CHICAGO – Like most states, Illinois finds its budget severely stressed. Gov. George Ryan has informed the legislature of an almost $700 million deficit and outlined a program of drastic budget cuts.

Critics of the cuts, including organized labor, pointed out that the recession is the product of overproduction; i.e. there are more goods than people with money to buy them. Therefore, actions that take money out of the hands of the public – by laying them off from state jobs, or cutting helpful economic programs – will deepen the recession. Better to budget more so that people will have money to spend and stimulate the economy.

Ryan’s original proposal included cuts to Medicaid at a time when more and more people were losing their health insurance because of layoffs and when hospitals serving low-income populations were more strapped than ever. Other cuts included reductions in educational programs for state prisoners.

Activists called this “penny wise and pound foolish,” because statistics show a strong relationship between lack of educational advancement in prison and recidivism, or the tendency of released prisoners to end up back in jail, living at the expense of the state and not paying taxes or otherwise contributing to the economy. Ryan backed off on some of the proposed cuts to prison education.

The bipartisan and labor-supported Center for Tax and Budget Accountability (CTBA) examined revenues as well as expenditures and came up with ways of bringing in more revenue that would net Illinois nearly four times the money found in Ryan’s original tax cut process – almost 2 billion dollars.

A few of these include:

• Pooling prescription drug purchasing by the state and purchasing in bulk, thus saving huge amounts.

• Keeping the Illinois estate tax, which is tied to the federal tax and, therefore, will disappear as the latter is phased out. But the two could be disconnected and the Illinois estate tax kept, with a saving of an amount equivalent to almost the whole original budget shortfall.

• Increasing taxes on cigarettes and gambling, which will discourage these behavior patterns, while also bringing in very large amounts of revenue.

• Closing corporate tax loopholes, which, for example, allow corporations to go back two years and forward 20 years in listing their losses when calculating their income taxes for a given year. The CTBA advocates eliminating the “backward” inclusion of losses and reducing the “forward” inclusion from 20 to five years.

These measures would get rid of the necessity of closing programs and laying off rank-and-file service workers. The burden would be shifted onto the shoulders of the corporations and off the backs of the poor and working class.

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