A report carried at CBS News in St. Louis from Jim Anderson of the Illinois Radio Network (IRN), which appears to be a private entity, tells readers that a research study (summary; PDF of relevant chapter) published by the Institute of Government and Public Affairs (IGPA) at the University of Illinois has identified "a combination of tough policies (which) could bring the state into fiscal balance by the end of the decade." To be clear, the end of the decade is seven years and eleven months from now.
Predictably, the "tough policies" include "maintaining increased income tax rates after they are scheduled to expire." On the spending side, what IGPA describes as "extreme austerity" means "keeping the growth rate of all spending down to 2.1 percent per year." Those who would rather not look at IGPA's detail can be forgiven, because the opening paragraph of the linked chapter above, which IRN did not cite, gives away the researchers' detachment from reality:
Illinois ended 2011 with a better financial situation than it faced a year earlier. However, the state began the year with a hole so deep that not even a massive tax increase and drastic spending cuts could come close to filling it.
In your dreams, guys. The 67% and 45% "temporary" increases in personal and corporate income-tax rates passed earlier this year -- increases which, according to Governor Pat Quinn, would prevent the state from "careening towards bankruptcy" -- have not created a "better financial situation." The credit markets agree. The state's credit rating, recently downgraded, is the worst in the nation.
There's also this odd sentence at the end of the IRN report: "The state’s operating budget is close to balanced, (Univ. of Illinois Economist Richard) Dye said, but the state has $8.1 billion in unpaid bills, according to the state comptroller, and more than $80 billion in unfunded pension obligations." That gives me the impression that the state has "balanced" its cash-based operating budget by falling further behind in paying its bills. This is a "better financial situation"?
It's worth recalling predictions establishment press types swallowed whole when the tax increases became law about their supposedly inconsequential impact on employment and company relocation (bolds are nine):
J. Fred Giertz, a University of Illinois economics professor, says an immediate exodus isn't likely.
Companies, he says, weigh workforce availability, transportation and other factors when deciding where to build or expand. "Our state is close to insolvency, and they don't like that either," he says.
"An immediate job killer? Not likely," says Ed Morrison, economic policy adviser at Indiana's Purdue Center for Regional Development. "Much more important is regaining financial stability."
Well, I guess it depends on what you mean by "immediate." Unemployment didn't increase the next day. But at the time the tax increase was passed, the unemployment rate in Illinois was 9.2%, which was lower than that of Indiana, Michigan, Ohio, Kentucky, and Missouri. By the end of 2011, the unemployment rate in the financially stinkin' Land of Lincoln was 9.8%, higher than every state just mentioned -- yes, even including Michigan (9.3%).
Job growth didn't stop "immediately," either, but in the final ten months of 2011, the Illinois economy added only 8,000 seasonally adjusted jobs. Companies on the whole aren't hiring, it's likely that many are leaving, and the state is having to bribe some larger companies to stay with incentives and tax abatements.
I can't wait for the IGPA's superlatives if the state's unemployment rate gets above 10% and the backlog of unpaid bills hits $10 billion.
There is someone who got it right:
John Tillman, CEO of the Illinois Policy Institute, a non-partisan research group dedicated to free-market principles, says the tax increases could cost 268,000 jobs over the next three to five years.
"When you raise the cost of doing business," he says, "people vote with their feet."
Given the employment growth in other states during 2011, particularly Ohio and Michigan, it's perfectly reasonable to believe that Illinois employment should have increased by at least 50,000 during the final ten months of 2011.
The other "experts" above who made dumber-than-a-box-of-rocks predictions any child should have been able to see through should lose their credibility as news story sources. But they won't.
At Dollar Collapse (HT Instapundit), John Rubino asks: "Why Isn’t Illinois A Bigger Story Than Greece?" Good question, especially given that Illinois has more residents.
Cross-posted at BizzyBlog.com.
