The governor is expected to take the lead on
setting spending priorities

by Aaron Chambers

Lawmakers resurrected a classic phrase to express their wonderment over Gov. Rod Blagojevich’s approach to dealing with the ailing state budget: Where’s the beef?

No, they’re not hoping for bigger hamburger patties, as burger lovers were in the Wendy’s commercials that made the saying famous. They want to know just how the Democrat intends to deal with a deficit he estimates at a combined $4.8 billion for this fiscal year and the one that begins July 1.

The beef should arrive this month. Blagojevich is scheduled to deliver his budget proposal for the next fiscal year on the 9th. Under the Illinois Constitution, that budget plan must be balanced. So Blagojevich must reconcile the shortfall he projects to be $3.6 billion in fiscal year 2004. At the same time, he is expected to deal with the projected $1.2 billion budget hole in the rest of this fiscal year.

The General Assembly must approve the state budget, of course. But the process in Illinois is executive driven. So the governor is expected to take the lead on setting spending priorities — and making the tough decisions necessary to correct the imbalance.

There are other, nonbudgetary concerns about the governor’s vision. For instance, Rep. Art Turner, a Chicago Democrat, says that while he appreciates the governor’s desire to focus law enforcement resources on battling ecstasy, the so-called club drug popular among young white suburbanites, he hopes adequate resources will be devoted to fighting crack-cocaine, a more pressing problem among his African-American constituents on the city’s West Side.

Still, the budget is foremost on most minds at the Capitol. And, for legislators, the governor’s action this month won’t come too soon: There’s growing sentiment that this governor is stalling on the hard choices. Fueling that perception, Blagojevich used his State of the State address last month to propose new spending.

This would include $24.9 million to establish “universal preschool,” $24 million to reopen Sheridan Correctional Center in LaSalle County to house drug offenders and $24 million to expand the state’s Family Care program, which provides health insurance for the poor.

Though the tag he attached to the package, $88 million for the next fiscal year, is substantially less than the estimated $800 million worth of promises he made during last year’s campaign, critics nonetheless charge that it was irresponsible to discuss more spending before outlining a budget plan.

Blagojevich insists that fulfilling campaign promises and balancing the budget are not mutually exclusive.

And the governor has taken steps to save the state money. He ordered agencies and departments under his command to cut 10 percent of administrative spending, a move Blagojevich officials say could save $125 million in fiscal year 2004. He also directed those agencies to reserve 8 percent of their fiscal year 2003 operating funds, 10 percent of capital improvement funds and 5 percent of grant and award dollars. The governor’s office is reviewing and prioritizing those programs, estimated at $1.7 billion.

The governor asked public univer-sities to present him with scenarios for cutting spending from their budgets. Those cost saving proposals were due to the governor by mid-March.

He limited to five the number of unused vacation days state employees can roll into another year. Responding to a news report, he said some 140 state employees who retired last year cashed in vacation time for lump sums, in some cases exceeding $60,000.

The governor also has proposed an ambitious plan to “refinance” the state’s pension obligations. Essentially, he proposes selling $10 billion worth of bonds, investing the revenue and paying pension obligations with the interest earned on those investments.

His aides say the plan, if approved by the legislature and accepted by brokerage houses on Wall Street, could save the state $300 million this fiscal year and $1.6 billion next fiscal year.

The bonds would be sold in $2 million to $4 million increments over a period of months, according to the governor’s budget bureau. The proceeds would be invested in stocks, real estate and equities. And the bonds likely would be paid off over 30 years.

“This is far, far preferable to raising taxes,” says Blagojevich, who maintains he won’t raise income or sales taxes to shore up the budget.

The budget bureau was fleshing out details of the bonding plan at press time in mid-March. So it’s unclear exactly how the proposal, if implemented, would affect the budget.

Much depends on how the scheme is structured. For instance, would debt service be backloaded so that heftier payments are required in later years? That’s how New Jersey structured a similar plan in 1997. As a result, administration officials there say, the state increasingly struggles to make payments. “It has caused tremendous increases in our future and present debt service,” says Matthew Golden, spokesman for that state’s Department of the Treasury.

Blagojevich has secured key support for his bonding concept, nevertheless. Senate President Emil Jones Jr. and House Speaker Michael Madigan, Chicago Democrats, back the plan.

Still, bonding measures require a three-fifths vote in the legislature. Though Republicans are in the minority in both chambers, their support will be necessary.

And GOP legislators have spent the spring session complaining about what they call Blagojevich’s reluctance to deal directly with the budget deficit. Specifically, they charge that he should deal with the current fiscal year before outlining plans for the next one.

“We’ve got a tremendous problem and that problem is today,” says Senate Minority Leader Frank Watson, a Greenville Republican. “It’s a fiscal year ’03 problem that doesn’t seem to get his attention.”

There are immediate ramifications to the current shortfall. As of mid-March, the Illinois comptroller’s office, which pays the state’s bills, was holding more than 241,000 of them totaling $1.6 billion. The longest wait for payment to vendors was 41 business days.

Republicans also complain the governor has not reached out to them for feedback on his developing plans. “I can’t really comment honestly because my comments are coming off the top of my head,” says state Treasurer Judy Baar Topinka, chair of the Illinois Republican Party. “If mine are coming off the top of my head and his are coming from the hip, we’ve got this anatomical discussion going on that doesn’t necessarily add up to a budget.”

Meanwhile, lawmakers are moving ahead with spending proposals of their own. This could put additional pressure on the governor to incorporate additional spending. The House Republican caucus estimates some $65 million in spending measures have been approved by that chamber.

Democrats also have been cool to Blagojevich’s approach but have not been as harsh in their criticism. Many in the governor’s party were disappointed that his State of the State failed to deal directly with the budget.

“It was a feel good speech for the people of Illinois,” says Sen. Donne Trotter, a Chicago Democrat and chief budget negotiator for his caucus. “But I think people are a bit antsy about what his spending plans are going to be. We heard about the needs of our state, but there was no meat to it.”

Blagojevich retorts that his administration is, in fact, off to a quick start. “I think the grumbling you’re seeing is that some who are entrenched, who are part of the status quo, don’t like the reforms we’ve talked about and we’ve announced.”

The Blagojevich Administration also has stepped up criticism of George Ryan, the governor’s predecessor. Last month, Blagojevich took to raising Ryan’s name during each public appearance, and blaming him for the budget situation: “Nobody was more popular in the Springfield environment than Gov. Ryan. He didn’t say no to anybody; he said yes to everybody. And now we’ve got a $5 billion deficit.”

Blagojevich Budget Director John Filan, during a press conference in February, traced the budget deficit to fiscal irresponsibility during Ryan’s four years. Despite declining revenues in the latter part of the administration, Filan said, lawmakers and the governor continued to build new spending into the budget.

“Not only is that troublesome from a pure dollar point of view, but that spending, once it gets in the base, it’s very difficult to get out,” he said. “So consequently, once you’re there it’s hard to pull back.”

The Blagojevich team didn’t cause the damage. But this month they must fix it.

Illinois Issues ,April 2003

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