Last year’s state budget caused some real consternation among local government leaders because the General Assembly cut their funding.
The budget slashed their share of the state income tax by 10 percent for one year and skimmed 2 percent off the top of several local sales taxes.
Gov. Bruce Rauner vetoed that budget. His veto was overridden, but the governor’s new budget recycles those same two ideas as well as the overall concept of off-loading state costs onto local taxpayers.
The biggest is Rauner’s proposal to shift some teacher and higher education pension costs down to the local and university/college levels. The pension cost shift idea has been around for years, but Rauner’s new proposal hugely accelerates the process.
The governor would shift 25 percent of costs per year to school districts and universities over just four years. That means, in four years, taxpayers in Downstate and suburban school districts would be paying over $1 billion a year for pension payments that they don’t pay now. And Chicago Public Schools would lose 100 percent of its state pension assistance in the first year, costing the city’s taxpayers an extra $228 million.
I just don’t see how the governor could ever pull this one off. And that means whoever drafts the final budget will have to patch a $591 million hole. Not impossible, but these little things do add up.
The governor’s budget proposal for next fiscal year also relies on an assumption that the General Assembly will pass an emergency $1.1 billion supplemental appropriations bill for this fiscal year by March. Much of that money is for the Department of Corrections, which operated on spit and bailing wire during the two-year budget impasse. Rauner’s administration signed lots of contracts without appropriations to keep the doors open. Now that a new budget is in place, creditors are demanding payment and you can feel a growing sense of panic about all those chickens finally coming home to roost. Where the governor and legislators are going to find that $1.1 billion in the next month or so is still a huge unknown.
Not to mention that other creditors are going to be forced to wait in long lines until somebody can figure out how to reduce the state’s current $9 billion backlog of unpaid bills because the governor’s budget proposal almost totally punts that problem into the future.
However, this budget is not the end of the world. After two years of an extremely painful budgetary impasse, it’s just difficult for me to get too fired up about a budget that doesn’t literally include a line of almost $5 billion in presumed savings from “working together on ‘grand bargain,’” like the governor’s budget proposal did last year.
Yes, the governor has lots of new money from the tax hike, so he should’ve been able to propose a far more balanced budget without all these gimmicks that probably won’t pass (like the pension cost shift) and the deferrals (like the backlog problem), which have to be dealt with eventually. But that would’ve required making some very real and very painful cuts in an election year. Not gonna happen.
Rauner also cleverly avoided making direct budgetary cuts with his tax reduction proposal. It’s a one-off plan that claims to cut the income tax rate by a minuscule quarter of a percentage point by relying on revenues from a pension reform idea that may be unconstitutional and has not yet been endorsed by House Speaker Madigan.
In Silicon Valley, they’d call that “vaporware.” But Rauner is already running a brand-new TV ad claiming he’s “leading the charge to reverse” the “Madigan tax increase” to provide “one billion dollars in tax relief for Illinois.”
We’re now left with two major unanswered questions.
First, is the governor finally serious about negotiating the budget? He had the legislative leaders over to his office last week, which is the first time that’s happened in 14 months. But it was just a quickie budget briefing.
Second, will the Democrats work with Rauner to solve those problems in an election year or will they wait to see if Rauner loses?
Senate President John Cullerton issued a statement last week that may answer both questions: “I met with the governor this morning. He said he wants to roll back taxes and put more money in education. Here’s the problem. His budget does the opposite. He spends the entire tax increase. And he cuts money for education. It’s almost like he doesn’t know what his budget does. I can’t explain the disconnect. It seems intentionally deceptive and it’s troubling.”
So, probably a “No” on both.
Rich Miller also publishes Capitol Fax, a daily political newsletter, and CapitolFax.com.