December 6, 2021 Reprint from Wirepoints Referred by Anthony Travis, The Tax Doctor
By: Mark Glennon*
So much baloney in an interview of just 18 minutes makes this worth going through in full.
Illinois Deputy Governor Andy Manar went on Tom Miller’s WJPF show Thursday to respond to an appearance two days before by Wirepoints’ Ted Dabrowski. The topics were Illinois’ underwater unemployment insurance trust fund and other budget matters.
Manar did no favors for himself or Gov. JB Pritzker’s Administration, being deceitful, to put it kindly. His actual goal seemed to be to discredit Wirepoints.
Judge for yourself. Below are the primary points Manar made and links to the full interviews follow.
Miller walked Manar through the same topics he talked to Dabrowski about earlier.
Originally, Dabrowski criticized how lawmakers ignored Illinois’ unemployment insurance trust fund, which borrowed $4.4 billion from the federal government to cover jobless claims, an unaddressed debt that remains to be paid. We’ve written earlier about that here, as have many others.
Nothing unusual, claimed Manar. Illinois is merely among “maybe two dozen” states that borrowed from the federal government to shore up their unemployment trust funds. Illinois is therefore “not in a different category or an outlier,” said Manar. About two dozen other states are in the “same position we are.”
Not true. For starters, all but ten states have repaid what their unemployment funds borrowed, and Illinois is among the five states with the most borrowed per capita.
But its worse than just the federal loans, and Manar ignored the additional amounts. Illinois also depleted nearly the entire $1.5 billion balance that was in its unemployment fund at the start of the pandemic. That was too low even then, and it’s gone now.
Be aware that this is a topic Pritzker himself already lied about. In July he was asked by Capitol News Illinois about why the state was not restoring the unemployment fund by using American Rescue Plan money, which was the prudent thing many other states did or are doing now. Pritzker claimed that it was not legally allowed and that “all across the nation there are states that owe billions of dollars in deficits…”
Both claims were patently false, as we detailed here.
Manar then resorted to an ad hominem shot at Wirepoints. “I just put this into that category of… Wirepoints, which I don’t even know what the organization is. Frankly, I think it’s a partisan organization. It certainly isn’t a, you know, a credible news organization… They’re looking for something to talk about because we have a lot of good news to tell the people of the state of Illinois about the state finances. We are on the right track in so many regards, especially to just where we were a few years ago.”
Manar can look at our About page if he doesn’t know who we are. It’s pretty simple. If he wants more, he should know we are funded by readers who tell us constantly that they are fed up with politicians who don’t tell them the truth, and our readers like us for calling that out.
What’s most egregious is that Illinois simply pretended in its budgeting that the unemployment fund problem does not exist. The federal loan and the rest of the unemployment fund’s deficit are ignored in both the current budget and the five-year budget projection recently published by the Pritzker Administration. But the entire hole will have to be filled, either by higher taxes on employers, lower unemployment benefits or cash from other state sources.
Miller then asked Manar about a special fund quietly put in the recent budget that allows Pritzker to spend what may be as much as $3 billion of federal relief money – all at his own discretion. Dabrowski had criticized the scheme during his interview.
Manar resorted again to an ad hominem attack on Wirepoints. “We go back to an organization that, I think, frankly is looking for a problem because they’re frustrated that they wake up every day, drink a cup of coffee and they see all this good news about the state finances.”
In truth, it wasn’t even Wirepoints that reported the story of the special fund.
It was the Chicago Tribune. The Tribune followed up with an editorial criticizing the fund and calling for more transparency in it. The sole article we did on it complimented the Tribune’s reporter who wrote the story and we summarized his findings.
Manar insisted that the governor’s special fund is transparent. “There’s full transparency about how it’s spent,” he said. “That was something that we requested and the governor said we need to make sure that we have an accounting of every dollar spent for federal funds coming during this very difficult and challenging. It’s complete nonsense.”
Tell that to the Tribune. The very existence of the fund was hidden, no specific appropriation was made and no further input from the legislature is required on how it gets spent.
