In 2010, Wisconsin was an economic disaster. Newly elected Republican Governor Scott Walker did the unthinkable when he started cutting state spending and reducing the deficit. Since that time, he has turned Wisconsin’s economy around. His economic policies have created jobs and revitalized neighborhoods and families. Without the help of a Republican controlled state legislature, Walker could never have accomplished what he has.
On January, 12, 2015, Bruce Rauner will be sworn in as Illinois’s 42nd governor. The Republican is facing a similar situation that Walker faced in Wisconsin four years ago. The only difference is that Illinois will still have a Democratic controlled state legislature who has already indicated that they have a much different agenda for the state than Rauner does.
Under the leadership of Democratic Governors Rod Blagojevich and Pat Quinn, Illinois’s economic status is dismal at best. If you recall, Blagojevich was impeached and removed from office because of corruption charges and Quinn, who was his Lieutenant-Governor just took over where Blagojevich left off.
Quinn and fellow Democrats did their best over the past two years to hide and cover up the true state of the state’s economy. One source described their methods as full ‘of the gimmicks and short-term stunts lawmakers used to mask how bad things are.’ From what I’ve been able to ascertain, their creative budget policies could rival the juggling skills of Cirque du Soleil’s best performers.
Preparing to take the helm of a nearly sinking ship, Gov. Elect Rauner has had a chance to take a closer look at the state’s true situation and he stated:
“The deficit is far worse than has been discussed.”
Rauner has indicated that he would like to work on the state’s deficit by cutting out of control spending. However, the Democratic controlled state legislature has gathered for a few more days in December before breaking for the Christmas holiday and they don’t look like they plan on stopping their spending ways.
One of the pieces of legislation they are contemplating is the expansion of state government by the establishment of a state health insurance exchange under Obamacare. The Senate has already approved the measure and now a House committee has voted 9-6 to send the matter to the House floor for a vote. They want to get the measure passed and onto the desk of out-going Gov. Quinn.
Democrats claim that establishing a state run exchange would help the state get up to $270 million in federal money. Residents who use the federal exchange pay a 3.5% fee for doing so. Under a state run plan, the state would charge a similar fee and would thus pay for itself.
However, state Republicans have pointed out that many states that have established their own state exchanges and received federal funds are already running into budget shortfalls. Establishing state exchange programs have generally cost far more than originally estimated.
In order for the state exchange to pay for itself, they would need a minimum of 500,000 people to sign up through the state exchange and pay the state fee. In the first year of Obamacare, the entire state of Illinois only had 217,000 people sign up for health coverage through the federal exchange.
So what happens to the ‘pay for itself’ argument being used by Democrats if fewer than 500,000 people sign up through the state exchange? It seems that state lawmakers will have three options: increase the fees they charge, use tax revenue assigned for other purposes or raise state taxes. Two of these three choices are going to hit taxpayers in their wallets which will not go over very well.
With a state economy facing a greater than reported deficit and Democratic lawmakers working hard to further expand state government, Rauner definitely has his work cut out for him starting in January. Will he be able to save his state from financial ruin or will the Democratic controlled legislature continue to run the state into bankruptcy like they did in Detroit?