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Wednesday, Oct. 31, 2007 06:26 am

Paper tiger

Illinois’ economy is big and bad — and not in a good way

Untitled Document The state of the state is surprisingly weak, according to a comparative analysis of Illinois’ economy published by the Commission on Government Forecasting and Accountability. The 10-member bipartisan commission, which provides the Legislature with information on economic issues, found that despite high regional and nationwide total rankings for Illinois in gross domestic product, wages, and personal income, Illinois’ rate of growth in these categories was low compared with those of other Midwestern states. “Overall, Illinois’ economy is one of the largest and most diverse in the country. The people of Illinois receive high levels of income and enjoy a high standard of living. Illinois has lagged behind the rest of the country in recent years in terms of growth in these categories. Illinois also has experienced a higher level of unemployment than most of the rest of the country,” the report states. Some of the other key findings of the 41-page report: • On the basis of domestic product, Illinois has the fifth-largest economy in the U.S. at $590 billion. • Growth in GDP, wages, and personal income has been poor over the past 10 years. • Illinois has had the third-slowest workforce growth in the nation despite having the fifth-largest number of workers. • Unemployment in the state has consistently been 5 percent higher than that in the rest of the nation, and since 1977 it has exceeded the national average 70 percent of the time.
• Illinois’ economic growth has not kept pace with the growth of the U.S. economy as a whole over the past 30 years. Beginning around the time the lawmakers arrived in Springfield in February and heating up when Gov. Rod Blagojevich announced his intention to pour more money into to education and state health-care benefits, the state’s economy has been the subject of intense debate this year. The business community protested the governor’s proposal for a gross-receipts tax — which, he hoped, would pay for his new programs — and other groups objected to any expansion of services, given the state’s unpaid pension obligation and a backlog in Medicaid payments. Benjamin Varner, the revenue analyst who authored the report, says its timing had nothing to do with political and economic discussions taking place around the state: “We weren’t trying to move an agenda.”
Having worked for the commission for two years, Varner adds that he was not surprised by the findings, noting that over the past 30 years Rocky Mountain states such as Nevada, Utah, Colorado, and Arizona have experienced GDP growth of more than 8 percent per year, to the detriment of states in the Midwest and Rust Belt, where growth has been sluggish. Joe Calomino, the Illinois director of Americans for Prosperity, a national organization that supports conservative fiscal policies, says the report shows the need for budget reforms. Calomino, whose organization was among the leading critics of the GRT, says his group favors more transparency and accountability in the budget process and control of spending, perhaps through the implementation of a zero-based system in which all expenditures must be justified yearly for some state agencies, and wants to make Illinois more business-friendly. “There is a problem with how government does business. We don’t have a true effort to get things fixed. If we ran government a little more like a business, you wouldn’t see some the problems we see now,” he says.
Contact R.L. Nave at rnave@illinoistimes.com 
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