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Ives vows cost-cutting—but says income tax hike to stay for now

Crain's Chicago Business

Tuesday, January 23, 2018  |  Column  |  Greg Hinz

Candidates--Statewide (12)

Even if she wins in November, the conservative lawmaker running against incumbent Gov. Bruce Rauner in the March Republican primary says the income tax hike that was enacted on his watch will have to remain in place for at least two more years. And Chicago and Cook County taxpayers should be prepared to dig deeper if her state budget plans pan out.

That was the word from Rep. Jeanne Ives, R-Wheaton, in an appearance before Crain's Editorial Board yesterday, in which she vigorously made her case for dumping Rauner—effectively, he's lost the support of the GOP base, she said—while laying out an agenda that likely will thrill libertarians and some conservatives, but provoke the other end of the political spectrum.

Ives underlined that most of her career has been focused on budget and economic issues. Her core argument is that most of Illinois outside of Chicago has too much red tape and too high costs to compete with nearby states. The remedy from the West Point graduate and former Wheaton City Council member: Cut costs, adopt a business-friendly attitude and divert back to the state what she views as excess payments that Chicago Public Schools and Cook County's health system get from the state treasury.

Ives said she'd start by working to repeal the income tax hike that was approved over Rauner's veto. But "I wouldn't do that immediately," she said. "I suspect that, within two years, we could set that out as a goal."

Some of the reason for the delay is that the money is needed pay off short-term state IOUs, which ballooned to more than $12 billion while the budget stalemate raged, she said. Another reason: Realistically, it will take that long to get something through a General Assembly that, unless something changes in November, will be dominated by Democrats, she said.

But a state that "is not competitive" needs to do something, she said. That means reducing regulations that force up costs, she continued. And it means trimming the state budget so more money can go to local school districts, reducing reliance on local property taxes.

On her list for axing are hundreds of millions of dollars of year in new state funding that CPS got under terms of the fiscal 2018 state budget. Chicago, for purposes of the new aid formula, is considered a poor, Tier IV district, even though in reality the city economy is doing so well that Chicago actually is Tier 1, she said.

"You can't have it both ways, Mayor (Rahm) Emanuel," she said, noting the mayor's frequent bragging about a huge number of corporate relocations to the city and the record number of construction cranes operating around town. "Are you doing great? Or do you need state support?"

Ives would save another big chunk in the budget by eliminating the Obamacare expansion and making other cuts in Medicaid, even though the former has shifted hundreds of millions of dollars a year from Cook County taxpayers to the state and federal governments. "Chicago's got a lot more state support than they should," she said. And if that means local taxpayers will pay more to give relief to taxpayers outside of the city, "I don't have to win (Chicago and Cook County) to be elected, she said. "This is a 50-percent-plus-one race."

Cook County is home to about 5.2 million of the state's 12.8 million residents.

A third financial target of hers is government worker pensions.

New workers need to be shifted from a defined-benefit pension to a 401(k)-style defined-contribution model, perhaps with a "generous" inducement, she said. Old pension debt, roughly $120 billion just in the state retirement system, can be "renegotiated" with employee unions that have rejected such actions so far, but may come to the table as they realize some of the pension funds are "one (economic) downturn away from failing."

Ives said she's keeping on the table the $2.2 billion the state and city have offered in incentives to get Amazon to bring its second headquarters and promised 50,000 jobs here, but said she'd be reluctant to go so big in the future. "I'd love to have Amazon. But I'd love to have 500 companies with 100 workers each."

Though the discussion centered on economic issues, Ives made it clear that hot-button social issues are the fire in her uphill race.

By signing legislation to allow Medicaid funding of abortions here despite promising not to, and by approving of so-called "sanctuary cities" legislation, Rauner offended Republicans statewide, Ives said. "Rauner can plead he'll be elected in November. But he can't be. He'll be Mark Kirked out of office. . . .The base is not with him."

Ives' reference was to former U.S. Sen. Mark Kirk, R-Ill., who lost his seat to Democrat Tammy Duckworth in 2016.

Her bottom line, aimed as much at some of the Democratic candidates as Rauner: "We've tried the millionaire/billionaire who's never been in office method, and it failed."