annual revenue boost for seven years. He won reductions in pensions for new state employees and is benefiting from a legal change allowing his budget to be approved with a simple majority vote, rather than two-thirds of the legislature.
* Jerry Brown came into office and did exactly the opposite of what Pat Quinn did. Brown slashed government to the marrow, causing real pain. He reformed pensions. Only then did California voters agree to tax hikes.
When Quinn took the reins in 2009, he decided against deep cuts and allowed the problems to fester for two years, until he and the General Assembly raised taxes in 2011. But he didn’t raise taxes high enough to avoid spending cuts, so it’s been one excruciating budget after another, and except for that prospective employee pension reform, nothing accomplished on that front, either.
* The thing is, people don’t really pay all that much attention to state government. They don’t really understand what the state actually does. By slashing spending, Gov. Brown created a whole lot of hardship, but the pain showed Californians how vital state government can be.
There were good reasons not to slash the Illinois budget in 2009-10 - one being the economy. But the income tax hike eventually took some real steam out of the economy as well.
It’s easy for me as a successful white male with a grown daughter to say that Quinn should’ve taken the Brown route. A whole lot of real people got hurt by those California cuts. Universities and P-12 education suffered greatly as well.
But Brown has taught his state an invaluable lesson about government, while the message received in Illinois - no matter how erroneous - is that tax hikes don’t work and that government is messed up beyond repair.
* Other stuff…
* Editorial: What can labor offer on COLA increases?
* Watchdog group: Don’t close women’s prison
* Time growing short to get Illinois’ health insurance exchange up and running
* Supporters seeking quick approval of road projects
* $2.1 million grant moves Danville-Urbana bike trail closer