The war of the 'woulds'

February 9, 2007

One of this 159-year-old newspaper's core legacies is its conviction that government should intrude as little as possible on the lives of the citizens it serves. So when government says it needs more money from your pocket, this page sets a high burden of proof.

Today we propose a necessary increase of $3 billion in state tax revenues for an aggressively reformed system of public education in Illinois. We believe the proof of need is there.

That increase in schoolfunding should be inflexibly contingent on school reform. More money should not simply be ladled atop the system of education most children now experience.

This series argues that we don't devote enough dollars to education--and don't get enough in return for the dollars we devote. Prior installments urged specific steps to increase the accountability of public education here--and advocated proven strategies for parlaying new revenues into student achievement.

Policy debates about how fully the State of Illinois should fund education devolved decades ago into an uninspiring war of the "woulds."

Proponents of various rival revenue schemes say their plans would reduce our schools' reliance on much-resented property taxes, or would treat rich and poor districts more equitably, or would relieve state government's rising indebtedness. Opponents of these schemes say a tax increase would cripple many Illinois businesses, would discourage others from creating jobs here, would dump good money after bad.

After parsing these arguments--we could fill a page on each, so count your blessings--we're not sure that this dueling melodrama is justified.

We have, though, become sure of a few things:

Without more revenue, Illinois can't afford a meaningful rise in school funding. A scandalous habit of allocating tomorrow's revenues today has put Illinois on a path toward "financial implosion," as the Civic Committee of the Commercial Club of Chicago warned in December: Because the state owes $106 billion--a number that's rising, not falling--Illinois can't meet its current obligations, let alone absorb new ones.

The state needs to make progress on its various crises, but fixing education, to improve the prospects of Illinois' economy, comes first.

Increased funding needs to come from a stable and broad-based revenue stream that grows with the state's economy. No one-shot gimmicks.

The governor of Illinois is in his fifth year of pledging to veto an increase in state sales or income taxes. Couldn't legislators override a veto? Not likely. Many of them are too skittish to push that hard for any tax hike--especially against a governor who shows no sign of flinching.

So what's a reasonable approach to raise more dollars for Illinois schools? That's a question both of economic policy--What's the least harmful way for governments to raise money?--and of re-election politics. It's a question that has gridlocked Springfield for decades.

There are many ways to boost revenue, each with pluses and minuses. We favor one tax scheme, an unorthodox proposal to break the gridlock. But the tax scheme that would most help Illinois schoolchildren is whichever one lawmakers summon the courage to enact--in conjunction with education reform--in 2007.

A sampler of the basic schemes and themes:

Legislate a so-called "tax swap"

That phrase is wonkspeak for reducing property taxes that go to schools, while hiking state income taxes. The property tax cut supposedly would put citizens in the mood for a companion tax increase to help schools. This has been a loser in Springfield, in part because many taxpayers think it's a ruse: They suspect any drop in property tax bills would be short-term. They don't trust a swap. This idea has failed too often, because too many voters see it as misleading.

Raise the state sales tax

Political Fact No. 1: Democratic lawmakers dislike sales taxes, which consume a big share of low-income families' money. Illinois collects 6.25 percent on most goods and shares one-fifth of that with local governments. Some of those local governments then pile on additional sales taxes. Bottom line: This is a regressive tax that many legislators won't want to raise much if at all. Netting $3 billion would require hiking the state sales tax by 2 percentage points. Tough sell.

Tax services