Illinois governor unveils harsh budget plan

Mar 9, 2010 — Chicago Tribune

By Ray Long and Rick Pearson

SPRINGFIELD, Ill., Mar. 9, 2010 (McClatchy-Tribune News Service delivered by Newstex) -- Illinois Gov. Pat Quinn on Tuesday unveiled a caustic budget plan that would borrow billions of dollars to stay afloat and push even more debt down the road, hoping to persuade leery lawmakers they should instead raise taxes in an election year.

Quinn aides warned the plan would cost roughly 13,000 teachers and staff their jobs, cut off poor seniors from help in paying costly prescriptions and shut down some healthcare programs for the indigent. But even after $2 billion in cuts, the state would still be $11 billion in the hole.

The administration's warnings served as the precursor for the Democratic governor's Wednesday budget address before a joint session of lawmakers who want to wrap up their business in two months so they can focus on their re-election.

Quinn is expected to restate the unsuccessful call he made last year for higher taxes. But the political dynamics for a tax increase have only grown worse as the election-seeking Democratic governor confronts campaigning legislators who fear a voter backlash in the Nov. 2 general election.

"He's not included a tax increase in this budget and that's a conversation that has to happen," Jerry Stermer, Quinn's chief of staff, said of the governor's plan. "The General Assembly has not acted on a tax increase and have given signals they don't want to act on a tax increase."

Quinn's gambit, to propose cuts in education and social services, represents the latest step in the increasing divergence between the state's very real deteriorating fiscal situation and the rhetoric of politicians who believe the public doesn't want or trust Springfield to get any more money from their wallets.

Similar cries about slashing services last year ended up being papered over by increased borrowing. Many lawmakers privately expect that fears among rank-and-file lawmakers about a voter revolt will lead to a repeat of last spring's session.

By proposing cuts of $1.3 billion in education, all but $94 million coming from grade and high schools, as well as taking $308 million away from cities and villages, Quinn may be attempting to set the stage for public anger over the potential of increased local property taxes _ more hated than the state income tax _ to take up the slack.

At the same time, with politicians traditionally proclaiming that education is their top priority, the likelihood of teachers being pink slipped amid the campaign season would seem doubtful. Likewise, Chicago Mayor Richard Daley has already turned thumbs-down on Quinn's idea to share less state tax revenue with cities.

Although powerful Democratic House Speaker Michael Madigan of Chicago could control enough votes for a tax increase, he has insisted Republicans also must vote to share the pain over decades of mismanaged budgets and underfunded state pensions. Republicans, however, have little political incentive to back a tax increase and have contended the excesses were due to six years of budget gimmickry by disgraced former Gov. Rod Blagojevich and compounded by the Democrats' one-party rule of Springfield.

Overall, Quinn's budget proposal forecasts a $4.7 billion operating deficit for the budget year that begins July 1, on top of $6 billion of debt from the current budget. Quinn would borrow to cover the operating shortfall, which would need to be repaid later on top of the $6 billion in lingering debt.

At the same time, the state will face the loss of more than $1 billion in federal money that has been used to prevent cuts in education funding this year. Quinn's proposal counts on the federal government continuing to pay a higher reimbursement rate for health care for the poor. If that ends as scheduled next December, it would blow a more than $500 million hole in the budget.

In addition to the proposed education cuts, more than $500 million would be trimmed from health and human service program budgets, including $70 million of the $140 million used to help poor seniors make up for the federal "donut hole" in their Medicare prescription coverage.

Although he proposed slashing spending for some services, Quinn's budget plan anticipated an increase of more than 1,100 employees at major state agencies under the governor's control _ up 2 percent overall from current levels.

Stermer also said there was "an agreement in the works" within the legislature that would institute a two-tier pension plan with lesser benefits for future state workers. Such a plan, he said, would provide up to $300 million in savings in the budget proposal. While pushed by prominent politicians in both parties, a two-tier system has been fought by state labor unions.

Although it is likely that lawmakers would significantly revise Quinn's proposal, regardless of prospects for a tax increase until after the fall election, the governor's administration nodded to public concern demanding moves to cut state government as a pre-condition for considering support for higher taxes.

At the same time, Quinn appeared to adopt proposals offered by two rivals for his job in the Feb. 2 primary. Echoing a call by Democratic Comptroller Dan Hynes, Quinn would review, renegotiate or dump many costly contracts that were signed under Blagojevich. He also proposed a tax cut for small businesses that create jobs, while his general election rival, Republican state Sen. Bill Brady of Bloomington proposed a larger and broader tax credit.

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Tribune reporters Monique Garcia, Bob Secter and Michelle Manchir contributed.

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Newstex ID: KRTN-0197-42729114