State budget will be a surprise
SPRINGFIELD -- As Gov. Rod Blagojevich prepares to unveil his multibillion-dollar state spending plan for the next budget year, he faces dual challenges in a sinking economy and increasingly hostile General Assembly.
The economic downturn has sapped state revenues and is projected to continue doing so, potentially hamstringing the flamboyant spender who's made government health care for every Illinoisan a personal political mission.
His budget speeches bear increased similarity to campaign performances. Last year, Blagojevich unfurled plans for statewide health care financed with the largest business tax in Illinois history.
Like many campaign promises, it didn't last long.
Enter the hostile lawmakers. Last year, Illinois House members rejected his tax plan 107-0. The overwhelming denunciation proved to be a sign of things to come as political bickering over spending and personalities sent the General Assembly's spring session careening into months of overtime. The final touches on a state budget -- due July 1, 2007 -- came just a few weeks ago. Yet already the projected state tax take used to balance that plan has nose-dived and is expected to come up nearly $750 million short.
Tension remains high at the Capitol, where the Illinois House is proposing every law that passes contain provisions explicitly telling the governor and his agency chiefs they have no authority to tinker with them.
Even members of the Blagojevich-friendly Illinois Senate urge the governor to tread lightly with this budget proposal given the economic realities and the fact that no one wants to repeat the disastrous overtime sessions of 2007.
"We're not going to have another 11-month session," said state Sen. Terry Link, a Waukegan Democrat and member of Senate leadership. "I would hope the governor is listening. You've got to listen to the will of the people who are going to pass this budget and who you're going to be working with."
Unlike previous years, Blagojevich has so far kept his speech largely under wraps. A spokesman offered no clues on what would be included, but suggested the governor isn't about to tone it down.
"People are looking to their leaders for what they can do to help. They're looking for can-do people. They're not looking for their leaders to be naysayers and to talk about everything they can't do," said Blagojevich spokeswoman Rebecca Rausch.
"The budget proposal the governor will unveil will focus on just that: what we can do to help families during tight economic times," Rausch said. "Our philosophy is: If families are doing well then the economy will do well."
Around the Capitol, expectations are the budget will include plans to eliminate business tax breaks -- such as one that doesn't impose sales tax on many software purchases -- and take money from special state accounts set aside for everything from mental health to drivers education. Both ideas are floated annually with limited success.
In addition, business groups are gearing up for a feared carbon tax that essentially penalizes companies for their emissions and potentially raises a billion dollars, if not more. Business interests argue companies would either quickly pass the tax onto consumers or look to move to other states. No state currently has such a tax.
At the same time, Indiana economic development officials are touting in radio ads lower taxes there and encouraging businesses to relocate.
Officials from Illinois pension systems also have been making the rounds at the Capitol, wary that lawmakers and the governor may again try to skip or shortchange the nearly $750 million increase in the payment due this year. The pension fund has a massive hole in it because while teachers and state employees paid in, lawmakers and past governors spent the state's share elsewhere, and at some point taxpayers are going to have to make it up with interest.
"The bottom line is that the state of Illinois, unlike many other states, has not taken advantage of our five years of economic growth. And now as we face a recession, our financial problems are daunting," said Democratic state Comptroller Dan Hynes.
Gambling expansion is also expected to soon be on the table, regardless of whether it makes it into the governor's budget plan. A fleet of new casinos had been proposed by Blagojevich and Senate Democrats to finance billions of dollars in road, bridge and school construction.
Recently, House Republican leader Tom Cross of Oswego sent colleagues a memo reminding them that the state appears to have won its long-running legal battle of a casino license once destined for Rosemont. Auctioning off that license could raise hundreds of millions of dollars.
However, recent developments cast the future of gambling taxes into uncertainty. On Jan. 1, a statewide smoking ban took effect that also barred smoking at the casinos. The monthly casino financial reports showed a 17.5 percent drop in revenues in January 2008 compared to 2007 and a nearly 6 percent decline in visits. The tumble has alternately been blamed on the smoking ban or horrendous weather and a bad economy.
The combination of political conflicts and dismal economic forecasts has lawmakers involved in crafting the state budget warning it's going to be a painful year.
"We can't be looking at any large expansions of any programs at this point. We really have to be fiscally responsible," said state Sen. Donne Trotter, a Chicago Democrat and the Senate's budget pointman. "We have to look at how we can get out of this hole by hurting the least amount of people."