Posts filed under 'Illinois Budget'
May 7th, 2008
Senate Minority Leader Frank Watson on Wednesday said this year’s legislative session is likely to stretch well into the summer.
“I don’t see us getting more done in the next four weeks than we’ve done in the last five months,” Watson said during the Illinois Business Day luncheon in Springfield. “I don’t see a lot of meetings I don’t see a budget or much discussion there. It’s poison in the air, and that’s not conducive to getting things done. So I would expect to see us back here again in the summer.”
Listening to Watson talk to hundreds of business people, I couldn’t help but remember a goofy motivational banner in the hallway outside my U.S. history class.
It said, “Those who fail to learn the lessons of history are doomed to repeat them.”
As the current legislative session wears on, it’s becoming more and more clear that lawmakers may not have learned the lessons from last year.
Last year, budget deliberations turned acrimonious early when the governor used his budget address to introduce controversial programs and revenue sources, and his method prompted his deteriorating relationships with lawmakers erode even faster. Infighting among the Democratic leaders in both chambers and the governor set the tone for the ensuing months of session, which some jokingly say never ended.
This year legislators will have to fight with declining revenue streams, rising unpaid bills and the desire to expand or start new programs as they hone in on the next budget. One audience member asked House Republican Leader Tom Cross why the state couldn’t just balance its budget by cutting government spending.
“It would be tough,” said Cross, who also spoke at the event. “You’re not going to cut your way out of it. … That is a component, but that will not solve the problem.”
Lawmakers will also have to struggle with growing distrust in Springfield.
“This dysfunction is starting to have real negative impacts on people’s lives,” Cross said. “No one trusts each other. … There are enough votes 71 and 36 to get these things done — not without kicking and screaming because they don’t like it but they know they need to do these things. I don’t think the issue is substance, it’s personality.”
As of Wednesday, the Legislature and the governor have 24 days to agree on a budget. This might be easy, but the key seems to be start talking about it.
Watson said the recent leaders’ meeting has focused on agreeing on a capital construction plan and not on the next budget. When attention does focus on the budget, it looks like the Legislature again might break from its traditions. Historically, the leaders and the governor meet and hash out one budget. Last year, the House and the Senate crafted their own budgets and this only made the already tense atmosphere more toxic. It appears a new method might make an encore presentation.
“The thought is the House might pass a budget over to the Senate. … There have not been any discussion between the leaders. The only meetings we’ve had are over capital,” Watson said.
The state Constitution says lawmakers must agree on a budget by May 31 to pass it with a simple majority of votes – that’s 60 in the House and 30 in the Senate.
And Watson said if that doesn’t happen, the process, “becomes more cumbersome to get things done.”
Cumbersome, indeed.
Starting on June 1, Republicans gain a seat at the table. The House Democrats are forced to woo their GOP colleagues in order to pass any bill, because each chamber now needs 71 votes, rather than 60. Unlike the House, Senate Democrats have the necessary 36 members to meet its raised threshold, and technically wouldn’t need Republican votes to pass anything if the Legislature misses the May deadline. But it’s hard to keep all of those ducks in a row, so any overtime session would also Senate Republicans a louder voice during negotiations.
Cross said citizens are beginning to see the true effects of Springfield’s infighting.
“Somewhere, somebody at the end of the day has to say, ‘You know what? I don’t like the guy in front of me. I don’t like him for a lot of reasons, he might have even lied to me, but at the end of the day, this is not about whether I like someone or not anymore,’” Cross said. “This is about the guy down the street who doesn’t have a job, (is) losing his house, losing his car … We’ve got to put aside our differences … We don’t like everybody. It’s human nature, but we’ve got to say enough and move forward.”
April 14th, 2008
It’s the greatest of perennial questions at the Illinois Capitol: What’s Mike Madigan Up To?
He is the Capitol sage, a man widely regarded for political acumen but difficult if not impossible to read. So it goes that last week when Madigan antagonized House Republicans, Capitol insiders found themselves again asking themselves and each other this question.
The speaker’s strategy over the last week doesn’t make sense on the surface. It doesn’t seem rational. Here we are, less than two months from the formal May 31 end of session, and Madigan and other state leaders have not even a basic framework for the next state budget. Yet Madigan acts to divide the parties in his own chamber — thereby making the prospect of a budget deal even more elusive.
He is already facing off with Gov. Rod Blagojevich and Senate President Emil Jones Jr., his fellow Chicago Democrats, and now he is poised to fight House Republicans too. Is he yearning for a long, ugly summertime session — just like the one last year, only worse? It’s one thing to relish a good fight. It’s quite another to invite additional opponents into the fight against yourself.
Theories on Madigan’s motives abound among political insiders: Perhaps he is trying to supercharge the Democratic base in advance on the Nov. 4 general election. Perhaps he is trying to whip the House Republicans into line. Perhaps, amid a toxic political climate, he is getting paranoid.
