Week of July 20th, 2009

The State of Illinois now has an operating budget for fiscal year 2010. The General Assembly passed the budget during a special session on July 15th. The budget, as it stands, will cause many programs to be funded at levels far below the previous year. The state of Illinois, like most states, it experiencing a reduced level of revenue and funding all programs at previous year levels is simply not possible at this time. While the budget is not perfect by any means, it is a reflection of the current state of the economy and the fact that for the past six years the Democratic majority in Illinois built the expense side of the budget to unsustainable levels by adding and expanding programs that we simply could not afford. Some of the growth was enacted by former governor Blagojevich, especially in health care expansion.

If you will remember, for the past six years, I have written about the fact that the state was adding programs and increasing spending at an alarming rate. I further warned that the spending spree was being financed by selling assets, raiding funds and borrowing money. In fact, twice the public pension fund was shorted payments during the past six years in order to spend on new and/or expanded programs. One of former governor Blagojevich’s first budgets was “balanced” by selling $10 billion in pension bonds and only putting in around $8 billion of the borrowed money in the pension fund. Then, a few years later, under the guise of “pension reform”, the systems were shorted another $2.3 billion. In addition, billions have been taken form the road fund and other “dedicated funds” over those six years.

While all of the revenue came from temporary sources, the expanded and new programs and additional spending was built into the base expenses of state government. For six years, we have warned people about the fact that these programs and the additional expenses were not sustainable. Many times, those warning were waived off as “partisan rhetoric”. That is understandable as those budgets were passed on partisan votes. However, the fact is that we are now in this situation due to the fact that those “Smoke and mirror” budgets were passed and we have far too many expenses built into the budget without sustainable revenue to pay for the spending. As a result, this year is when the chickens have come home to roost.

There are those who continue to insist that the way to fix this problem is simply to pass an income tax increase, sales tax increase or both. That might sound like the easy and necessary thing to do. However, the only thing that would do at this point is take money away from hard working people at a time when unemployment is over ten percent and people are having trouble making ends meet. At some point, a revenue increase might be needed, but until we get state spending under control and prioritized, more revenue would only add to our problem.

The budget that we passed will require the governor to make some tough choices. He asked for and received unprecedented power to manage this budget. He has complete discretion as to how to spend $1.2 billion from the proceeds of a short term borrowing plan. The entire authority for borrowing is $3.5 billion, but the General Assembly insisted that $2.3 billion go towards program for the most vulnerable citizens in Illinois. For weeks we have heard about cuts to programs for the disabled, elderly and mentally ill. The fact that we insisted on $2.3 billion of the $3.5 billion go to human services programs like developmentally disabled will not fully fund those programs, but it should allow for around 90% funding. The remaining $1.2 billion that the governor now controls will also not fund all other areas of the state budget. He will have to decide where the money is best spent. Some programs will likely be cut by 50% or more.

The bottom line is that almost all areas of state support will receive less. That means education grant line items will be reduced. Soon, the State Board of Education will meet and decide where the cuts should be made. I am certain that the governor’s office will have input into those decisions. The same is true for all state departments, there will be cuts and some of the cuts will not be easy to make. This prioritizing will be difficult and I think we need to remember that Governor Quinn will be making some very difficult decisions.

Many people have contacted me over the past several weeks and months to tell me where we should be making cuts and how the State could and should save money. I want those suggestions to keep coming. There is going to be a bipartisan task force set up to examine state spending and determine areas where the state can cut back. There are some good ideas already coming in. I have heard from many people who work at the Department of Corrections especially about how money could be saved. I will serve as a member of that task force. My hope is that the task force, along with pensions and Medicaid reform commissions can really start the fiscal reform we need to fix our budget problems in Illinois. Before we ask for more money, we must do a better job of managing the money the people already give the state.

The General Assembly is not scheduled to meet again until the fall veto session which has been scheduled for October 14-16th and October 28th-30th. At that time, I am sure we will take another look at the budget and hopefully some of the reform measures will be ready to act upon. The fact is that next year could be even worse due to the loss of federal stimulus funding. However, my hope is that the jobs created by the new Capitol program and the economy itself will begin to rebound so that our revenues to state coffers will increase and allow us to restore some of the cuts.

We have also launched a new website, www.reinventillinois.com to elicit suggestions on ways to make state government more efficient or cost effective. The website seeks the ideas of “Illinois’ greatest natural resource”—its citizens—to develop innovative new approaches to solve our state’s budget problems. I encourage you to visit this website to leave your own thoughts, read the suggestions of others, and view helpful links to state budget reports and the latest in Illinois financial news. If you have thoughts you would like to share, you can email me at reddyunit1@aol.com or call either of my offices at (217) 558-1040 or (618) 563-4128. You can also send letters to P.O. Box 125, Hutsonville, IL 62433. To track legislation or to listen or watch live session, visit www.ilga.gov or my website, www.peopleforeddy.com.