State must face harsh economic realities

Gov. Rod Blagojevich is putting together his speech on the state budget, which he will deliver on Wednesday.

As part of his research, he should try very hard to imagine what people are saying at kitchen tables about their economic situation. And what executives are discussing in boardrooms in terms of keeping their businesses profitable.

The governor can accurately surmise that there is a lot of uncertainty, in those homes and businesses, about their financial futures. And he would do well not to add to that anguish by once again proposing a massive new round of state spending that the state's individual and business taxpayers can ill afford.

We would hope, too, that the governor has taken a hard look at some alarming fiscal facts provided by state Comptroller Dan Hynes.

Hynes notes that while other states took advantage of a period of economic growth to firm up finances, "Illinois … still sustains a deficit, ending fiscal year 2007 nearly $3.6 billion in the red based on preliminary unaudited estimates. While this is an improvement from the record $4.166 billion deficit recorded in fiscal year 2003, it provides Illinois the dubious opportunity to retain its status as having the worst deficit in the nation for the fourth year in a row."

This is not an "opportunity" Blagojevich or the legislature should be eager to pursue.

The state can't pay for what it has in place now, let alone create a host of new programs. Hynes notes that prior year bills deferred for future payment stood at over $1.8 billion in the 2003 fiscal year, and grew to nearly $3.4 billion by the end of fiscal year 2007.

Meanwhile, the unfunded pension liability in Illinois is among the worst of all states in the nation.

All this, even as the threat of a looming recession presents the prospect of a severe diminishment in the stream of revenue into the state treasury. Income and sales tax collections are down. Home sales fell nearly 17 percent in 2007 in comparison to 2006. And unemployment in Illinois in December stood at 5.5 percent. It was 4.1 percent in December 2006.

This is not a time for the state to be finding new ways to spend money. The emphasis in legislative sessions ahead ought to be on getting control of state finances and finding ways to stimulate the Illinois economy. In that regard, passage of a capital improvement plan to repair the state's roads and bridges could create hundreds of thousands of good-paying jobs in Illinois while improving travel.

There are some harsh economic realities that need be addressed by state leaders, starting with Blagojevich's speech on Wednesday. And after that, a cooperative -- not combative -- working relationship between the governor and the legislature that is characterized by fiscal responsibility requisite of political leadership in a time of growing fear of recession.