Quinn finds unlikely allies in business community

Gov. Pat Quinn built his career on populism and consumer advocacy. But, in the middle of what might be his defining political moment, he finds himself in an unlikely alliance with major Illinois business groups in a battle against unions and advocates for the poor.

Quinn has proposed sharp cuts in both Medicaid and pensions for government workers to save billions in expenses the state can't afford to pay. In that, he for the most part has the support of the state's business community.

Business leaders say it's a surprise the ideas are coming from Quinn - a surprise they welcome.

"I have been more comfortable with Governor Quinn since he got elected, and his actions, if you will, than I was for the past 30 years of his political life," said Doug Whitley, president of the Illinois Chamber of Commerce. "He's coming across as being a solid guy who's interested in getting the state's problems fixed."

Whitley noted that the problems are ones that Quinn inherited.

Quinn addressed an Illinois Retail Merchants Association meeting May 2 in Springfield, and he sounded almost surprised the group wanted to hear from him. But that did not stop him from appealing for their help.

"I was so happy when I got the invitation," he told the audience. "This is a moment we cannot miss. Like never before, we need you to talk to your legislators."

The state's tough financial situation has been a sore point for business executives, some of whom complain that the state's climate hampers investment. Quinn signed off last year on an income-tax increase that angered many business leaders. The state continues struggling to pay companies it uses as vendors. The state's credit rating has been downgraded. And other states are trying to lure Illinois companies away.

Quinn, 63, spent most of his career building a populist resume. As a Cook County politician in the early 1980s, he helped create the Citizens Utility Board, a consumer watchdog group whose mission is to look out for the interests of residential utility customers. His speeches are liberally sprinkled with references to the everyman president, Abraham Lincoln, and the working men and women of Illinois. He was known for

Unions are his biggest campaign contributors, though he angered them by moving to cancel a pay increase promised to state workers.

The state's mounting fiscal problems - the state government owes $9 billion in unpaid bills - led Quinn to announce plans that so far business leaders support as realistic efforts to get the state's ledgers under control.

To rein in Medicaid costs, Quinn has proposed cutting services for the poor and disabled and cutting payments to doctors and hospitals. To keep from having to cut further, he proposes essentially doubling the tax on a pack of cigarettes, a measure that is not as popular with the chamber.

He wants to control pension costs by having government workers pay more from their paychecks into pension funds, making those employees work longer before they can retire and reducing cost-of-living increases after they leave work.

"The IMA supports both pension and Medicaid reform and we commend Governor Quinn for laying out bold proposals," said Mark Denzler, vice president of the Illinois Manufacturers Association, though he noted the group wants to see more details.

Business leaders say reining in the rapidly increasing Medicaid and pension systems will have a long-term impact like few other things the governor could do. Medicaid is currently running a $2.7 billion deficit, while the state retirement systems are running a shortfall of $83 billion on the money they'll have to pay out to state employees in the decades ahead.

"It's clear that these are things that are eating more and more and more of the budget each year," said David F. Vite, the Retail Merchants Association president.

Whether Quinn and his new friends in the business community succeed will depend on how lawmakers respond, the chamber's Whitley said. Both House Speaker Michael Madigan and Senate President John Cullerton agree that the two big state spending programs need to be reduced.

The General Assembly over the past week has voted for some of the cuts Quinn has in mind, but lawmakers with high numbers of state employees in their districts "feel far more heat and feel far more vulnerable," Whitley said.

"You've got to look that state employee in the eye and say, `Do you want a pension or not?"' he said. "Because you can't have what we've currently got - because what you've currently got is not sustainable."

Claims of fraud

Last week, the Associated Press examined a legislator's claim that fraud and abuse account for roughly 10 percent of Illinois' Medicaid spending and that eliminating it could save the state $1.5 billion. There was little evidence supporting that 10 percent figure for Medicaid programs generally or the Illinois program in particular.

The Civic Federation, which analyzes state spending and recommends reforms, points out federal reports showing “improper payment” rates of 10.5 percent in the nation's Medicaid program as of 2008.

Improper payments include any sort of error, such as a check for too much or too little, so it's a broader category than fraud and abuse. But the information does shed light on the scale of problems in Medicaid spending.

The most recent estimate for improper payments nationwide is 8.1 percent.