Bill would match Illinois spending to what taxpayers can afford

(Editor's note: This article was published first at Illinois Policy Institute).

Taxpayers could soon have more faith in Illinois’ budgeting process as legislation that would insulate them from tax hikes is ready to be heard in the Senate Appropriations: Revenue and Finance Committee.

Senate Bill 589 would create a “spending cap” that ties Illinois’ general revenue appropriations to growth in the median household income. It is sponsored by state Sens. Suzy Glowiak Hilton, D-Oakbrook Terrace; John Curran, R-Lemont; Steven Landek, D-Burbank; Jason Plummer, R-Vandalia; Doris Turner, D-Springfield; and Dale Fowler, R-Harrisburg.

In recent years, state expenditures have grown nearly twice as fast as the typical taxpayer’s income, culminating in the two largest tax hikes in state history and relentless calls for even higher taxation.

Had the state enacted the spending cap a decade ago, these tax hikes could have been avoided and the state budget would have been allowed to grow at a sustainable level.

Illinois needs a spending cap to protect taxpayers for continuous tax hikes and to rein in runaway state spending. Because the state for 20 years has spent beyond its means, Illinois has seen:

• the two largest income tax hikes in state history, in 2011 and 2017
• J.B. Pritzker enact 20 new tax and fee hikes totaling $4.6 billion in 2019
• voters forced to stop a $3.6 billion income tax hike in 2020
• Pritzker and some lawmakers push a $500 million to $1 billion tax hike on small businesses
• Pritzker threaten to raise the flat income tax by 20%
• Pritzker propose $934 million in tax hikes in his 2022 budget.

A spending cap would eliminate the constant call for these tax hikes. By tying growth in the state budget to the average growth in median household income, lawmakers would be able to reasonably predict how much additional state spending their constituents could afford in the coming year without the need to raise taxes. This procedure would create stability within the state budgeting process and allow for modest growth in government funding while also protecting taxpayers from future tax hikes.

Years of mismanaged state finances have already left Illinois with difficult budgetary issues.

As of December 2020, Illinois had $5.5 billion in unpaid bills in addition to the $4.3 billion owed for money the state borrowed during the COVID-19 pandemic.  Making matters even worse, the state has the largest pension crisis in the nation, leaving taxpayers on the hook for an additional $144 billion in pension debt, while other liabilities bring the state’s total debt to $226 billion.

This massive debt burden means taxpayers are on the hook for $52,000 each, according to the non-profit Truth in Accounting.

The fiscal situation in Illinois is obviously unsustainable. Years of spending beyond the state’s means have left taxpayers facing relentless tax hikes, a $5.5 billion backlog of unpaid bills and hundreds of billions of dollars’ worth of debt.

Thirty-three states have some form of tax or expenditure limits, including all of Illinois’ neighbors. Members of the Illinois General Assembly should follow the examples of other states in enforcing fiscal discipline. The Texas Constitution restricts growth in appropriations to the growth rate in state personal income, with exceptions for constitutionally mandated appropriations or in emergencies. Tennessee has a similar spending cap.

In order to begin turning around state finances, lawmakers should enact SB 589. The bill would allow for reasonable growth in state spending, tied to taxpayers’ ability to pay. It would avert the need for constant tax increases.

If the Illinois General Assembly could provide a basic level of certainty about the long-term growth of state government, it could ward off future tax hikes. Illinois could once again become an attractive destination for families and businesses.