Wednesday, March 26, 2014

Waiting in the dark for doomsday

By Jamey Dunn

Gov. Pat Quinn is not releasing details ahead of his budget speech tomorrow, but Republicans say they expect him to paint a picture that is more negative than it needs to be.

UPDATE 3/26/2014: The Chicago Tribune has reported that Quinn plans to propose making the temporary income tax increase permanent and offering property tax relief for homeowner. The story cites anonymous sources. Quinn's budget staff refuses to share any details of his plan with the press. His budget office did not give reporters a customary budget briefing that typically takes place the night before the speech. However, his campaign released a statement this morning blasting Republican candidate for governor Bruce Rauner for wanting to roll back the tax increase, an indication that Quinn will advocate for keeping the current rates. His campaign says allowing the tax rates to roll back would be devastating to education, making it seem likely that the governor's speech today will focus on funding schools. “Rauner’s sales pitch to run Illinois like a business would run our state straight into the ground,” Deputy Press Secretary Izabela Miltko said. “It's clear his plan would take a sledgehammer to education, lay off tens of thousands of teachers and leave Illinois’ students at a huge disadvantage. His inability to provide real solutions for our state makes it clear he can’t be trusted to run Illinois.” Quinn is required by law to present a budget based on current statute. But there is nothing stopping him from calling on lawmakers to make the tax increase permanent as he does that, as long as his budget document is not based upon the proposal. 

Quinn is breaking from tradition in a few ways when it comes to this year’s budget. He intends to present a five-year plan to lawmakers tomorrow instead of the typical one-year proposal. Quinn asked lawmakers to give him extra time to prepare his budget, pushing the speech until after last week’s primary. Staff was reportedly still putting final tweaks on it through he weekend. Quinn is facing wealthy Republican businessman Bruce Rauner in the November general election, and politics will tinge every aspect of the rollout of his proposal. Rauner has already released an ad attacking Quinn in anticipation of the budget speech and is expected to come to Springfield tomorrow.

While lawmakers on both sides of the aisle have said that they would support longer-range budget planning, some are suspicious of Quinn pitching a budget that might last longer than his time in office. They see the new format as a possible way to spread out accounting tricks over several years and make what will be a difficult budget for Quinn politically an easier sell. “The governor is talking about completely changing the format that he presents this budget in from the way it’s been done in the past, and I think it is an intentional act on his part to confuse and distract,” said Sen. Matt Murphy, a Republican from Palatine. Republicans said that did not expect to receive an advance briefing on the budget. A press briefing is scheduled for tomorrow after the speech. When asked why they were pushing off the briefing, Quinn staffers said that the 5-year plan could be confusing and they wanted to ensure they would have enough time to answer all of reporters’ questions.

Murphy and the rest of his caucus say that Democrats are trying to make the situation look worse than it could be in order to justify continuing the current income tax instead of allowing them to step down as the are scheduled to beginning in 2015. Murphy said that Democrats started off with a more conservative revenue estimate and are ignoring some money that typical come in, such as revenue from unclaimed property. He also said they could consider transferring less money out of the general revenue fund for other spending, and could make a smaller payment to the fund for state employee health insurance. The insurance fund has been shorted in recent budget years. He said that less money could also be dedicated towards bills because there will likely be more revenue than expected at the end of the current fiscal year, and that could be used to pay down the backlog. “The Democrats’ approach this entire spring has been to try to create as dire a picture as possible,” he said. “You can make it a lot more plausible that you can fund core services and still allow the tax rate to go back down as the Democrats promised it would, but they don’t want people to see that. They don’t want that argument out there because they want to continue to get the money that they’ve been getting.”

He presented a few scenarios, one of which he said would actually give the state $13 million more to spend on discretionary costs and one that would require a $700 million cut. Murphy said that Republicans are not necessarily advocating for all of these ideas, but he says they illustrated that there are more options out there besides devastating cuts or a tax increase. “We’re not suggesting that you do this,” he said. “It’s just an exercise to illustrate that they’re kind of gaming the numbers to create a doomsday scenario.” Some of the options Murphy outlined would require changes to law.

