Page V-1 Monday, August 2, 2010 FarmWeek
®
Illinois’ dangerous intersection: How can the state pull out of its fiscal skid with the least injury?
T
he State of Illinois is in financial collapse. There isn't a day that goes by that you don't read about someone not getting paid or some constituent service or
Reading the signs RICH GUEBERT JR.
Chairman, Illinois Farm Bureau Resolutions Committee With funding for research and education ever dwindling, an exploding global population, a greater need for affordable, safe, and abundant production, and an increasing emphasis on environmental stewardship, perhaps at no time in history has agriculture been at a more critical crossroads. For that reason, it has never been more important that organizational policy is current in reflecting your views on the range of issues surrounding agriculture. Our passion — which happens to double as our business — must find a way to exist in a still-evolving new paradigm. We must not only respond to current issues, but we must anticipate trends that often originate outside the borders of our control. We can build into our business plans contingencies for weather, price fluctuations, and production —but one variable for which we cannot plan is public opinion. And so it is this crossroads at which we stand—our current production and business models working at peak efficiency facing a public that might force us to alter those models. This annual FarmWeek supplement will hopefully arm you with some of the information you will need to make so many important decisions at such a critical juncture.
program being cut or eliminated. Local school districts, units of local government, and private business are in near bankruptcy because of the instability of state funds. Our elected officials continue to attempt to patch the mess together with no long-term fix. Potential answers to how the mess will be fixed have been few and far between. Many ideas have been floated, but none gains enough political momentum to be considered. If the fiscal demise is not addressed, how much worse will it get? That leads right into how bad it is now. If this were a family farm or business, the bank and our suppliers would have cut us off a long time ago and sent the sheriff to put a big red "Foreclosed" sign on the front door. Let's look at some quick facts. The state has close to $7 billion in unpaid bills. That is equal to almost 27 percent of the state’s yearly tax collections. If we put it in other items that are not included in the state budget, such as the annual state pensions payments for this year of $3.7 billion, the deficit percentage jumps to 41 percent of the state tax collections. Then add to that all the new interest payments for all the borrowing the state has been doing to stay afloat, health care payment increases, other program cost increases, and declining tax revenue collections of an additional $4 billion and the total comes to a $13 billion deficit. That is is equal to 50 percent of the state's total tax collections. How did the state get to this point? Well, let's look at some telling statistics. Medicaid (medical assistance to those not able to pay) spending has increased 72.6 percent, from $8.4 billion to $14.5 billion, from fiscal year 2001 to FY 2009. State employee health insurance spending has increased 92.9 percent, from $1.1 billion to $2.1 billion, in the past 10 years. The state has issued long-term
bonds for construction and pension payments that will cost taxpayers $22.7 billion in interest alone. In fiscal 2003 and fiscal 2010, the state borrowed a combined $13.5 billion to make the pension payments in those respective years. To top off the spending increases,
the state has seen drastic declines in tax collections. The state income tax, one of the largest revenue sources for the state, has seen a decrease in revenue of 5.1 percent over the past 10 years. If you are thinking this is a "perfect storm," you are correct — increased spending and decreasing revenue. So what are the answers? There are
many "options" being publicly discussed. Some say the state should continue to cut spending. But what programs should be cut? In agriculture alone, there are numerous programs that rely on state funding. Programs that provide basic services, such as meat and poultry inspectors so our livestock can be processed, the grain warehouse programs that perform inspections to make sure grain is secure, weights and measures standards that ensure scales are correct, fertilizer and pesticide applicator testing programs so we can get our licenses to apply our inputs, and many more. Then there are other programs such as Soil and Water Conservation Districts, University of Ilinois Extension, county fairs, ag education, and AgrAbility Unlimited. Where should the cuts be made? Others state that taxes need to be increased to address the fiscal crisis. Which taxes could be increased? See Intersection, page V4
MAPPING IT OUT Should the Illinois Farm Bureau support increased cuts in state program funding? If so, what programs should be cut and to what levels? Should policy support changes in the way state pension systems provide retirement benefits to state employees and teachers? Should the Illinois Constitution be amended to remove the current guarantees for benefits currently earned by state employees and teachers? Are there acceptable tax increases or tax expansions? If so, which ones and to what levels? Should policy be open to a "graduated state income tax?" Is there a need for increasing the state motor fuel tax or should the current gallon tax be changed to a mileage tax? Should users of specific programs or individuals seeking state permits see fee increases?