(The following is the text of a talk Rich Whitney gave on September 27th at the Rally for Campaign Nonviolence in Carbondale.)
As the State budget stalemate in Springfield drags on, I detect an unfortunate mix of complacency and exasperated resignation in the public mood. But my message today is that we literally cannot afford to be complacent. There is too much at stake, including human lives.
To recap what brought us here: The governor proposed a budget with unacceptable cuts to higher education and public services in Illinois that was rejected by the Democratic-controlled General Assembly. The Assembly proposed a budget that contained less severe cuts but which was out of balance by $4 billion, so the governor vetoed it. He has offered to consider raising new revenues to reach a more acceptable – or less destructive – budget, but only if the General Assembly accepts his misnamed “turnaround agenda,” which includes new cutbacks to workers’ compensation benefits and attacks on the rights of workers to organize. So here we are. It’s day 89 of the hostage crisis.
Because most Illinois government agencies are still being funded and state workers paid, most Illinoisans are not personally feeling the pinch – yet. But make no mistake, it is a catastrophe; it is simply a catastrophe that is unfolding in slow motion. And the people who are getting hit hard first are, mostly, the most vulnerable members of society, whose voices are seldom heard or acknowledged in the corporate media.
Child care services are being slashed. 168 families from the southern 15 counties in Illinois have been dropped from the Child Care Assistance Program. Ninety percent of recipients work full-time. LIHEAP, which helps low-income people pay their energy bills, has cut its services. Here in Southern Illinois, the Sparrow Coalition has documented cuts to Attucks Community Services, which serves low-income children and their families, and has suffered staff reductions affecting the provision of after-school tutorials, community gardens program, health services, and more. The Boys & Girls Club of Carbondale has lost funding for a curriculum of prevention education, academic support, and positive youth development activities. Centerstone, the largest behavioral treatment provider in Southern Illinois, providing mental health services, substance abuse treatment, and developmental disabilities services, had laid off 17 employees due to the budget stalemate.
The Delta Center, which served 300 patients across Southern Illinois with mental and substance abuse disorders, HIV / AIDS, adolescents, and criminal justice clients has been closed. The Family Counseling Center in Cairo took over the state permits for three of the eight Delta Center properties but retained just 35 percent of its staff. The Franklin County Juvenile Detention Center methamphetamine treatment program ended July 15. The program in the Benton detention center helped treat children in roughly 40 counties of Illinois for the past nine years. Good Samaritan Ministries our local emergency shelter, with transitional housing, a soup kitchen, food pantry, and an emergency assistance program, stopped receiving state funding on July 1, and, despite charitable contributions to help compensate, will soon be forced to cut services.
Twenty percent of county health departments statewide have reduced their staff since July 1st. The Jackson County Health Department will reduce hours and cease operations on Fridays. The Franklin-Williamson Bi-County Health Department has laid off a dozen employees in the last five months. Funds for Meals on Wheels and other state elderly support programs are being withheld, forcing some of Illinois’ senior centers to shut down and/or lay off employees.
Southern Illinois University is using other financial reserves to maintain operations but cannot do so indefinitely. President Randy Dunn has already announced a period of retrenchment, because, even if something like the Democratic budget plan had passed, that still would have meant an 8.75 percent cut in state funding, on top of years of prior cuts.
I could go on. But the real tragedy here – and the real opportunity to turn things around – lies in realizing that none of this is necessary. The problem does not lie in a lack of solutions. Providing adequate funding for our budget and our public pension obligations is not an insuperable problem. The problem is one of political will, and, therefore, getting enough people to demand the enactment of these solutions.
The underlying causes of the state’s budget crisis has nothing to do with having an overly large or expensive state government. Illinois has already been cutting education and services since 2002, total state employment has been cut by 10.5 percent between 2002 and 2012, and Illinois now has one of the lowest numbers of state employees per capita in the U.S.
The state’s pension crisis has nothing to do with exorbitant public pensions, since Illinois ranks in the bottom one-fifth of all states for average retirement benefits paid to its state workers. It was fundamentally caused by many years of state government borrowing from the pension systems and deliberately failing to pay into them as needed.
The root causes of the state’s budget and pension crisis lie primarily in its highly regressive tax system. When the combined impact of all Illinois taxes on different income groups is measured, Illinois taxes the bottom 20 percent of income at almost triple the percentage of the top one percent. Our tax system is one of the most backwards in the United States – we tax poverty instead of wealth, yet legislators and others act baffled by the State’s inability to pay its bills. We have a structural deficit, which is a fancy way of saying that, year after year, our tax revenues cannot possibly meet fund the most basic, core functions and obligations of state government – like helping the truly needy, public health and safety, transportation and education. But instead of fixing the problem, a succession of both Democratic and Republican governors and General Assemblies, going back decades, thought it was a much better idea to short-change the pension system, not make needed payments, using that revenue to balance the budget, and let future taxpayers deal with the problem. So here we are, day 89 of the hostage crisis.
This means that the solution lies in fixing our regressive tax system. The longer term fix would be to do what the federal government and the majority of states do: Enact a progressive or graduated income tax, so that people who receive higher incomes pay a modestly higher percentage of that income in taxes. That will require a constitutional amendment in Illinois, but if ever we needed to use the amendment process, now is the time to do so.
A shorter term but more dramatic solution lies in recognizing that Illinois operates two of the largest financial markets in the world, the the Chicago Mercantile Exchange (including the Chicago Board of Trade) and Chicago Board Options Exchange, trading hundreds of trillions of dollars’ worth of futures, options and other derivatives each year;
A proposal to require buyers and sellers of these derivatives to each pay a $1/contract fee to the State of Illinois on all agricultural futures and futures options and a $2/contract fee on all other trades, would amount to less than 1/1000ths of one percent of average contract value, yet would generate approximately $10 billion in revenue annually, enough to solve the current budget crisis.
Financial transactions taxes of this type have been successfully implemented in more than 25 countries without causing any exchanges, or significant volume of traders, to trade elsewhere, including in London, Hong Kong and South Korea, among the highest-volume exchanges in the world. Experience demonstrates that such a tax would be too small to cause traders to trade elsewhere, yet it would still be enough to solve our budget crisis. Furthermore, some of the derivatives traded on these exchanges are exclusively licensed by the Securities and Exchange Commission to be traded anywhere else.
All Illinois consumers, even the very poorest, generally pay sales taxes of 8 percent or more for necessities, depending on where you live. It is only fair that wealthy speculators in Illinois pay a sales tax of a tiny fraction of a percent to help maintain the system from which they have reaped such largesse. We already tax gambling, sometimes to the detriment of the poor and desperate. It is time to include the biggest casinos in our state.
This proposal is sometimes called the “LaSalle Street Tax,” named after the Chicago street where large-scale financial trading occurs. A version has been introduced in Springfield by State Rep. Mary Flowers – H.B. 106, the Financial Transactions Tax Act, but unfortunately, it sits where many good pieces of public policy go to die, stuck in the Rules Committee. I ask you, if you have not done so already, to take one of our informational flyers, bring it back to the organizations you work with and get them on board, to contact your state representatives, and Speaker Madigan, and join us in DEMANDING the enactment of the LaSalle Street Tax proposal – for the sake of all of us who want public services and education in our State restored to full fiscal health.
In other words, do it for the sake of all of us who desire to live in a civilized society.