A financial watchdog group often sought-after for its budget expertise has rejected Gov. Bruce Rauner’s proposed state budget, saying the plan the governor laid out in February assumes billions of dollars in savings that “do not appear to be achievable.”
In a 78-page report, the Civic Federation’s Institute for Illinois’ Fiscal Sustainability officially opposed Rauner’s spending plan and urged lawmakers to come up with an independent proposal that expands sales taxes, considers taxing non-Social Security retirement income over $50,000, and ramps up the state’s income tax on corporations and individuals.
The group said Rauner’s budget would cut services that ultimately would prove more costly to the state in the long run.
It also panned Rauner’s proposal to cut back local government’s share of state revenue.
“It would be a hollow victory if the state of Illinois put its house in fiscal order but allowed the finances of other municipalities and the city of Chicago, the state’s economic engine, to deteriorate further,” Civic Federation President Laurence Msall said.
Rauner’s plan claimed to close a $6.2 billion operating deficit by relying, in part, on $2.2 billion in pension reforms that few believed Rauner could achieve. The state’s budget hole was exacerbated by the expiration of a temporary income tax increase that rolled back at the beginning of the year.
When it came to group health insurance for the state, Msall said Rauner’s numbers — a proposed reduction by more than one-third — seemed out of reach and unlikely to happen in this session.
With the state Legislature facing a budget deadline by month’s end, Rauner’s pension proposal has not gained traction, largely because a previous pension reform plan is still caught up in the courts. In fact, the Illinois House on Wednesday outright rejected deep spending cuts Rauner has proposed, including a $1.5 billion slashing of Medicaid. It was a vote that carried no Republican support.
The Civic Federation applauded the fact that Rauner laid out a $31.5 billion spending plan in February, about a month after being sworn in, and that the governor did not rely on borrowing to fill the gaping revenue hole.
“We do commend Gov. Rauner for getting it out on time. We just can’t support the $2.2 billion in reduction in pension contributions,” Msall said. “We can’t support some of the other more optimistic and aggressive proposed cuts.”
As lawmakers were in Springfield haggling over the proposed budget, Rauner was in Chicago, talking to the City Council about his “turnaround agenda.” Rauner has repeatedly tied advancing that agenda, which largely looks to limit the power of unions in Illinois, to negotiating a tax increase to balance the budget.
On Wednesday, Rauner’s office made that connection again, in response to the Civic Federation’s recommendations.
“Illinois’ fiscal crisis has been years in the making because career politicians were more interested in sweetheart deals with Springfield insiders than helping the taxpayers they were supposed to be working for,” the governor’s office said in a statement. “The structural reform addressed in the governor’s turnaround agenda will help free up resources to tackle our $6 billion deficit. New revenue cannot be discussed until we address the underlying structural issues that have landed us here in the first place.”
In an interview, Msall brought up past support for a sales tax expansion by both Mayor Rahm Emanuel and Rauner, saying it should be looked at this session.
Msall also urged state lawmakers to address “the mounting financial crisis in the Chicago public schools” that was not included in pension reform legislation that is now before the courts.