As the Tribune described it, “no mention was made of any kind of state fund that would permit the governor to spend a chunk of the federal cash exactly as he wished, without any kind of approval or even input from state lawmakers — or the public for that matter. It never came up in committee sessions or on the House floor.”
Finally, the Tribune editorial said that none of whatever Pritzker has done right “excuses the opacity that the Pritzker administration has draped over its handling of President Joe Biden’s ARPA money. Illinoisans across the state should be incensed,” the Tribune’s editorial said.
In any case, transparency is not the only issue. The bigger matter is that Pritzker was given the unilateral power to spend billions of dollars with no legislative input.
What about the recent Kiplinger report concluding that Illinois is the least tax-friendly state in America for middle-class families? Miller asked for Manar’s reaction to that.
First, Manar tried to blame local governments. “A big piece of that is property taxes,” he said, “which of course you know the state doesn’t get a dime of in terms of revenue. That’s all locally driven and run by local units of government and locally elected officials. So a big piece of that, in my assessment, deals with things outside of the state’s purview.”
All locally driven decisions? No. Unfunded mandates imposed by the state are strangling local governments. Their largest problem, pension cost, is entirely dictated by the state. Same with one-sided collective bargaining rules – some of the most union-friendly in the country – that leave local officials with no serious ability to control costs.
Manar then said he didn’t want to “dust up the debate that we had over the fair tax,” but proceeded to do just that. Part of the problem in Illinois, he said, “is that we have a flat tax, which means the disproportionate share goes on working people.”
The fair tax, however, would have done nothing for the middle-class tax burden addressed by Kiplinger. The specific tax rates passed by the legislature that would have become effective had the fair tax passed included only token cuts, if any, for some lower income groups, but huge increases for the big earners. Voters killed the proposal because they saw through it for what it was – just another tax increase, about $3.4 billion worth. That defeated tax increase is what Manar laments.
Finally, Miller asked Manar about a report by Pew Charitable Trusts showing Illinois to be second worst, behind only New Jersey, in the gap between its revenue and what it spends, which has persisted for at least 15 years.
Manar dodged the Pew issue by ticking off a list of supposed accomplishments on the budgetary front that have us on a better path: Illinois’ unpaid bills dropped from $16 billion to $4 billion; Pritzker cut spending by more than more than $700 million in 2020; Illinois has gotten two credit upgrades; we’ve paid back short-term borrowing that was in place. That means Illinois is on a new, better path, Manar said.
Once again, he added an ad hominem. “I mean, that’s hard empirical evidence of good management of government finance, and I know that’s hard for people at Wirepoints and the Illinois Policy Institute to accept, because their existence is based off of peddling information they got a footing on during the Rauner Administration that brought us to the brink of insolvency.”
Sorry to break it to Manar, but we were harsh critics of Rauner’s tenure as governor as you can see here, here, here and in many other columns. Personally, I was optimistic about Rauner initially, but my opinions changed after he took office. Efforts to blame most of Illinois’ problems on Rauner, however, are demonstrably silly, as we explained here and here.
Regarding the “empirical evidence” Manar says Wirepoints ignores, most of his claims are highly misleading. For example, the state issued $6 billion in bonds in order to pay down the unpaid bills, essentially just moving debt from one account to another. We won’t try to summarize here the many columns we have written about other progress claimed by the Pritzker Administration, but a few of those articles are linked below.
Suffice it to say that Illinois is temporarily floating on a bubble of federal money – over $180 billion in aid to the public and private sectors – which has helped spike tax revenues. It will not be sustained. When it’s over, Illinois will be left with the deep, structural fiscal crisis it had before the federal bailout.
Manar got one thing right, which is that at Wirepoints we wake up frustrated every morning. But he sure got the reason wrong. We are truly overwhelmed by the dishonesty, incompetence, and hypocrisy we see in each morning’s news about government, particularly in Washington, the State of Illinois and Chicago. We wish we could cover more of it.