Budget ambiguity has unambiguous consequences

It's easy to understand why politicians take ambiguous positions: wiggle room. Avoiding specifics allows elected officials to champion causes that resonate with the public - like school funding reform - while managing to avoid ever voting for a bill filed to accomplish the goal. You know the rap: "I support it in principle, but quibble with the details of this legislation." It's how politicians have their cake and eat it too.

Of course, there's one policy arena that's generally exempt from this type of non-productive, political ambiguity: the budget. By definition, a budget has to be specific, delineating precisely how revenue in a given year will be spent, on which public services. And if Illinois needs anything, it's a General Fund budget that unambiguously details how to resolve its fiscal shortcomings while covering the cost of core public services.

This is especially so now, given how significantly Illinois' fiscal condition has deteriorated since the governor came into office. In FY2015, the last state budget passed before Bruce Rauner was elected, Illinois had an accumulated General Fund deficit of $5.97 billion. The good news: that deficit had been reduced on a year-to-year basis each of the four preceding fiscal years. The bad news: it still meant 25 percent of all spending on current FY2015 services was deficit spending. That's troubling, since nine out of every 10 dollars of such expenditures cover the core areas of education, health care, human services, and public safety.

So far, Rauner's delivered three budget addresses, and passed zero budgets. Not surprisingly, things have gotten worse. Current estimates are that the General Fund deficit will grow to $14.75 billion by the end of FY2017, meaning fully 67.8 percent of all current year spending on core services will be deficit spending.

Hence the keen anticipation for the FY2018 budget Gov. Rauner recently proposed: finally there'd be a detailed road map for creating a bipartisan, "Grand Bargain", budget bill. And while the governor did strike the right tone in calling for a bipartisan resolution of Illinois' fiscal problems, his proposal fell well short of providing the specificity needed to craft actual legislation.

For instance, he proposes to make $37.316 billion in total, FY2018 General Fund expenditures. Of that amount, $11.385 billion is pegged to cover hard costs that have to be paid by law, such as debt service and the like. So far so good, right? Well, no actually. See, the governor's FY2018 estimate for hard costs is some $1.4 billion less than what current law provides. The primary reason for this differential is that the governor anticipates some ill-defined "savings" that will purportedly come from "reforms" that are both vague, and require a change in law. Or, put another way, $1.4 billion in ambiguity.

That leaves $27.041 billion in proposed FY2018 spending on current services. Or does it?

I question that math, because the governor only projects $32.744 billion in revenue for FY2018, meaning even if he gets the somewhat questionable savings plugged into his hard cost line (and he won't), total proposed spending still exceeds projected revenue by $4.572 billion. This is where the governor's FY2018 budget proposal really gets creative. Instead of identifying which new revenue sources would cover that on-budget shortfall, or the billions in cuts to core services needed to balance things out, the governor instead projects $4.572 billion in "savings" from a line item called "Working together on Grand Bargain."

That's quite a convenient Grand Bargain indeed. It also effectively cuts his own proposal for spending on current services in FY2018 by 17 percent, without specifying which services would be cut. And that only accounts for the "on-budget" shortfall. Remember, FY2018 begins with an estimated $14.75 billion in unpaid bills inherited from FY2017. Which means when the magic, "Grand Bargain" and other savings fail to materialize - and they will - the deficit will balloon to north of $20 billion, or a tad more ambiguity than we can afford.

Ralph Martire is executive director of the Center for Tax and Budget Accountability, a bipartisan fiscal policy think tank. rmartire@ctbaonline.org