Rauner's Plan - Back Home Again in Indiana

Rauner’s Plan…Back Home Again in Indiana…

The other evening on Chicago Tonight, one of the incoming eager freshman Representatives (Rep. Breen of Lombard) excitedly suggested that our new Governor would be following the Mitch Daniels’ playbook to economic success.  Less than a week later, Rauner moved deftly to eliminate “fair share” for nearly 7000 workers in the public sector.  It wasn’t a shot across a bow; it was a frontal assault and clear declaration that Rauner is not going to play nicely (as he earlier offered) with Speaker Madigan or Senate Leader Cullerton, whom he originally cast as crooks in his successful bid for office. 

The Mitch Daniels playbook – like Rauner – isn’t really very complicated.  There are only a few major plays, and they’re likely to be run just as tutor Daniels of Indiana quarterbacked his state when he too assumed office.

Cap property taxes, negate any influence by unions, streamline and/or privatize services for the people, narrow the definition(s) of public assistance, restrict the worker compensation laws, reduce commitments to Medicaid, increase the number of Charter schools, reduce the overall population of state employees, cling to a flat income tax structure, etc.   

In the mind of our new Governor – and the Illinois Policy Institute and the Civic Committee and many of the righter-wing Republicans in the General Assembly – this new offensive will bring Illinois back to economic preeminence.  As a state, we will once again become a serious economic player, no longer the target of Indiana’s taunts on billboards overlooking our freeways.    “Stillannoyed…”   

Mitch Daniels, now the president of Purdue University still likes to crack wise about his neighboring state by acting amazed whenever Illinois does something well: “Hey, look, they (Illinois) had a successful program!” (re: tax delinquency amnesty) In fact, Daniels often joked that Illinois' near presence made his job easier.

But what will a more Hoosier-like Illinois look like exactly? 

Well, according to most serious research (as I pointed out last blog) it would be difficult to forecast, because each and every state carries a myriad variables from weather to education levels that can impact each significantly.  And to say simply that making our state a completely RTW (right-to-work) state will increase employment, even a little, is a stretch.  But Rauner, the Illinois Policy Institute and the Tea Party extremists of the Republican General Assembly will disagree – and most vehemently, as usual.

According to the Illinois Policy Institute, people are fleeing Illinois. “Recent data from the Internal Revenue Service shows that, in 2009, Illinois netted a loss of people to 43 states, including each of its neighbors – Wisconsin, Indiana, Missouri, Kentucky and Iowa. Over the course of the entire year, the state saw a net of 40,000 people leave Illinois for another state…Why are so many people leaving Illinois? Because the state’s poor public policies are forcing them out. Public policies drastically influence quality of life. On average, Illinois residents are leaving for states where they can have a higher standard of living“ {my emphasis}

(https://www.illinoispolicy.org/reports/still-leaving-illinois-an-exodus-of-people-and-money/).

But, according to the numbers, Indiana has been influenced as well by the Great Recession…and people are leaving that state too (http://www.governing.com/gov-data/state-census-population-migration-births-deaths-estimates.html).  The gainers in incoming migrant populations of an economic workforce looking for greater opportunity have been – as you might have guessed – Texas and North Dakota.  Other states continue to be southern sunny/golf areas where retirees go to reside in comfort.  But the IPI likes/loves to use Indiana as a foil to any economic issues facing Illinois.

And in one case, they are not wrong in their one-sided position.  Illinois does face an unfunded pension liability so large and looming that it found it necessary to raise income taxes several years ago for citizens and for corporations.  That, of course ends possibly this year.

After a few years with Daniels at the helm, in 2012 Indiana actually had a surplus. In fact, Indiana, during the height of the Great Recession was able to provide a refund to its citizens in income tax rebates.  These refunds were greatly welcomed by the populace. 

“Single tax return filers will get a $111 tax credit next year and joint filers will get $222 because the state surplus went over $2 billion. Eyewitness News caught up with some shoppers Wednesday to find out what the tax credit means to them.  It is that time of year when Hoosiers are out shopping for the holidays. Valarie Konger is among them. She was picking up last minute items before Thanksgiving. Her goal is to stay within her budget.

‘I think everybody wants more money. I know I do!’ she said”  (http://www.wthr.com/story/20157863/every-indiana-taxpayer-gets-111-automatic-refund ).

