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Budget woes raise tough questions for hopefuls

Posted January 03, 2010 10:00 pm

SPRINGFIELD - The candidate was asked a simple, direct question: Specifically, where would you cut spending to make good on your promise to fix Illinois' enormous budget problem without a tax increase?

"The answer," he replied, "obviously is to cut spending and limit the growth in spending, which is outrageous."

Jim Ryan was the candidate who came up with that non-answer in a recent debate, but it could have been almost any of the Republicans running for governor.

As Illinois faces the biggest budget disaster in its history, the seven men battling for the GOP nomination are making big promises but offering voters few details about what they would actually do if elected.

They fiercely reject the idea of tax increases and say cost-cutting is the key to balancing the budget. But when asked to spell out which government services they're willing to cut, most of them retreat - as Ryan did in the debate - to generalities about making Medicaid more efficient or scouring the budget for waste.

They rarely dwell on the scope of the state's problem: a deficit of about $11 billion.

That's $11 billion out of $28 billion promised for general government services. That amounts to a 40 percent hole in the budget.

Even if the deficit is only half that size by the time the next governor takes office, or if officials disguise half of it by borrowing money and paying bills late, filling the hole would still require cutting $1 in every $5 the state now spends.

And that would require slashing some services and eliminating others completely.

"They've got themselves in a position, electionwise, where they can't campaign on the truth," said Steve Schnorf, who was budget director under Republican Govs. Jim Edgar and George Ryan.

Even some conservatives who oppose a tax increase scold the candidates for glossing over the vast changes that would be required.

Steve Rauschenberger, a former state senator and a budget expert, said it would require, among other things, cutting school spending and switching to a voucher system, reducing the number of prison inmates by one-quarter, trimming higher education and overhauling Medicaid from top to bottom.

"Any candidate who doesn't talk frankly about major changes ... I don't think is being realistic," Rauschenberger said. "You can't balance this budget simply by looking for easy efficiencies or slight reductions in head count."

The Associated Press asked the candidates to name three specific programs they would end.

Sen. Bill Brady suggested streamlining the State Board of Education, an agency whose administrative budget amounts to $26.5 million. That's about one-quarter of 1 percent of the deficit.

Bob Schillerstrom, the DuPage County Board chairman, called for ending a $13 million program letting legislators award college scholarships.

Businessman Andy McKenna said free mass-transit services should be offered only to poor senior citizens. That is not a state government program.

At times, the Democratic candidates aren't any more specific than the Republicans. But Gov. Pat Quinn and challenger Dan Hynes both endorse different plans to raise income taxes, giving voters something to review as they decide whom to support.

And voters can judge Quinn's performance in office, which includes budget cuts, attempts to lay off employees and other cost-cutting measures. Hynes has put together a budget plan that depends on some vague promises but also includes a long list of specific cuts.

Many experts reject the idea that Illinois' budget problems can be fixed by cuts alone.

"I just don't see any way we can reduce expenditures by those kinds of numbers. I don't think it's possible," said Daniel McMillen of the University of Illinois' Institute of Government and Public Affairs.

Even so, McMillen agreed with the Republican candidates that raising taxes now, amid a deep recession, could harm the state's economy.

Schnorf, the former budget director, said Illinois must get spending under control, then raise taxes. "I think it needs to end up being both," he said.

Jim Ryan's campaign declined an offer to talk in detail about his budget plans. But Sen. Kirk Dillard defended his no-tax-increase plan as both realistic and necessary, saying an increase would slow the state economy at the very time it needs help.

Noting his experience helping to balance the budget as chief of staff under Edgar, Dillard argued the solution is to trim costs overall, overhaul Medicaid and government pensions, and encourage job growth that will produce new tax revenue.

"We cannot be all things to all people," he said.

But when asked about any particular program - from universities to human services to agriculture research - Dillard said it should get more money.

Of all the Republican candidates, Dan Proft has probably been most blunt about changes he would pursue. The Chicago-area public relations consultant proposes cutting state taxes as part of a plan "to completely rethink and reorder" government services.

All the candidates promise to cut pensions and Medicaid, two of the biggest and fastest-growing parts of the budget. Cutting them wouldn't be easy and wouldn't erase the deficit, at least not by themselves.

The billions that Illinois spends on pensions each year pays the amount already promised to employees; cutting benefits now would keep that debt from growing but wouldn't erase what is already owed.

Moreover, Quinn and his predecessor, Rod Blagojevich, both tried and failed to change benefits to slow the growth of the state's obligations.

Medicaid, the program to provide health care to the state's poor, is huge and complex. Major changes would involve intense jockeying among lawmakers looking to cut, lawmakers interested in protecting Medicaid clients, and the hospitals and nursing homes that get the money.

If an overhaul could be passed, it's not clear how much money Illinois could save.

Dillard put the figure at $1.3 billion from expanding managed care and $1 billion from eliminating fraud. A report from the Commercial Club of Chicago's civic committee said Illinois could save $750 million. Schnorf predicted the savings would be several hundred million - "nowhere near a billion."

