A Not So Grand Bargain

The Illinois legislature is attempting to devise a compromise budget bargain that will satisfying both political parties and the governor.  The state is in a two and half year budget crisis that started when Governor Bruce Rauner vetoed the first budget of his term in office in 2015. In fact, no budget has been approved during his administration.  There are some observers who believe there is hope this year, but there are only a few days left in the legislative session.  Much has been written about the backroom, closed door negotiations between the state’s Democrat and Republican lawmakers as they try to reach a compromise that satisfies both parties and addresses the issues important to the Republican governor.  He has said he will veto anything that fails to meet his criteria.  The compromise is being called “The Grand Bargain” and as one might expect, it includes some grand plans for new casinos in Illinois.

“There is a grand bargain being negotiated. I believe new revenues through the casino are part of that grand bargain, and I’ve said I’m open to whatever package can move the needle to a balanced budget, and I’ve said I’m open to local control. So the answer is, if that came as part of a package, I could be supportive of that,” Governor Bruce Rauner said.

Calling the bargain “grand” is rather grandiose as the term connotes some truly Grand things such as the Grand Bazaar, Grand Canal, Grand Place and numerous Grand Hotels.  The Turks started building the Grand Bazaar six hundred years ago; the Grand Canal is as old as Venice. The Grand Place in Brussels began as a market in the 12th century and the hotels for the most part were creations of 18th and 19th century culture.  It is difficult for me to put a political bargain in Illinois in that category.  However, I suppose for those waiting for the state to pay up it would at least be a grand bargain if they get their money.  Illinois currently has $14 billion in unpaid debts because it is operating without a budget.

For the gaming industry, the important elements in the compromise include as many as six casinos, one of which would be in Chicago with another possible in Springfield.  A new and lower casino revenue tax is being suggested which might help the existing industry.  But if Illinois ends up with six additional casinos, a tax break is not going to make up for the revenue lost to those new casinos.  I see no upside to the expansion for the state’s casinos; in the aggregate the state would probably have more total revenue from casinos.  However, the grand bargain’s potential for success does not hinge on the casinos; it is dependent on meeting Governor Rauner’s criteria.  The Republican governor is a first term politician and a businessman.  Bruce Rauner ran on a turnaround platform promising that for any budget to receive his approval it must freeze income and property taxes, change collective bargaining and prevailing wage laws, increase sales tax to areas currently not taxed, consolidate local government bodies and impose term limits.  Thus far it has been a contentious and bitter battle for ideological control between the governor and the lawmakers.

“The governor may have underestimated just how strong the Democrats’ resolve was not to turn their backs on their traditional allies, as well as the Democratic leaders may not have appreciated how strongly the governor felt about trying to impose some of those turnaround agenda items in exchange for a tax increase,” Jak Tichenor, interim director at the Paul Simon Public Policy Institute at Southern Illinois University at Carbondale said. Decatur Herald & Review, 5-21-17

The governor has indicated he is prepared to finish his term in office without a budget.  He is willing to make the issue the centerpiece of his campaign for re-election and in the process blame career politicians, insiders and unions for the deadlock.  Rauner and one other man provided nearly all of the funding for his last campaign and have already put up a reported $100 million for his re-election efforts.  The ability to self-fund the campaign makes him far more independent than most candidates.  The budget has become a very high stakes game that some think is more like Russian roulette than poker.  I can see nothing grand in the making and in particular I can see no grand outcome for the existing industry in Illinois.  The Grand Bazaar has lasted for six hundred years because it has something for everyone.  The Grand Bargain has little of value for anyone and is not likely to survive even one legislative session.



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