On the other hand, the costs for people in Indiana to follow their past Governor’s recipe for economic strength has left much of the state’s with services sorely lacking, industries struggling, and people willing to do just about anything and earn just about nothing to put food on the table.  Standards of living?

Unemployment rates in Illinois AND Indiana both hover above the national average – Indiana at 5.8% and Illinois at 6.2% (national average at 5.6%).  But workers in Illinois receive a minimum wage 17% higher than workers in Indiana.  And, with the collapse of the unions in a Right to Work state, one disgruntled worker described Daniels’ brave new experiment as somewhat lacking: “Mr. Meece, a trim ex-marine, gest $14 an hour when he works.  A decade ago, he earned multiples of that. ‘Nothing is union anymore,’ he says. ‘You’re just a day laborer’” (http://www.nytimes.com/2011/06/23/us/23indiana.html?pagewanted=all&_r=0)

Median income in Indiana has fallen by 15% in the last decade according to the New York Times, and “the so called real unemployment rate, which includes those too discouraged to work, stood at 17.4% last year (2011). And the percentage of Indianans who participate in the work force has dropped in the past two years, much faster than in Illinois and Ohio to the east” (see above NYT).

This, according to the Economic Policy Institute makes perfect sense: “But even as a policy of ‘immiseration makes growth,’ it doesn’t work. According to statistical studies (which I compiled in a paper for the Economic Policy Institute titled “Does ‘Right-to-Work’ Create Jobs?”), the impact of RTW laws is to lower average income by about $1,500 a year and to decrease the odds of getting health insurance or a pension through your job—for both union and nonunion workers. But while RTW succeeds in cutting wages, it fails to boost job growth”(http://www.thenation.com/article/165599/what-right-work-means-indianas-workers-pay-cut).

Not surprisingly, personal bankruptcies in Indiana also outstrip Illinois.  While no one can touch Nevada’s 11.1 bankruptcy filings per 1,000 residents, Indiana leads Illinois in bankruptcy/family by an unsettling 13% (http://www.creditcards.com/credit-card-news/nevada-state-bankruptcy-per-capita-q4-2010.php).  More than 7 in 1000 Indiana homes files for bankruptcy in 2010, during Daniels’ great recovery. 

Education was not an escapee of the playbook either.  Remember that Rauner is a devotee of the concept capping or freezing property taxes in Illinois.  In Indiana, many have learned that “you get what you pay for,” and providing a cap to property taxes in their state constitution has left many of the state’s school districts flailing to make educational programs available if not viable.  Indiana’s school districts – a state which also clings to its mandate to teach evolution as science -  have been the most vulnerable victims of the capping of property taxes to one percent of assessed valuation for homes. 

With funds limited and/or disappearing, many Indiana school districts struggle with maintaining structures, keeping a talented work force, providing comprehensive curricula to ever-increasing sizes in classrooms.  While taxpayers in Indiana gained over $700 million in savings overall, their lack of largesse for services prevented school districts from receiving more than $245 million in property tax assistance for running schools.  In fact, new initiatives in the Indiana playbook will require greater limitations on taxes for businesses, equipment, etc.   Kyle Stokes of Indiana Public Media created a short video demonstrating just how injurious the tax caps have been to struggling districts in Indiana, while Mitch Daniels has identified increased Charter Schools as a significant mover in Indian’s future.  Watch the video and understand Rauner’s plan’s eventual effect:

http://indianapublicmedia.org/stateimpact/2014/02/04/video-indianas-property-tax-caps-impact-school-districts-bottom-lines/

Like the meager and laughable bone of minimum wage he threw to the General Assembly the other day during his state-of-the-state speech, Rauner has no intention of letting anyone except the wealthy off the hook when it comes to the fiscal pain he is about to bring to our state. 

His first play from scrimmage is RTW.  Daniels may be his model, but Wisconsin’s Scott Walker is another Rauner  emulates.

Walker also knows the playbook.  When first elected, he proclaimed: “We can no longer live in a society where the public employees are the haves and the taxpayers who foot the bills are the have-nots” (http://www.thenation.com/article/165599/what-right-work-means-indianas-workers-pay-cut).

Rauner’s plan, like Daniels’, is to create an angry division between the have-less (as in Indiana) and the have-anything (pension, collective bargaining, job security).  In the end, like Valarie Konger who is trying to make ends meet, we can be exuberant with our trip to Wal Mart – but it will be at the expense of roads, education, or services we might ourselves eventually need.