State treasurer: Stimulus won't fix budget
Illinois Treasurer Alexi Giannoulias said President Barack Obama's $789 billion stimulus package won't provide enough cash to fix the state's $9 billion budget gap.
The state budget of the fifth-largest U.S. state by population will get $2 billion in stimulus money over two years, said Giannoulias. Illinois is $4 billion behind in paying Medicaid service suppliers and expects a $4.5 billion deficit in the year ending June 30, according to Illinois Comptroller Daniel Hynes. The deficit will rise to $9 billion in the following fiscal year, according to Hynes.
"We need more money," Giannoulias, a first-term Democrat, said today in an interview. "We could use a lot more assistance."
Illinois faces falling revenue and rising costs for state services as unemployment increases, said Giannoulias. Unemployment stands at at least 8.2 percent in 31 of the state's counties, he said. The national unemployment rate was 7.6 percent as of January, according to the Bureau of Labor Statistics.
Giannoulias, a 32-year-old former bank loan officer, said he was thinking of running in the February 2010 Democratic primary for Roland Burris's U.S. Senate seat. He also said he would consider serving should Quinn ask him to the fill the seat in the event Burris resigns. He said Obama encouraged him to run for treasurer in 2006
Illinois Governor Pat Quinn and Giannoulias called last week for Burris to step down over questions concerning discrepancies in statements about contact with former Governor Rod Blagojevich and his advisers before he appointed Burris to Obama's Senate seat. Blagojevich was impeached and removed from office last month after federal prosecutors in December charged him with trying to sell Obama's senate seat.
"I could bring some perspective to these issues," Giannoulias said. Running for Senate "is something I'm seriously considering."
What Congress does to help U.S. states pull out of the recession will be felt for years, he said. More stimulus is needed to create jobs and restore confidence in the economy, he said.
The slumping economy has slashed the amount of money Illinois made on the state investment fund, which currently totals $14.3 billion. The fund generated $426 million for the state in fiscal 2007, a figure that may fall to $130 million in fiscal 2009. In fiscal 2010 he predicts it may drop to as little as $15 million as interest rates decline.
On a recent investment of $700 million of commercial paper, the state received 0.05 percent interest, down from a 4.5 percent return the investment would have generated last year.
Obama told the National Governors Association at the White House today that his plan would provide immediate help to cash- strapped states. Republican critics have said the plan might raise the cost of unemployment benefits. Obama appointed Vice President Joe Biden to oversee coordination of stimulus efforts among federal, state and local governments.
Quinn, who took over after Blagojevich was ousted in January, ordered spending cuts on Feb. 10 to address the budget shortfall. The cutbacks included a 1 percent spending reduction and limits on travel, purchasing deferrals and a freeze on non- essential hiring. The announcement didn't specify overall savings the cuts would generate.
Illinois will get $12 billion to $16 billion from Obama's stimulus legislation, but only about $2 billion will be available for state budget relief, Giannoulias said. The rest will help generate jobs and replace roads and other infrastructure, he said.
"It will have an impact," said Giannoulias. "It should have been even bigger."