Tuesday, May 26, 2009

Prepare for revenue vs. spending showdown

By Bethany Jaeger
The General Assembly has five days until the constitutional deadline of May 31 to approve a state operating budget, and there are only three days until Senate President John Cullerton wanted to adjourn so everyone could go home by this weekend.

Things are still pretty fluid in the Capitol, with lots of options being discussed but few commitments being made to any of them.

“There’s Plan A, Plan B, Plan C, and, so far, we have not seen B nor C,” said Sen. Donne Trotter, budget negotiator for Senate Democrats.

Plan A includes funding basic portions of the budget to keep the lights on and to secure federal stimulus funds regardless of whether the legislature approves an income tax increase. And that plan, approved by the House last week, wouldn’t fulfill spending obligations for state programs and public employee pensions. House and Senate Democrats are circulating lists of programs that would not be funded under the core budget plan, forcing members to rank programs that could be cut or not.

Those lists are leading up to the plea for a state income tax increase, but for that to happen, Democrats need Republican support. Senate President John Cullerton said he doesn’t believe his caucus has 30 votes necessary to approve an income tax increase, leading him to turn to Republicans. The GOP, however, doesn’t want to approve an income tax increase unless the General Assembly first tries to trim spending and make existing programs more efficient, including instituting managed care policies and other Medicaid reforms.

Sen. Dale Righter, a deputy Republican leader from Mattoon, said, “To say that there isn’t any waste in state government is to say, ‘I agree with the last six years of Rod Blagojevich’s budgets,’ and I don’t think any of them want to say that.” He added that constituents want comprehensive reforms that affect every dollar the state spends, not just a percentage of it. He said enacting a half-year budget would unlikely include any reforms.

“Once you support that and put that into law, then you’ve locked that in place. And you’ve said, ‘OK, there’s nothing we can do about that spending.’ And I don’t think that’s the message we want to send.”

As Democrats and Republicans consider their options behind closed doors tonight, consider this breakdown of general revenue versus spending and the large gap between the two, according to Democrats.

Spending side
  • Legislators are working with about $23.8 billion to dole out, including federal stimulus funds.
  • The House last week approved $16.9 billion to keep the lights on and to secure federal stimulus funds, leaving about $6.9 billion to split among state programs.

Revenue side
  • According to Senate Democrats, the state would need an additional $4 billion just to get to last year’s funding levels (a.k.a. a zero-based budget).
  • And then it would need between $2 billion and $4 billion to pay the state’s full share into the public employee pension systems.
  • That means, according to Trotter, that budget negotiators anticipate needing up to an additional $8 billion to get up to last year’s funding levels and to fully fund the pensions.
  • Shorting the pension payments is always on the table. Making a minimal payment, however, would not pay down the compounding liabilities.
  • So is approving a temporary budget that would distribute the money on hand but would not be enough to get through the year. Cullerton said he opposes the idea of a half-year budget.
  • Gov. Pat Quinn also has proposed a two-tiered pension system so that newly hired teachers and state employees would earn less generous retirement benefits. While the administration suggests long-term savings would result, teachers’ unions strongly disagree and point to a report by the legislative Commission on Government Forecasting and Accountability.

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