Monday, June 29, 2009

Pieces to the puzzle

By Bethany Jaeger, with Hilary Russell and Jamey Dunn contributing
The House easily approved a short-term borrowing scheme to fully pay the state’s pension contribution and to prevent about $2 billion in cuts to human services, but not all services will be saved from significant funding cuts. The measure, SB 415, now heads to the Senate. The House also sent to the governor a $29 billion capital construction program that was approved in May but withheld because the governor said he wouldn’t sign the package until he received a balanced operating budget on his desk.

With less than 30 hours before a new fiscal year begins, Gov. Pat Quinn still doesn’t have a balanced operating budget on his desk. House Democrats could argue that the series of budget bills already approved by that chamber would be enough to fund about 93 percent of the governor’s proposed spending plan, “which, in this economy, is not too terrible,” said Rep. Lou Lang, an assistant majority leader from Skokie. But without enough votes to approve an income tax increase, as preferred by Quinn, the House appears poised to send to the governor four basic budget bills and wouldn’t come back to the Capitol until the money ran out.

Three existing basic budget bills include SB 1197, a lump sum spending plan; SB 1433, authority to sweep money from dedicated funds; SB 1609, ability to refinance state debt, which the governor already signed into law. The short-term borrowing plan, SB 415, would be the fourth bill in a bare bones spending plan.

“I think it reflects exactly the money that we have, and I think that’s a responsible thing to do,” said Rep. Frank Mautino, an assistant majority leader from Spring Valley. “If there’s more money [down the road], you can allocate more spending.”

The House tonight approved the borrowing plan and specified that the $2.2 billion freed up from the short-term borrowing would have to fund community-based human services (see Amendment 4).

“This is not the total package,” Rep. Kevin McCarthy, an Orland Park Democrat sponsoring the measure. “This is not going to eliminate all the pain out there, but it is a step forward.”

If approved by the Senate, the plan would allow community-based services to be funded at 70 percent of the level sought by the governor, according to House Democrats. Some legislators said that’s better than the 50 percent funding level projected without new revenues to pay for it.

“It's still 70 [percent] is better than 50 [percent] on across the board,” Mautino said.

But not all providers would reach the 70 percent funding level, according to Mautino. The 70 percent would be an average. And the governor would have significant latitude to spend the money within human services, potentially directing the money toward services that would recapture the largest amount of federal matching funds. The governor also would still have to cut at least $1 billion to get closer to a balanced budget that suffers from a deficit ranging from $7 billion to $9 billion, depending on whom you ask.

And some services, including financial aid for needy college students and funding for Amtrak rail services, still would see significantly reduced funding levels. The knock to transportation services also could jeopardize federal stimulus funds, said Rep. Elaine Nekritz, a Northbrook Democrat.

Yet, the bill passed with 101 voting in support and seven voting in opposition, but many said the borrowing plan is only a short-term fix that doesn’t address the need for long-term reforms of everything from tax policy to pension benefits.

“This is one of many puzzle pieces that we need to put together, but it’s not a long-range solution to a problem we’ve had in this state,” said Rep. Sara Feigenholtz, a Democratic leader on human services, adding that this year’s budget and economic downfalls are more complicated than in the past. “It is the 9-11 of state budgets. It’s a very fragile situation. It’s more responsible for us to fix how we spend, fix how we collect revenue.”

Rep. Dave Winters, a Shirland Republican who voted against the borrowing plan, said although the pension obligation bonds would allow the state to make its full $4 billion pension payment in the new fiscal year, the state would still have to find more than $4 billion for the next year’s payment, too. In addition, the state would have to start repaying $500 million for the bonds. So that would mean the General Assembly would have to find about a $4.7 billion in general funds to make next year’s contribution, according to Winters’ math. House Democrats said the borrowing plan would cost about $257.4 million in interest over five years.

“Borrowing is not the answer,” Winters said during floor debate. “It is simply digging a hole that we’re going to be stepping in next year.” And that hole will be bigger than the hole dug this year.

The GOP leader, however, said even if borrowing isn’t an ideal way to cope with the budget gap, Republicans at least want the revenue to specifically save providers of human services to the most vulnerable citizens. “We have a responsibility to work with [Democrats] and get this resolved and diminish or minimize the potential pain,” House Minority Leader Tom Cross said during floor debate.

Rep. Jim Durkin, an assistant minority leader from Western Springs, added before the vote that most Republicans thought it was the “fair” and “moral” thing to do to help prevent such drastic cuts to community-based service providers. “We’ve received some pretty tough letters from these providers over the past few weeks,” he said. “And I don’t appreciate the most vulnerable in our society being used as pawns — which they are being used as at the moment — in this budget process, but it’s reality.”

Capital bill sent to the governor
Rep. Lou Lang, a Skokie Democrat, said he released four pieces of the $29 billion construction program to fix the state’s infrastructure and to put people to work. The bipartisan plan was approved with the understanding that Gov. Pat Quinn would sign them into law, Lang said. But the governor changed his tune shortly after the vote. “The fact is that the governor gave us his word that he would sign those bills.” And when he did not sign those bills, Lang filed motions to reconsider. “We had just gone through six years of a governor who didn’t tell it to us the way it was,” Lang said, referring to former Gov. Rod Blagojevich. Lang added that he felt that if the bills were not going to be signed immediately, better to be in the control of the legislature than in the hands of someone who had said he would sign them but then reneged on his word.

“I don’t know what he’s going to do with those bills,” Lang said, “but we have thousands and thousands and thousands of Illinoisans out of work.”

Quinn’s office said the governor had wanted Lang to lift the holds on the construction bills so he could examine them when they landed on his desk.

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