Politics                                                    

Sound-bite politics push aside sound fiscal policy By CHARLES N. WHEELER III

Every homeowner knows that sooner or later the old homestead will need a new roof. When water starts running down the living room wall, though, the situation screams out for immediate attention. In similar fashion, many students of state finance believe that Illinois' fiscal house needs repairing. In their view, the state is suffering from a structural imbalance in which revenue growth does not keep pace over the long haul with unavoidable spending increases for health care and social services.

Much like the leaky ceiling in our homeowner's residence, dramatic evidence emerged last month to support their argument. Consider these ominous signs:

• The Chicago School Finance Authority, created to bring fiscal responsibility to the city's schools, proposed that the state sell almost $1.4 billion in long-term bonds to provide operating grants to Chicago and other local school districts. Without the cash, the authority warned, Chicago schools could not open on time in September. The proposal took state officials, legislators and Wall Street bond raters by surprise. Many expressed disbelief that anyone would seriously suggest taking out long-term loans to pay teacher salaries, violating the cardinal rule of public finance that day-to-day operating expenses should not be bonded. Authority Chairman Martin J. Koldyke, however, termed the plan a "reasonable approach" to meeting the financial needs of school districts statewide while respecting Gov. Jim Edgar's no-tax pledge.

• Auditor General William G. Holland reported a significant increase from 1990 to 1992 in the percentage of the Department of Central Management Services' (CMS) accounts receivable that were more than 75 days old. In fact, state government's housekeeping agency even wrote off as uncollectible almost $28,000 in 1991 telephone charges.

That the state is owed a lot of money by a lot of debtors is not news. But the deadbeats targeted by the auditor were other state agencies, the customers for the goods and services provided by CMS. And the bad debt phone bills were rung up by several of the department's own bureaus and divisions.

Anyone who follows the state's fiscal affairs is familiar, of course, with a long list of warning signs: Overcrowded prisons, underfunded schools, advocacy groups for the mentally ill and abused children asking federal judges to make the state live up to its commitments. But the Chicago School Finance Authority's desperate proposal and the auditor general's matter-of-fact findings underscore just how desperate things are getting. How much worse does it have to become before our elected officials have the courage to face the problem?

So far, sound public policy has taken a back seat to sound-bite politics. In the case of prison overcrowding, for example, a task force proposed a comprehensive, common-sense package to defuse the smoldering powder keg without bankrupting the state. Key portions cleared the Senate with strong bipartisan support and no real opposition — yet the legislation had to be put on hold in the House while sponsors pleaded for a truce in the partisan jockeying threatening to kill the bill.

Budget-making, too, has seen both parties in the House more interested in getting roll calls for the 1994 election than in making responsible spending decisions. Democrats added $110 million to Edgar's request for education, presumably to show they care more about school kids than the governor. To provide the extra dollars without raising taxes, though, they pretended to cut other agencies, allocating only enough to pay rents for six months, for example, and shortchanging the state employee group health insurance program. But those are hardly real cuts, no matter what the spin doctors might claim on the campaign trail next year.

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Indeed, maneuvering for Campaign '94 pervades the Statehouse atmosphere. It's a high-stakes battle between Edgar, who's determined to keep the no-new-tax pledge he made during the previous campaign, and House Speaker Michael J. Madigan (D-22, Chicago), who's intent on forcing the governor to renege. Under these circumstances, it's probably not realistic to expect serious talk of higher taxes for schools or any other worthy cause. Politics seems to have ruled out even discussing the structural imbalance causing the state's fiscal woes.

Yet some experts believe that revamping the state's revenue structure would go a long way toward solving its chronic shortfalls, even without raising the overall tax burden. There are intriguing ideas that merit scrutiny, such as expanding the sales tax base to include selected services, in recognition of the structural change in the Illinois economy, or adopting a progressive income tax that eases the burden on low-income residents while asking more of those better off. And there's the perennial call to shift the burden of school finance to the income tax from the property tax.

Unfortunately, it seems obvious these ideas will be given short shrift in the months leading up to the 1994 election. Of greater concern, however, should be the possibility that political pressure next year might drive Edgar or his Democratic rival into the same kind of antitax pledge that now precludes reform talk. Instead, one would hope that both candidates would follow the example set in the 1968 gubernatorial campaign, when Democrat Sam Shapiro and Republican Dick Ogilvie studiously avoided making antitax promises, because both knew that whoever won in all likelihood would have to propose the state's first income tax.

A similar moratorium on antitax pledges in Campaign '94, or better yet, bipartisan acknowledgement that the tax structure needs to be examined with an eye toward reshaping, would be a welcome sign that the roofers are on their way. Meanwhile, keep the buckets ready. 

Charles N. Wheeler III is a correspondent in the Springfield Bureau of the Chicago Sun-Times.

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