Rauner’s incredible shrinking agenda

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It’s hard to get a handle on our new governor. He campaigned saying he would “shake up Springfield,” but he’s governing as if his goal is to blow up Springfield.

Now he’s announced $400 million in cuts, including child care and aid to the elderly, to fill the state’s budget gap, which he helped create. But though he’s acknowledged the need for new revenue in the past, he won’t discuss it until his “turnaround agenda” is enacted.

That agenda, though, is steadily shrinking. Rauner’s people say they are negotiating and compromising. But that seems to amount to slowly recognizing that the people of Illinois aren’t ready for a full-scale right-wing counterrevolution, and taking demands off the table, one by one.

According to Senate Republican Leader Christine Radogno, Rauner is now focused on two items: workers’ compensation reform and a property tax freeze.

That’s hardly a program for transforming the way the state operates. And even on their own terms, the two proposals don’t accomplish what they claim.

Yes, both workers’ comp insurance premiums and property taxes are high in Illinois. But neither reducing benefits to injured workers nor freezing property tax rates gets to the root of the problem.

Rauner’s proposals around workers’ comp would certainly reduce benefits, according to David Menchetti, a lawyer who represents injured workers and helped draft reforms to the state’s workers’ compensation law when he was a legislative aide. An analysis by ProPublica of states that have “reformed” workers’ comp shows that injured workers have been denied access to treatment and driven into poverty, while the costs of care are shifted from insurers to taxpayers.

If the experience of other states is a guide, some of Rauner’s proposals will put employers at risk of civil lawsuits, Menchetti said. That’s a huge threat to small and mid-sized companies, and exactly the kind of thing workers’ comp law is intended to head off.

And there’s no evidence reduced benefits will lead to lower insurance premiums, Menchetti said. That’s based on Illinois’ own recent experience. State law was changed in 2011 to reduce benefits to workers and payments to health care providers. But insurance premiums have not gone down — not statewide, not per policy, and not per covered worker, he said.

The National Council on Compensation Insurance recommended premium reductions of nearly 20 percent as a result of the new law. Instead, insurance companies seem to have pocketed the savings as higher profits.

Rauner’s proposal, supposedly aimed at lowering employer costs, would in reality only benefit insurance companies, Menchetti said.

To get at that, the state needs to regulate insurance premiums. “Greater transparency would be the most direct step the state could take to reduce workers’ compensation premiums,” Menchetti said. Currently insurance companies are required to report their rates to the state, but not their costs. Other states go further and directly regulate rates.

And 25 states have their own nonprofit workers’ compensation insurers which compete with private insurers and “keep them honest,” Menchetti said. So if NCCI recommends a 20 percent reduction in premiums, the state-chartered nonprofit can enact the reduction and force others to follow suit.

“The approach [in Illinois] has been to reduce benefits and let the market reduce premiums,” Menchetti said. “That hasn’t worked.”

It’s the same story with the property tax freeze. Property tax rates are high because of the state’s overreliance on property taxes to fund schools. That’s a result of the state’s regressive revenue system, which doesn’t raise enough to pay for basic services because it doesn’t tax sufficiently where the money is — at the top. A rate freeze does nothing to address that.

Increasing state funding to the point where Illinois met the provision in its Constitution that “the state has the primary responsibility for financing the system of public education” would take billions of dollars. Short of that, freezing property taxes without significantly increasing state funding will mean less money for schools.

During his campaign Rauner actually promised to increase state support for education, and his proposed budget claims to ramp up funding by a couple hundred million dollars. But that’s not quite accurate, according to Amanda Kass of the Center for Tax and Budget Accountability. What Rauner did was to divert money from a separate schools fund, she said. It’s not new money, it’s a sleight of hand.

Kass points out that current law allows municipalities and school districts to raise property taxes to keep up with inflation. Freezing rates will mean service cuts throughout the state.

Meanwhile, local governments throughout the state face increased police and fire pension payments in the coming year. Does Rauner really think the answer is mass municipal bankruptcy? That’s going to attract new investment?

Illinois voters thought they were getting a business leader who could cut deals and would keep his eye on the bottom line. At this point it looks like they were hoodwinked.

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