By James Wigderson
Special Guest Perspective for the MacIver Institute
Good news last week for football fans as the National Football League finally reached an agreement with the players’ union. Packer fans received more good news when they learned that Illinois Governor Pat Quinn will finally pay off the bet he made with Wisconsin Governor Scott Walker over the NFC Championship game between the Green Bay Packers and the Chicago Bears.
No, Quinn did not promise to send back members of the Wisconsin State Senate the next time they decide to flee Madison rather than vote. Quinn’s state needs all the hotel tax revenue it can get, regardless of who is paying it. Or even if we’re still unsure of who was paying for it the last time.
Quinn is going to volunteer at a food pantry in Kenosha wearing a Packers jersey on August 6th.
Of course it took Quinn a while to fulfill the terms of the bet. Most Illinois governors have been traditionally reluctant to leave the state lest it be interpreted as bail-jumping. In Quinn’s case, perhaps he was afraid of the contrast.
It will probably be of some relief for Quinn to visit Wisconsin, a state that is moving in the right direction. While Quinn is here he might be amazed to learn that Wisconsin successfully balanced its budget this year without raising taxes.
Quinn’s state budget, hurriedly passed to avoid having any Republican input, inadequately funds 12 of 14 state agencies, despite legislators voting earlier in the year to raise taxes about $6.8 billion per year. There are more holes in Quinn’s budget than the Bears secondary when Aaron Rodgers is back to pass.
When Quinn visits Kenosha he might notice that one of his state’s temporary guests, State Senator Robert Wirch, is being recalled for his temporary vacation from his job in Madison. Supposedly Wirch fled to Illinois to protect the collective bargaining privileges of state employees, although you would never know that if you were listening to Wisconsin’s Democrats during the recall campaigns.
While Quinn is visiting Wisconsin he might want to take notes on how the state’s labor costs were contained. Instead of mass employee layoffs, Governor Scott Walker and the Wisconsin legislature required state employees to contribute more for their health insurance and to their retirements. Instead of wasting the opportunity like a Bears draft pick spent on a quarterback, Walker’s spending cuts were balanced with collective bargaining reforms that allowed local school districts and other local governments to adjust to the reduced amount of state revenue.
In Illinois, Quinn signed an extended contract with AFSCME promising raises during the next fiscal year. Now Quinn and the state of Illinois are in court defending themselves because they can’t afford to pay the raises to 30,000 union employees. Quinn’s contract with AFSCME prevents the state from mass layoff of state employees so Illinois is considering just eliminating positions to get around the prohibition. It remains to be seen if the courts will intercept Quinn’s budget bomb like a fourth-quarter Jay Cutler pass.
Unlike Illinois, Wisconsin is paying off debts. Wisconsin under Walker reimbursed the medical malpractice compensation fund for money taken under Governor Jim Doyle and paid the debt owed to Minnesota under the previous tax reciprocity agreement.
Quinn’s state is having trouble paying its current bills. As of last Wednesday, the state of Illinois had more than 181,000 unpaid bills totaling $3.38 billion.
There may be a few more people showing up at the Bears tryouts looking for a job this year. In June unemployment hit 9.2%, the same as the dismal national average, and the state actually lost 7,200 jobs in the last month, using seasonally adjusted numbers. Illinois also saw 18,900 people added to unemployment last month.
When Quinn visits Kenosha, he will be following many of his Illinois residents here as they visit Wisconsin as tourists. He might notice a few moving vans with Illinois plates, too.
While Wisconsin was meeting in special session in January to try to improve the state’s business climate to attract jobs, Illinois increased the corporate tax rate by 45%. Companies like Caterpillar immediately threatened to pull out of Illinois.
Iconic companies such as Sears and CME Group, the parent company of the Chicago Mercantile Exchange and Board of Trade, may quit Illinois like Jay Cutler in the second half against the Packers. CME Group Craig Donohue said his company was taxed more than any of its competitors and told Reuters, “Our tax situation is untenable.”
Motorola, Navistar, and Continental Tire each received millions in incentives after they threatened to move.
On the other hand, a survey of Wisconsin CEOs by Wisconsin Manufacturers and Commerce showed 88% of Wisconsin CEOs believe the state is on the right track.
Quinn may have been reluctant to visit Wisconsin at the height of the protests lest he upset his many union supporters. However, here is an opportunity for Quinn to see what works and what doesn’t in putting a state’s fiscal house in order.
Signing long-term contracts with the state employee union with terms you cannot fulfill is not the way to fix Illinois’ financial woes. Nor is it possible for a state to borrow and tax its way into long-term prosperity.
Wisconsin tried those things and learned from its past. Wisconsin still has a ways to go become the economic champions but it’s on the road to victory, leaving Illinois behind in the big game.