Analysis: No shortage of challenges for Rauner next year

When Bruce Rauner takes office as governor next month, he’ll face a litany of challenges — not the least of which is the loss of $4 billion in revenue from a state income-tax rollback that takes effect Jan. 1.

The Republican has yet to say exactly how he’ll fill that void, but it appears he thinks he can balance the state’s bleeding budget without changing the income-tax rate, which will drop from 5 percent to 3.75 percent.

“Our problems have not been created by the tax hike expiring,” Rauner asserted at the Capitol last week during the legislative veto session. “They are due to years of mismanagement.”

Rauner, who’s made a fortune in the investment industry, campaigned in part on using his business background to turn around Illinois, which on Friday was labeled the “worst-run state in America” by USA Today. But crafting a 2015-16 state spending plan is just one of the issues he’ll face after being sworn in Jan. 12. Among the others:

Pensions:The Illinois Supreme Court has been asked to rule quickly on whether reforms that Gov. Pat Quinn backed in hopes of solving the state’s $100 billion pension shortfall are legal — and Rauner has said he wants more pension reforms regardless. That will pit Rauner against powerful state-employee labor unions.

Minimum wage: Mayor Rahm Emanuel and the Chicago City Council’s vote to raise the minimum wage from $8.25 an hour to $13 an hour by 2019 gummed up plans for minimum-wage hike to $10 or $11 statewide. House Speaker Michael Madigan, D-Chicago, adjourned the House until Jan. 14 without considering a minimum-wage bill.

Rauner has tied passage of a statewide minimum-wage increase to “pro-growth” reforms for businesses, but he’ll have to work with the Democrat-controlled House and Senate to get those done.

Sixty-three percent of Illinois voters approved an advisory referendum Nov. 4 that asked if they’d support a statewide minimum wage hike to $10 an hour by Jan. 1, so there’s pressure on all sides to do something.

And — should lawmakers take action on a statewide minimum-wage hike — it’s unclear if it would trump the action taken by Chicago’s City Council.

“I can’t really comment on that issue. It’s complex,” Rauner replied when asked if a state law could pre-empt local minimum-wage hikes like Chicago’s. “There’s different sides to that point.”

State agency directors, employees: Rauner’s term will usher in the biggest turnover of state-agency chiefs since Democrat Rod Blagojevich took over as governor from Republican George Ryan in 2003. Rauner must choose these top aides wisely. Quinn was politically embarrassed in February after his newly appointed Department of Children and Family Services director, Arthur D. Bishop, stepped down following Chicago Sun-Times and WBEZ reports that revealed a theft conviction and paternity case in Bishop’s past.