Election year for entire Legislature makes vast agenda more daunting

Here's a look at what's shaping some of the key issues in the spring session:

Public pensions

When Democratic lawmakers approved an income tax increase a year ago, their hope was the extra money would keep state services chugging along while leaving some leftover cash to slowly pay off a multibillion-dollar backlog of bills.

Instead, rising payment costs for the state's public employee pension system are expected to eat up that money. This year's pension payment ballooned beyond projections, so lawmakers have to find an additional $1 billion or so, more than double what they initially thought.

That's given supporters who have long pushed for pension cost cutting a renewed sense of urgency. While Democrats and Republicans alike recognize the need to make changes, there's a fundamental divide about what changes to make.

Republicans want to focus on reducing retirement benefits for current employees, an idea that leading Democrats have said may violate the state's constitution and result in years of courtroom battles.

Under Cross' plan, employees would keep the benefits they've earned to date but get three choices: stay in the current system and pay more, move to a lower-benefit option that went into effect last year for new hires or enter into a 401(k)-style plan.

Cross estimated the changes could save $45 billion over the long haul, but the measure has yet to be called for a vote. Cross said he is waiting for Democratic House Speaker Michael Madigan to put up votes on the measure, a notion Madigan recently dismissed as political posturing.

Democrats, meanwhile, are floating the idea of shifting some of the pension burden to local school districts and universities, arguing those institutions currently pay little or nothing toward the cost of their workers' retirement plans.

A detailed proposal has yet to emerge, but the concept has the support of the governor and Democratic legislative leaders.

"I don't think it's out of line to ask the local districts, 'Why don't you contribute to this cost? These are your employees,'" Madigan said after a recent appearance at Elmhurst College.

Opponents contend such cost shifting would force local governments to increase property taxes when school districts already are struggling to pay teachers and provide services after years of payment delays from the state.

Either way, lawmakers acknowledge any changes are likely to anger somebody.

"It's going to be very difficult," Cross said. "People are not going to be happy. It is affecting and impacting hundreds of thousands of people, many of whom have done nothing wrong, so it's a very difficult topic."

Medicaid

Medicaid, the health care program for the poor, costs roughly $15 billion a year to operate. That's about one-fourth of the overall state budget.

Last year, Quinn signed into law what he called "landmark" changes to cut costs. The new approach set income limits for a child health care program, increased requirements to prove eligibility and put half of the patients in managed care. Officials estimated the state would save as much as $744 million over five years.

But Republicans contend the Quinn administration largely has abandoned a requirement that applicants prove they live in Illinois and show two pay stubs to ensure they meet income requirements.

Quinn's office says federal regulations prohibit states from reducing the number of people eligible and putting additional burdens on applicants seeking care.

The administration says it's working on more reforms, but the governor on Friday said he won't provide specifics until his Feb. 22 budget address.

Sen. Heather Steans, D-Chicago, said everything must be on the table to get costs under control, ranging from cutting nonessential services, such as dental care, to lowering the reimbursement rate that doctors and hospitals get for providing care and filling prescriptions.

But Steans said reducing services could have unintended consequences: Cutting care in one area could increase demand in others, especially when the state should be focusing on preventive care and stopping expensive re-admissions.

"It's harder to make difficult choices in an election year, but you also have a public that wants us to be demonstrating that we're restoring fiscal sanity," Steans said.

Lawmakers in both parties say one thing remains clear: Illinois must make big changes or the state's budget problems will persist.

"The truth of the matter is if we don't do fundamental reforms, there's no dispute that the state is on a path to bankruptcy, and that should be an unacceptable result to everyone in state government," said Sen. Matt Murphy, R-Palatine.

Gambling

As lawmakers look to cut pension and Medicaid costs, others are using the state's dire budget situation to lobby for a major gambling expansion after the measure stalled last year at the finish line.

Rep. Lang, a longtime gambling supporter, argues that the right expansion plan will bring in much-needed cash and create jobs in areas desperately in need of them.

"We have to find all the revenue that we can find that doesn't tax people," Lang said.

A plan was passed to add five new casinos, including one in Chicago. But the governor, who wasn't much involved in negotiations, vowed to veto it. Quinn is OK with the casinos, but he opposes a provision that would allow slot machines at horse racing tracks.

Now, Quinn says he's willing to consider a so-called impact fee that would give tracks a portion of casino revenues to win support. But Lang said track owners are concerned the fee wouldn't be a permanent stream of revenue, arguing the fund could be swept or eliminated in the future.

The governor also has hired a former lawmaker to lead negotiations with Quinn facing pressure from Mayor Rahm Emanuel, who wants a Chicago casino to help pay for new infrastructure projects.

Another meeting with the numerous interest groups is scheduled for this week. Lang suggests the horse racing crowd could be placated by legalizing online gambling such as Internet poker, blackjack and craps. The lawmaker argues theU.S. Department of Justicehas opened the door to such a move.

Asking lawmakers to take a vote on such a major gambling expansion before the November election could be a tough sell.

"There are new opportunities that could lead somewhere valuable, but we're nowhere near the point of suggesting that that can happen yet," Lang said.

Tribune reporter Alissa Groeninger contributed.