Back in June of 2015, in “The
Razor blade in the apple,” I speculated about the likely effects if passed
of Mr. Rauner’s ballyhooed property tax freeze. Among its provisions, the Rauner tax
freeze would exempt local governments from the Prevailing Wage Act and allow
those governments to limit what is on the table when they sit down to bargain
with public employee unions.
It all sounded a
bit dodgy to me. Take the Prevailing Wage Act, which sets a locally
controlled floor for construction pay on taxpayer-funded projects. I wrote,
As I understand
that law, it doesn’t require, say, the city of Springfield to pay Chicago
wages, only that local governments in Springfield pay the wage – usually the
union-negotiated wage – that prevails in Springfield. I’m not convinced that
this is inimical to government efficiency. Construction is only a fraction of
the cost of public works, the cost of labor is only a fraction of the total
cost of public works construction and the difference between paying top local
wages and paying less than top is a fraction of labor costs of public works.
I didn’t really
expect anyone to take my word for it, since my conclusions were merely I
reasoned from general principles. Happily, Rich Miller has looked at some of
the same points, this time reasoning from numbers provided by Rauner’s staff in
a blog
post that appeared on his Capitol Fax.com site on Jan. 14 and
later in his column that appeared in our paper on Jan. 21.
Even if every single local school district
throughout Illinois immediately stopped paying prevailing wage rates on
construction projects (not gonna happen) and even if eliminating the prevailing
wage does indeed save as much as the Anderson study projected (doubtful),
school districts could’ve saved a grand total of 0.74 percent of their property
tax budgets, which is not much more than a rounding error. Now figure, in
reality, savings of at most half that amount and we’re looking at about a third
of a percentage point. That’s not even a rounding error.
Miller also examined the likely effects
of others of Rauner’s plans to put the state’s finances on a stable basis.
Here’s some of what Rich concluded:
Personal income tax savings by ending out-migration
of Illinoisans to other states: $140 million
Revenue growth by lowering the Illinois unemployment rate
it “average:” $150 Million
Revenue growth if Gross State Product is raised: $220
Million
All this pain
inflicted to maybe produce an additional $510 million in
revenues — a 1.4 percent increase over the
State of Illinois’ Fiscal Year 2015 budget.
In the end, Miller concluded that the
Turnaround Agenda, even if it could be passed, “wouldn’t produce enough revenue
to pay the juice on money owed to the state’s vendors.”
These conclusions are based on Rauner’s own
numbers, by the way. The centerpiece of his plan to save Illinois is a fraud.
Pass it on.
This article appears in Jan 21-27, 2016.