Laurence Msall, president of the Chicago-based Civic Federation, wants candidates to spell out which programs are a priority and which are not, provide detailed Medicaid proposals and explain how they would improve aging roads and mass transit systems.

"Anyone seeking the office of governor who think it's going to be an easy job is not facing the economic reality," he said.

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Governor candidates asked to brandish budget shears

The Associated Press asked the candidates for Illinois governor about cutting state programs and employees. Here are highlights from their answers:

Question: Please list three specific programs that, as governor, you would eliminate to save money.

Adam Andrzejewski, Hinsdale businessman

• Department of Commerce and Economic Opportunity.

• possible reduction in municipal revenue sharing.

• Illinois Health Facilities Planning Board

Bill Brady, Bloomington state senator

• a better managed Medicaid system will save the state approximately $1.2 billion to $1.8 billion.

• eliminate the State Board of Education to cut bureaucratic spending and provide more money directly to classrooms.

• eliminate high-paid Department of Corrections appointees under the Blagojevich/Quinn administration.

Kirk Dillard, Hinsdale state senator

• Medicaid benefits that are not approved. A better-managed system and eliminating fraud could save as much as $1 billion.

• two-tiered pension modernization could save the state $162 billion over the long term.

• eliminating free rides for seniors on CTA, Metra and PACE.

Andy McKenna, Chicago businessman

• reform the pension system

• reform the state's health care system

• means test the CTA's seniors rider fare program.

Dan Proft, Chicago political consultant

• High-speed rail funding

• Funding for land-banking for proposed Peotone airport

• Cut DCEO in half

• Eliminate the Health Facilities Planning Board

• Eliminate quasi-autonomous bonding authorities: IHDA, IFA, Sports Facilities Planning Authority

• $10M for anti-smoking campaigns

• $26M for class-reduction pilot program that ISBE recommended be cut

Jim Ryan, former state attorney general from Elmhurst

• eliminate current fractured system of procurement (to) save approximately $500 million.

• eliminate pork/member initiatives (to) save from $1 billion to $3 billion.

• move more Medicaid patients into managed care, a move that could save up to $1.2 billion.

Bob Schillerstrom, DuPage County Board chairman from Naperville

• Cut the current pension system for new employees

• End the Legislative Scholarship Program

• Require new state employees to enroll in a defined contribution plan, such as a 401(k).

• Require new state employees to pay higher portions of their retirement health insurance.

Dan Hynes, state comptroller from Chicago

There are some obvious examples of programs that the state could cut and save millions of dollars, like the Governor's Internship Program and the Pest Management Program. However, we need to take a more comprehensive review of every program. ... I would support an initiative ... where programs automatically sunset after a fixed number of years unless they can prove that their existence is meeting the state's standards. I have also called for the merger of the Comptroller's office and the Treasurer's office, as well as the elimination of the Lieutenant Governor's office.

Pat Quinn, governor, from Chicago

I have already identified $2 billion in spending cuts for the current fiscal year, and I plan to continue to find new ways to save money going forward. However, it is important to remember that the vast majority of state programs, and those that are most expensive to provide and administer - such as Medicaid and pension funding - are required by statute. To make any meaningful cuts in the budget, it is necessary to work with the General Assembly to identify programs that can be reduced or eliminated.

Question: Approximately how many employees should Illinois state government have in fy2011?

Andrzejewski

Illinois budget problems are not due to massive numbers of state employees. It actually ranks well in employees per capita. The budget drain comes from easily gamed and rich pension benefits, and an opaque grant-making system that needs to be opened up to transparency and audits.

Brady

Illinois needs to cut state spending by approximately 10 percent, which means that we need to balance our financial efforts among several areas, including a proportional reduction in the number of state employees.

Dillard

Less than it did in FY2010 if there is no improvement in the economy, but without the ability to thoroughly audit the state budget programs and expenditures, this is difficult to forecast.

McKenna

I would employ the number of employees necessary to operate state government and would reduce the work force in areas where government operations are duplicative.

Proft

I don't have a magic number. The issue is less about the number of state employees than the cost they are imposing on Illinois taxpayers given salaries that are now, on average, well above salaries paid in the private sector ... the cost of health care benefits ... and the pension obligations we are incurring.

Ryan

The important metric is not just the number of employees, it is overall spending. Blagojevich raised the salaries of existing employees, gave more work to outside contractors and increased the state's overall spending well beyond the rate of inflation or our population growth.

Schillerstrom

I run a county with one of the lowest staff-to-population ratios in the country. We have done this by streamlining government, consolidating services and training employees in multiple capacities. I plan to bring that type of efficient government services to the governor's office.

Hynes

In order to run Illinois as efficiently as possible, it is imperative that we cut management and unneeded bureaucracy, not front-line workers, starting with firing half of the high-paid Blagojevich political appointees making over $70,000 per year.

Quinn

Next year, the state of Illinois faces an historic deficit, with a shortfall that is projected to exceed $10 billion. Without strong action by the General Assembly to increase revenues ... it seems likely that the state will be forced to reduce staffing levels.

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