The Civic Federation doesn’t support Gov. Bruce Rauner’s latest budget proposal because it is “precariously balanced” — claiming there aren’t enough contingency plans and it doesn’t effectively work to eliminate the state’s massive bill backlog.
“Given recent history, the renewal of political stalemate could be the gravest threat facing the State,” according to the Civic Federation’s Institute for Illinois’ Fiscal Sustainability report released Wednesday morning.
“Unfortunately, the possibility of renewed political stalemate hangs over Springfield, and it would be financially reckless to wait until after the upcoming election to start working toward long-term stabilization,” Civic Federation President Laurence Msall said in a statement. “The State narrowly avoided a downgrade to junk status last year and another impasse could squander recent progress.”
The civic watchdog’s report says the group “cannot support” Rauner’s recommended budget because it is “only precariously balanced,” citing a projected surplus of $351 million that depends on “various aggressive assumptions” totaling $1.8 billion in savings or additional revenues.
“It is not clear whether these assumptions are backed up by contingency plans,” the report says.
The report says the budget again relies on the selling of the James R. Thompson Center for the third year in a row and on “speculative group health savings.”
The Civic Federation also says it doesn’t support a budget that doesn’t have a plan to eliminate the unpaid bill backlog. The surplus would go towards the bill backlog — which was at $6.88 billion on Tuesday — but it’s “unclear how the State will pay the remaining backlog in future years.”
The Civic Federation also says it doesn’t support the governor’s proposal to shift the normal cost of pensions to local school districts outside Chicago over four years, while making Chicago Public Schools pay for their normal pension costs starting next year.
“The proposal exacerbates inequity to Chicago taxpayers, who also pay for teachers’ pensions outside the City,” the group says.
There are some parts of Rauner’s budget the group supports, such as reducing the state’s role in financing health insurance costs for teachers and universities and community college employees and retirees. The group also supports Rauner’s support of a “consideration model,” the pension reform plan Illinois Senate President John Cullerton has long tried to pass.
The Civic Federation has several recommendations as well, with the No. 1 priority to “enact a full-year, balanced budget for FY2019 and avoid sliding back into another fiscal crisis.”
Other recommendations include reducing late-payment penalties on the bill backlog; broadening the income tax base by eliminating the exclusion of federally taxed retirement income; expanding the sales tax to include services taxed by Wisconsin and working towards a rainy day fund.
Rauner in his February budget address said he’d help balance the budget through a change in health insurance benefits for retired teachers and state employees — and a cut to Chicago Public Schools teacher pensions.
He’s also proposing the removal of group health insurance for state employees from collective bargaining — a move that will require legislative support that may prove difficult to get. That would save an estimated $470 million, Rauner argued, while adding the state would have an extra $351 million in surplus to help pay down debts within his plan.
The governor’s office disagreed with the Civic Federation report, saying “thanks to a number of reforms and spending reductions, it is balanced with a surplus.
“These are our administration’s ideas, but we are open to suggestions from the legislature to provide better value for taxpayers,” Rauner spokeswoman Rachel Bold said in a statement. “What we’re not open to is increased taxes. This is where we strongly disagree with the Civic Federation. The people of Illinois are already taxed out. Families are facing tax hike after tax hike at the state and local levels. They’ve had enough. It’s time to cut taxes, not raise them.”
Illinois Comptroller Susana Mendoza said she agreed with the report’s assessment that the bill backlog isn’t addressed, all the while doing some finger pointing at the Republican governor.
“The Civic Federation is right to call out the Governor for not addressing the state’s remaining bill backlog, which is nearly $7 billion,” Mendoza told the Sun-Times in a statement. “The Governor continues to follow a familiar pattern of non-reality-based governing. It’s affirming to know there are others who see this for what it is: A make believe budget that fails to meet Illinois’ real-world challenges.”
Meanwhile, Rauner and the four legislative leaders met in Springfield on Tuesday morning, with Cullerton saying progress was being made. He did, however, warn of the challenges of enacting a budget during an election year.
“What is true is that there’s an election in the middle of the fiscal year and we haven’t had that before so that might play a role in somebody’s motivation. Not me. We just have a much closer, smaller gap and there’s ways to fill it,” Cullerton said.
Cullerton called last year’s budget process “chaotic,” but noted “we’re just closer [this year] because we have more revenue.”
Rauner said the budgeting process is moving “very slowly,” and said he introduced a “fully balanced budget” with no tax increase in his February proposal. He accused Democrats of a “clear reluctance” to detail a revenue number.
“We should not let politics or elections get in the way of doing the right thing for the people of Illinois,” Rauner said. “The people of Illinois deserve truly balanced budgets, not more taxes.”