The day after unveiling a new budget blueprint for the coming fiscal year, Gov. Bruce Rauner followed that up with a televised campaign ad that portrays the re-election seeking incumbent as “leading the charge” to cut taxes for working people in Illinois.
The Rauner ad takes aim at Democratic House Speaker Mike Madigan, the governor’s frequent nemesis, who gets blamed for imposing a $5 billion tax increase last summer over Rauner’s objection. At 14 seconds, the spot says: “Bruce Rauner vetoed the Madigan income tax increase, and now Rauner’s leading the charge to reverse it. The Rauner plan: More take-home pay for working families, lower taxes for job creators and $1 billion in tax relief for Illinois.”
Rauner didn’t actually include that tax cut in his spending plan, which ironically relies on the revenue bump from the very tax increase he assails. But he did argue in his speech to lawmakers that an overhaul to state pensions could be used to fund a “nearly $1 billion tax cut.” Though Rauner rounded up, the value of the proposed tax cut is noted in the governor’s budget book as $917 million.
At the same time, however, the Rauner budget did anticipate separate cost saving initiatives which, if realized, would over several years shift responsibility for more than $1 billion in expenses for teacher pensions off the state books and on to local property taxpayers.
Given all that, can Rauner really lay claim as he does in his ad to having a plan for $1 billion in tax relief? We decided to take a look.
Election year wish list versus realpolitik
His latest offering appears constructed with more care. Not present, for example, was the major asterisk he slipped into his 2017 budget which attributed more than $4 billion in savings to a legislative compromise that had not been hammered out and never was.
That said, the latest budget offering and tax-cut plan from Rauner has its share of difficult-to-achieve contingencies and faces challenges both in the Legislature and likely the courts as well.
First, Rauner would need the Legislature to pass a pension-reform bill that upends the current formula for calculating future benefits. The governor didn’t put forward a specific proposal but he said the idea is based on a model that makes employees choose between annual salary increases and cost of living increases to pension benefits.
What’s more, just months after Rauner took office in 2015 the Illinois Supreme Court unanimously struck down a sweeping pension reform plan approved two years earlier. The court found that the state Constitution says retirement benefits, once offered to public workers, can not be “diminished or impaired.”
At the same time, however, the court hinted that it might be possible to change the structure of pension benefits as long as employees got something of equal value in return. The concept has never been legally tested.
So even if lawmakers and the governor agreed on a pension-reform fix, it almost certainly would face a court challenge with an uncertain outcome.
The idea that the very difficult pension reform would be ironed out in the coming months leaves critics skeptical of Rauner’s plan. On top of that, the governor would have to convince the Democratic-controlled Legislature to then partly reverse the income tax increase it passed, with some Republican votes, last year.
“It needs legislative approval on the front end and back end and a Constitutional review in the middle — other than that it’s golden,” said Ralph Martire, executive director of the Center for Tax and Budget Accountability, a Chicago-based think tank partly funded by labor unions.
Rauner’s campaign staff did not respond to questions from the BGA about the governor’s tax cut claim. Also left hanging were questions about the pension spending shift which over time could force local schools to seek significant property tax hikes.
Separately, the governor’s office did issue this statement: “We don’t need pension reform to balance the budget, but if we can take that extra step we can put nearly $1 billion back in taxpayers’ pockets and begin to roll back the tax hike with a 1.4 percent tax rate cut. We look forward to working together with legislators on both sides of the aisle to pass these vital reforms and get Illinois moving in the right direction.”
Rauner says he has a plan for “$1 billion in tax relief for Illinois” tied to a pension overhaul. But that statement is suspect on multiple levels — even for a campaign commercial. There is no actual plan to examine.
The “plan” consists of brief mentions in a more than 550-page budget proposal and a few lines in a speech, but no details were provided to explain how the savings would be implemented or calculated. However, the tax cut was then featured prominently in a re-election campaign ad the day after Rauner unveiled his budget.
What’s more, Rauner’s budget does include separate provisions to shift teacher pension costs off the state books and on to local school districts where property taxpayers would likely have to collectively pick up a tab costing more than $1 billion.
Rauner’s ad highlights a vague $1 billion tax cut plan, but makes no mention of the added expense to local taxpayers that would be the practical effect of his pension cost shift. His tax cut claim should not be considered in a vacuum, which is why we rate it Mostly False.