Senate Democrats strongly disagree with Murphy and his party’s take on the budget. “These are real numbers. This is the impact that we see. This is the reality that we’ve been dealing with,” Park Ridge Democratic Sen. Dan Kotowski said at a hearing budget earlier this week. Senate Democrats asked state agencies to present the potential fallout from a 20 percent cut. Kotowski said today of Murphy’s scenarios, “That’s just wrong. If you look at the numbers that we presented, the group health [insurance] number represents the actual costs.” He said that under the budget starting point that is currently being used by lawmakers, total obligations to the health insurance plan are being underfunded. He also said that much of the money that is put aside for overdue bills would go toward Medicaid obligations and capture federal matching funds. He also said that Quinn’s plan to present a five-year proposal is a step in the right direction because it allows the governor to indicate his vision for the future instead of potentially using creative accounting to scrape through one tough fiscal year. He said government should adopt more long-term budget planning tactics, which are commonplace in the private sector. “It depoliticizes the budget process because you’re looking at five years.”

Democrats note that levels of state staffing and core services have been cut in recent budget years, and under the $34.495 billion revenue projection approved by both chambers, that trend would continue. That amount is about $1.5 billion less than the revenue projection approved for the current fiscal year. House committees have already been told what numbers they are working with based on the revenue projection and they are considering 14 percent reductions. Chicago Democratic Rep. Greg Harris, who is chairman of the House human services budgeting committee, said that under the revenue projection his committee would have $719 million less to work with this year. He said that all programs that are not mandated by court orders or other requirements could be eliminated “and then we’ll have to cut 200 million more.” Childcare for low-income parents, in-home care for seniors and addiction treatment and prevention programs would all be on the chopping block. Meanwhile, he said that a proportionally equal cut for education would lead to the layoffs of thousands of teachers. “In order to balance the budget and provide the services and undo our backlog of bills, we need to be responsible in how we budget. That means controlling our expenses, but it also means having necessary revenue.” He said that putting off bills and underfunding obligation is not the way to go.

When asked what he hoped to see from Quinn tomorrow, Harris said: “I would like to see just a really bold and powerful explanation of the fiscal realities that face our state and how we must be responsible to pay down our back log of bills. So we need the revenue to do that, to meet our current obligations and to be sure that we are not cutting aid to education, that we’re not discontinuing meals on wheels to seniors, that we are not cutting substance abuse programs.”

Arlington Heights Republican Rep. David Harris said he hopes to hear the opposite. He says he would like Quinn to say that he agrees with the House’s revenue estimate, which he helped craft as part of the House revenue committee, and that the state can live within that amount. Harris agrees with Murphy that some costs could potentially be shifted to make the situation a little easier and bring the cuts down to a few hundreds of millions of dollars instead of billions of dollars. “Do you mean to tell me that we can’t have a reduction of $700 [million] to $800 million and not run sate government? I don’t buy that.” He said he is concerned that Quinn instead is going to propose some costly initiatives, such as an increase to the Earned Income Tax Credit for low-income workers.

Murphy said he is not expecting much out of the speech tomorrow. “He’s got a real divide in his party about whether to raise taxes or not, and I think he’s going to try to get out of tomorrow without saying anything concrete and hope nobody notices.” He, and other lawmakers, said that he has heard that Quinn's budget office, which originally had a larger revenue estimate than the one lawmakers approved, is revising its estimate down. Murphy reads this as indication that Quinn may follow the Senate Democrats' lead in framing the budget as a “doomsday” scenario.

Rep. Greg Harris said that whatever Quinn presents, his committee will meet the next day to continue with the budgeting process they, and other budgeting committees in the House and Senate, have started.

Rep. David Harris said that so far, Democrats and Republicans in his chamber have been able to work together to agree on a spending number. But once the debate comes down to how to spend the money, things may not remain so amicable. “The fireworks will start on Thursday,” he said.

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