CHICAGO (CBS) — The Illinois budget is in chronic crisis with red ink, debt and gridlock being the norm for years now.
But a headline in the Minneapolis Star Tribune paints a very different picture from the Prairie State – ”Budget Surplus Swells To $1.5 Billion.”
How did a nearby state turn around its financial mess?
“We took over in beginning of 2011 and we had an almost seven percent unemployment rate. We had a 6.2 billion dollar deficit,” said Minnesota Budget Commissioner Myron Frans.
That’s the bleak economic landscape faced by Frans and his boss, Minnesota Governor Mark Dayton, when they entered office.
Eight years later, a huge turnaround.
“Minnesota created over 318,000 jobs in the last eight years. Our unemployment down to 2.8 percent, the lowest in about 20 years,” said Frans.
That’s the kind of fiscal stability and economic growth llinois can only envy. But it’s how they did it in the “Land of 10,000 Lakes” that’s surprising.
“We realized the first thing we had to do was to stabilize revenue. And in order to stabilize revenue and fund government that means we needed to increase taxes,” Frans said.
Especially on the wealthy. While Illinois has a 4.95 percent flat tax for everyone, Minnesota raised its tax on couples earning over $250,000 from 7.85 percent, to 9.85 percent.
“We’re continuing to see income growth, wage growth and we now actually have more jobs available than we job seekers,” according to Frans.
Incoming governor J.B. Pritzker is also pushing to raise taxes on Illinois’ wealthy and the Minnesota blueprint thrills his supporters.
“I’d love to be more like Minnesota,” said Bob Reiter of the Chicago Federation of Labor. And while Illinois is drowning in pension debt, Minnesota reformed its failing pensions. Employers and workers pay more while retirees get less.
“They wanted to make sure those pension funds were available continuing in the future,” said Frans.
But Illinois’ unions reject pension reductions.
“We’ve been fighting this for as long as I’ve been at the Chicago Federation Of Labor. And that hasn’t changed,” noted Reiter.
Problem is, many analysts believe raising taxes alone won’t fix Illinois budget problems, unless pension spending is also addressed. And Myron Frans said Minnesota has carefully watched its spending.
Something Springfield has never been known for.
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December 13, 2018 at 05:39PM