Could Electing a Republican Governor in Illinois Stem the Tide of Outward AGI Migration?
Back in March, venture capitalist Bruce Rauner won the Republican primary over three formidable opponents. He is now the man chosen by Republican voters to take on Governor Pat Quinn in the November gubernatorial election. Rauner is not a politician. He is a wealthy businessman who is starting his run with an estimated $6 million war chest of his own money. While certainly not the first businessman to enter the fray of politics, this Republican candidate is now beginning to gain the attention and support of many of Illinois’ Democrat voters as well. These are voters in a state that has been dominated by Democrats (in both chambers of the legislature as well as in the governor’s office) since 2003. Likely voters in both parties are apparently growing tired of the “status quo” in their state, which includes widespread corruption and deterioration of services. Four of the last seven governors are incarcerated, including the last two men to hold the office.
Between 1992 and 2011, the state of Illinois lost just over $31 billion in adjusted gross income (AGI), due to tax related outward migration. The 2013 chiefexecutive.net ranking of Best and Worst States for Business ranks Illinois as number 48, followed by only New York and California. And in a recent poll conducted by wallethub.com and reported by cbsnews.com, the state of Illinois ranks 47th in overall taxpayer burden (it’s 29 percent above the national average). From these statistics alone, it is clear that voter concerns are well founded.
With seven credit-rating downgrades since June 2010 and a growing unfunded pension liability currently standing at $100 billion, Rauner calls the current governor a “failure.” Often considered “a bull in a china shop” by those who know him, Rauner is also very direct. In words perhaps not grammatically correct, he went on to say, “We’re going to get him gone in November.” The new gubernatorial candidate has a basic plan that he laid out to voters during his campaign. First, he intends to cut costs and run Illinois like a business profit center. Secondly, he promised to take on the unions and the nation’s worst-funded state pension system, which is the largest burden on the state budget. Mr. Rauner points to the efforts and successes of governors Scott Walker of Wisconsin and Mike Pence of Indiana, in this extremely contentious venture.
From a taxation standpoint, with costs under control, Rauner supports rolling back state income tax rates to 2010 levels, and allowing the 2011 individual income tax increase to roll back from 5 percent to 3.75 percent when it expires in January 2015. Looking to put the state in a competitive position with others around the country, Rauner plans to review the entire state tax structure, including corporate taxes, fuel taxes, sales taxes, and real estate taxes.
Needless to say, as with any tax reduction plan, there is also strong opposition. Local school districts and religious organizations are very vocal about the potential revenue shortfall and the huge bite it could take out of their ability to perform their services.
However, in a recent Gallup poll published in USA Today, residents were asked their level of pride in the state in which they live. The results showed that only 19 percent of Illinois respondents have pride in living in their home state. Based on this result, Gallup listed the State of Illinois as the second-worst place to live, behind only Rhode Island. Not surprisingly, the two dominant reasons given were high taxes and corruption. If these numbers hold true in November, there could very well be a changing of the guard in Springfield and a new direction for Illinois — upwards.