* My Crain’s Chicago Business column…
Chance the Rapper didn’t tell just Gov. Bruce Rauner to do his job the other day, when he wrote a $1 million check to fund cash-strapped Chicago Public Schools. He asked the same thing of journalists a few days earlier. “I want you all to do your jobs. Like, seriously, all your publications that you guys work for. . . .If you guys could give a comprehensive history on how we ended up here.”
I don’t have the space to write a comprehensive history, but Illinois’ troubles began over 100 years ago. A 1917 study concluded that state pension systems were essentially insolvent. Instead of fixing the problem, the government allowed it to fester.
More than 50 years later, delegates to the state’s constitutional convention were so alarmed that they borrowed a scare tactic from New York: Lock in promised pension benefits with an ironclad lifetime guarantee to force the state’s leaders to finally put a lid on costs and provide enough money to sustain the pension funds.
It didn’t work. Benefits kept being added, funding kept being shorted.
Meanwhile, our courts decided that another new constitutional provision declaring the state had the “primary responsibility” for funding education didn’t mean the state was actually required to provide over half of all funding. The state’s share plummeted while local property taxes rose, and rose, and rose, putting the squeeze on homeowners and businesses alike.
Around the same time, the big brains who ran the state decided to drastically narrow our revenue base by exempting retirement income, food and medicine from state taxation. They also refused to tax services when the service economy was kicking into high gear, while creating tons of tax exemptions for big businesses that were having trouble in a changing economy.
And just for good measure, they greatly increased long-term pension costs by giving retirees a 3 percent compounded annual cost-of-living raise. Albert Einstein may have never called compounded interest the most powerful force in the universe, but he would’ve been right if he had.
Click here to read the rest before commenting, please. Also, keep in mind that the point of all this is that the state has repeatedly narrowed its taxing base (or refused to expand it) while continually spending ever more money.
* Illinois considers applying sales taxes to more services