East of the Wabash River we have Indiana and a governor–Mitch Daniels–who is winning national awards for good governance, and citizens who are benefiting from the lowest unemployment rate, one of the strongest state budgets, and some of the lowest tax burdens in the Midwest.
West of the Wabash River we have Illinois and a governor–Rod Blagojevich–who today is under arrest by federal agents for allegedly committing a staggering amount of extortion and other political corruption, and citizens who are being harmed by rising unemployment, a budget that is billions of dollars in deficit, and growing tax burdens.
Blagojevich was arrested Tuesday on charges that he tried to extort $50,000 from a person the governor was considering to appoint to the U.S. Senate to fill the seat that will be vacated by President-elect Barack Obama. During a nearly two-month investigation that included wiretaps on Blagojevich’s phone calls, investigators also uncovered numerous other instances in which the governor allegedly engaged in extortion or other criminal actions.
Meanwhile, Daniels last month was named Public Official of the Year for achievement in government service by Governing magazine, which listed Indiana as the most-improved state in its Grading the States assessment. Also in November, Site Selection Magazine named Indiana the most-improved state for business in the nation.
Taxpayer advocacy organizations also give Indiana high marks. The Tax Foundation, a private national tax research organization, ranked Indiana first in the Midwest and 12th nationally in its 2008 Business Tax Climate Index. Among other things, Indiana under Daniels has slowed spending growth–just 2 percent this year–and capped property tax burdens at 1 percent of assessed value for primary residences (higher caps for rental and business properties) and moved some services that had been funded by local property taxes onto the state budget. The state sales tax was raised 1 cent to pay for this, but the net effect has been $1.72 in savings for every dollar of higher taxes.
In Illinois, though, corruption continues to run rampant, property taxes continue to climb, and state and local spending soar.
In Rich States, Poor States, a 2007 book by economists Arthur Laffer and Stephen Moore, the authors wrote, “The demoralizing symptoms of economic despair in the declining states like … Illinois include lost population, falling housing values, a shrinking tax base, business out-migration, capital flight, high unemployment rates, and less money for schools, roads, and aging infrastructure.”
They noted over the past 10 years, Illinois ranked 48th out of 50 states in overall economic performance, 44th in per-capita personal income, and 47th in employment.
Contrast that with the news out of Indiana just last month. As one sign of the job gains and income growth occurring in Indiana, a new Honda manufacturing plant opened. While Illinois and surrounding states report soaring deficits and debt, Indiana reports a $1.4 billion surplus and falling debt.
Honest government with an emphasis on efficiency in Indiana; dishonest government with almost no concern for efficiency in Illinois.
The river that serves as much of the border between Illinois and Indiana cannot explain these differences. The people we elect really do matter.
Steve Stanek ([email protected]) is a research fellow at The Heartland Institute and managing editor of Budget & Tax News.
The following articles will appear in the February issue of Budget & Tax News, published by The Heartland Institute. For a hard copy of the issue, write Dan Miller at [email protected].