Gov. Pat Quinn to unveil $30 billion-plus Illinois budget
(MCT) — Gov. Pat Quinn this week will unveil his spending priorities for one of the nation's most cash-strapped states, but the $30 billion-plus operating budget will be shaped by many forces he can't get under control.
The income tax hike Quinn approved two years ago has brought the state $15 billion in new money, but Illinois still has a stack of old bills that now approaches a staggering $10 billion.
The governor has vowed to lead on reducing the state's $96.8 billion pension debt that drains money from schools and human services, but he has been unable to win a resolution. Cost-saving health care reforms are coming in hundreds of millions of dollars short. Washington's sequestration standoff also could cost Illinois millions. And the state's poor credit rating led him to postpone plans to borrow money for job-creating construction projects.
Then there's the Democratic governor's political future. His plans to run in a 2014 primary barely a year away ensure that power and ego from all corners of the Capitol will be a factor in the final budget.
Quinn retains the pulpit that comes with being governor, but he hasn't been able to use it to bully the powers that be into enacting his agenda. House Speaker Michael Madigan, in particular, and Senate President John Cullerton largely run the Statehouse these days even though they, like Quinn, wear the Democratic Party label.
"When you're the chief executive, you face challenges from the outside that are not of your making," said Quinn spokeswoman Brooke Anderson. "The governor's job is to control the things he can and manage the elements that are outside his control. But I'd say that we've been in a perfect storm since the moment Gov. Quinn got here. We're facing the worst recession since the Great Depression, decades of financial mismanagement that has been culminating in the pension crisis and unpaid bills. And you have to deal with that."
Despite his liberal roots, Quinn has shown a willingness to cut costs. One has to look no further than at the cuts in health care to the poor and the string of prisons and mental health and developmental centers he has shuttered. But he has clashed at times with fellow Democrats as well as Republicans over how much to spend and where.
A reminder of who is in charge of how much spending eventually will be approved came last month at a low-profile legislative hearing. The governor's financial team suggested the Democratic chairman of the House Revenue & Finance Committee would have to wait for Quinn's budget address to get the administration's best estimate of how much money Illinois would take in during the next budget cycle.
"Well, it may be too late then," said Rep. John Bradley, the Marion Democrat who chairs the panel.
For the last two years, the House Democrats and Republicans have stuck with their own revenue projections and refused to go above the amount when constructing a budget. A similar game plan is taking shape again this year. Bradley didn't raise his voice, but he made it clear in his committee that the Legislature's decisions on spending will be made whether or not the governor wants to weigh in.
"My advice — my humble advice — to you all would be to get us the information," Bradley said to the governor's aides at the budget hearing.
As he presents his fifth budget Wednesday, Quinn finds himself leading a state where lawmakers are showing a growing frustration and impatience with the string of financial woes.
"All of these things add up and in a significant way," said Rep. Tom Cross, the House Republican leader from Oswego.
Anderson defended the governor, saying he looks at the "big picture" and pushes for solutions aimed a stabilizing state finances, creating jobs and strengthening the economy "in the long run."
Even so, the Illinois economy is lurching forward rather than trending upward smoothly. Unemployment was at 8.7 percent in December, nearly a percentage point higher than the national rate. Businesses still are complaining about the financial pinch of what was billed as a temporary, four-year income tax hike that Democrats championed in 2011.
Preliminary figures show Illinois is expecting only about $600 million to $800 million in new money from economic growth during the budget year that begins July 1, a mediocre performance.
But that's nowhere near enough to cover the state's $9.7 billion backlog of old bills, a comptroller's estimate that factors in bills the administration has in the pipeline. Walgreens, for instance, is due $118 million — the largest amount that Illinois owes any business. The state also owed $707 million to elementary and high schools as of midmonth. The University of Illinois alone is owed $526 million — marking the furthest behind the state has been on payments to its flagship school.
The growing budget pressure prompted the Quinn administration only weeks ago to predict that education could see a $400 million cut in the next budget. That would follow cuts the prior two years of $162 million and $209 million.
Quinn and lawmakers blame it on the rising costs of state worker pensions. But the governor who has said he was "put on Earth" to fix the pension systems so far has left that mission unaccomplished.
The most recent calculation of the total pension debt is $96.8 billion. That's more than the total amount of money that Washington is supposed to cleave from the federal budget under the sequestration that began Friday.
Exponential growth in the state's annual pension payments is expected to push the price tag in the next budget to nearly $6.1 billion — an increase of more than $900 million from the current budget. And it's much higher when counting payments made on loans used to pump money into pensions in past years.
Cost-of-living adjustments are driving some of the pension debt, and they've become the target of multiple legislative proposals to reduce retirement costs. "That's where the money is," said Senate President Cullerton, of Chicago.
Further out of Quinn's sphere of influence is the Washington battle over sequestration, the federal cuts that began when no deal was reached to avert them. The White House estimated Illinois could lose tens of millions of dollars, including money for education.
The governor hoped to save hundreds of millions of dollars by reducing the state's health care costs for both government workers and the poor.
But Quinn's lengthy showdown with labor may be costly initially. A Madigan memo told his troops the protracted negotiations have meant none of the hoped-for $350 million in health care costs would be realized immediately, meaning "further cuts to other areas of the budget." The governor now is hopeful that long-term substantial savings of hundreds of millions of dollars will be realized in the final two years of the contract — if the union ratifies it.
Another revelation came last month when the agency that oversees health care for the poor calculated about $1 billion was racked up in savings through reforms but another $400 million did not materialize for multiple reasons, including court fights and bureaucracy that prevented changes from getting in place fast enough. Quinn aides had argued as the current budget came together that the legislative estimates were too aggressive.
Republican leaders Cross and Sen. Christine Radogno of Lemont estimated the overall amount of recent "lost savings" is closer to $2 billion.
"I don't know if that's effective leadership, ineffective leadership, or is it just a political decision that you're going to alienate some of your friends?" Cross said.
But as Quinn maintains that he's keeping his focus on controlling state government's bottom line, there's one major factor Quinn can't control. It's the biggest political parlor game in Illinois: What will Attorney General Lisa Madigan do?
The House speaker's daughter has been pondering a challenge to Quinn in the March 2014 Democratic primary, and few know how that could play out in the Legislature's budget maneuvers.
Speaker Madigan's spokesman said the attorney general's political future will not influence budget decisions as he works to build up the state's financial health. "The speaker tries to deal with governors of all shapes, sizes" and regional backgrounds, and has for his whole career, said Steve Brown, a spokesman for Rep. Madigan.
Quinn quickly dismisses questions about politics, sounding like a candidate who'd rather not discuss how his own future is tied to the state's.
"This is all going to be about policy for really the next some months," Quinn said at a recent stop, "because this is really what the governor has to do right now."