First cuts, then taxes

by Jamey Dunn
The top four legislative leaders and Gov. Pat Quinn agreed that they will have to cut spending from a budget that is severely out of whack before resorting to tax hikes to plug the deficit. But how soon those cuts could be made and when lawmakers will agree on a budget is far from clear.

Leaders of both political parties met again with Quinn in his Chicago office today to continue budget talks after failing to agree on a bare bones budget approved along party lines May 31.

Quinn is not backing off of the need to approve a state income tax increase. He said after the meeting that his office would send out notices this week to human service providers letting them know that their funding could be slashed in half if the budget that legislators passed were enacted.

The governor said he and leaders discussed about $1 billion in cuts and cost-saving ideas in today’s meeting. However, he said that even if those cuts were achieved, an income tax increase would still be necessary. “We have to do this. Otherwise, … we won’t recognize our state,” he said.

Republicans continued to demand cuts and reform before considering tax increases, and they said they now sense some cooperation from Democrats. “I am encouraged that there does seem a willingness to consider some real changes to the way we do business in Illinois,” Senate Minority Leader Christine Radogno said.

Quinn said he could support pension reform, including a two-tiered system that would offer lesser benefits to newly hired state employees and teachers, as well as switching to a managed-care style for Medicaid programs. (His proposal for a two-tiered pension system stalled in the legislature last month.)

House Speaker Michael Madigan said he agrees that pension and Medicaid reforms are necessary and that they should be addressed regardless of the need to approve a budget. But he would not indicate whether making budget cuts and cost-saving reforms this summer would improve the chances of his chamber approving a tax increase. He said he thought that voter opinion, especially opposition from unemployed or under-employed constituents, played a large hand in legislators' rejection of a temporary income tax increase at the end of May.

“I think that lawmakers that do not wish to vote for the income tax increase are reflecting people in their districts,” Madigan said. “Seldom do Americans welcome tax increases.”

While Quinn emphasized the need to produce a “balanced budget” before the new fiscal year starts July 1, House Minority Leader Tom Cross said he doesn't think there's enough time to make the level of changes he thinks are necessary before his caucus would consider a tax increase.

“I think the worst thing we do as a state is to just come along and say that we’re going to raise taxes in this economy,” Cross said, “ and hand it over to a system that’s going to put us in the same situation in another two or three or four or five years without fundamentally changing how we handle things.”

Cross said that Quinn’s staff will sit down with Democrats and Republicans of both chambers to go through the budget line by line to look for places to cut. In addition, Quinn said he will issue executive orders to create a Taxpayer Action Commission to implement the Tax Payer Action Board’s cost-cutting recommendations as quickly as possible, and he said he'd form an Economic Recovery Commission intended to stimulate job growth and economic development.

Senate President John Cullerton said that he thinks a tax increase ultimately will be needed but that cutting the budget is the first priority. “It’s inevitable, I believe, after we do this cutting, …eventually we’re going to have to have some new revenues to help avoid the draconian cuts that the governor was talking about. So, hopefully, we’ll do that. But, first, we have to focus on those cuts.”

The next leaders’ meeting is tentatively scheduled for next Tuesday.