Thursday, May 29, 2008

It's close

By Patrick O’Brien and Bethany Jaeger
The House and Senate may have drawn closer to agreeing on a state budget today, but it’ll come down to Friday and Saturday to find out whether the legislature is headed into overtime session.

Negotiators likely have found a common ground on school funding, which would increase by between $500 million and $530 million, according to Rep. Gary Hannig, the House budget negotiator. Higher education funding levels also are relatively close, granting nearly a 3 percent increase across the board. Budget negotiators need to work out funding levels for community colleges.

The main sticking point in the overall budget appears to be with the House Democrats, who want to increase spending for human services. But Hannig said the House tomorrow likely will present two more substantial portions of a budget that would represent an agreement between the chambers.

The House sent two smaller, less-controversial portions of the budget (here and here) to the governor this afternoon. They would fund such agencies as the Capital Development Board, the Illinois Commerce Commission and the Illinois Workers’ Compensation Commission at mostly current levels.

“It’s more likely that we would take up the rest of the budget perhaps tomorrow,” Hannig said. That leaves tens of billions in spending still under negotiation.

Whether the final budget will be balanced is up to debate.

Rep. Renee Kosel, a New Lenox Republican, said this year’s budget process has made it impossible to know whether the Democrats’ plan carries a deficit. “I can’t tell you whether it’s a flat budget or whether it’s a balanced budget because we don’t have all the pieces,” she said. She added that increased education funding is necessary because of increases in enrollment.

Over in the Senate, Democrats showed a rare sense of solidarity as they approved two ways to plug a projected $500 million hole in the budget.

They had to scurry around the floor to ensure all their ducks were in a row to approve a $16 billion borrowing plan. They did. The plan would pump money into the increasingly expensive pension systems for public employees. They later approved a mechanism that would allow the governor to sweep about $500 million out of special dedicated funds, which would help put more money toward education and leverage up to $530 million in new federal matching funds.

All Republicans voted against the plans. That’s a sign that the pension deal faces a severe challenge in the House, where some Republicans would have to support it for the plan to pass. Quote Hannig: “It’s hard for me to see how you can find 71 votes out here. I have advised the Senate of the difficulty that they will face in the House.”

Senate Democrats defended the pension bonding proposal as a way to refinance $42 billion of debt at a lower interest rate, saving the state about $55 billion in the long run. It also would free up $500 million that otherwise would have been earmarked for the state’s contribution to the five pension systems next fiscal year.

Republicans dismissed the bonding scheme as risky for two reasons. Current market conditions can’t guarantee generous returns on investments, and the governor and the legislature can’t be trusted as they continue to fudge with the payment schedule set in the 1990s.

“This is more about budget relief than it is about fixing the pensions,” said Sen. Christine Radogno, a Lemont Republican.

Senate Minority Leader Frank Watson likened the plan to an “Enron borrowing scheme.”

The so-called fund sweeps legislation would not only leverage federal funds and free up existing state dollars, but it also would be restricted by federal rules on how they could be spent, said Sen. Jeff Schoenberg, an Evanston Democrat sponsoring the measure. He said the federal rules address the concern that the legislature relinquishes too much power to the executive branch.

Nearly 30 funds also would be prohibited from being swept. They include funds for veterans’ homes, teachers’ health insurance and public transportation needs, as well as a motor cycle riders’ safety training fund that landed in court last year.

The House would need a regular majority to approve fund sweeps, meaning Republican votes would not be needed if all Democrats were on board.

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