It’s not clear when we’ll know what Madigan is up to, or when the mess is Springfield might work itself out. But I’ll do my best to sort through some of the variables at play, and maybe, just maybe, I can put some of this chaos into order:
- The Obama factor. U.S. Sen. Barack Obama may appear light years away from his days in the Illinois Senate, but as a candidate for president he may do much to shape the politics of Illinois this year. If the ultra-popular Obama leads the Democratic ticket in the November general election, he could pull other Democratic candidates upward. In other words, Democratic and independent Illinois voters likely will turn out in droves to vote for Obama, if he is the Democratic presidential nominee, and in doing so they are more likely to support other Dems on the ballot. And that means the Dems controlling Springfield may have substantial wiggle room this year. They may be able to take risks — such as a brutal, intra-party, summer-long fight over the budget — and not suffer losses in the November general election.
- The Rezko Factor. Tony Rezko, a former top fundraiser and adviser to Blagojevich, in on trial for allegedly using his insider clout to shake down firms seeking business with the state. As I noted in my Saturday column, Blagojevich has been MIA for much of the last two years as the feds closed in on his inner circle. (Chris Kelly, another former top Blagojevich fundraiser and adviser, also is under indictment on federal tax-related charges.) If Rezko is convicted, pressure will build on Rezko and Kelly to share with the feds any dirt they have on Blagojevich, who has already been named as “Public Official A” in the Rezko case. I would expect Blagojevich to head even deeper underground; he won’t want exposure to rank-and-file lawmakers, the public or the media. If Rezko is acquitted, Blagojevich could feel emboldened and be much more enthusiastic about a high-profile fight at the Capitol.
- Madigan v. Jones. The intensity and sincerity of the animosity between Madigan and Jones cannot be exaggerated. These two men are locked in a political battle of the titans — a brawl dominating state government matters large and small.
- Jones & Blagojevich. At least until further notice, Jones is in lockstep with Blagojevich.
- More cash to spend. If Madigan and Jones agree on anything, it’s that they both have expressed support for income tax hike to generate more state revenue. Jones is a longstanding proponent of a tax hike to help public schools with more state money. Last spring, Madigan kicked off the spring session by saying it was time for the state to take responsibility for its pension debt and other fiscal problems (you can’t pay off this debt without raising more money). Last summer, he went a step further by actually suggesting an income tax hike.
- Blago’s tax-hike pledge. Blagojevich continues to insist he won’t raise taxes on “people.” His no-tax-hike pledge, in fact, is the pledge from his races in 2002 and 2006 that he has most often repeated. Only, he violated that pledge by approving a sales tax hike for the Chicago-area early this spring, as part of an effort to bail out mass transit systems. Will he now support an income tax hike?
- Supermajority after May 31. The formal end of spring session is May 31. After that, lawmakers must produce a three-fifths majority to approve any bill with an effective date prior to the following June 1. A budget for the upcoming fiscal year, beginning July 1, obviously must be effective before then. Passing a budget after May 31, therefore requires a three-fifths majority. It is not possible to achieve a supermajority in the House without at least four Republican votes, and that’s assuming every one of the 67 Democrats in the chamber sticks together. Jones does have a supermajority in the Senate, but he failed repeatedly to keep his own members together last year. Even with his supermajority, Jones failed to steamroll Senate Republicans when it really mattered.
Now, back to the question of what Madigan is up to. What if he is three steps ahead of everybody else at the Capitol, as he is so often said to be? What if he is acting in accordance with a rational plan to advance his political objectives?
All of the conventional theories of Madigan’s motives assume he will continue his fight with Blagojevich and Jones. They discount the possibility of the three Democrats making a deal.
Is it possible that Madigan is trying to signal to Jones that he is prepared to make a deal, perhaps on a tax hike, by pushing the Republicans away? It’s a radical theory, but I’ve certainly crazier ones.
Madigan, Jones and Blagojevich could make a budget deal by May 31, and approve it without a single Republican vote. Come June 1, they do need Republican support, and it’s anybody’s guess what that might mean — particularly if the parties are divided in both chambers.
Then again, the lines of communication between Madigan and Jones, just as between Madigan and Blagojevich, and now between Madigan and House GOP Leader Tom Cross, are dead, sources say. Any deal among the Dems appears a long way off, at best.
And the summer fast approaches.
Last summer, work at the Capitol resembled the scene near the end of “Animal House”where frat guy Stork wanders into a parade, shoves aside a drum major, and then leads the marching band into a dead-end alley. The band members, still playing their instruments, march themselves into a wall, crushing each other.
Last summer, Blagojevich and lawmakers repeated this scene twice daily.
March 4th, 2008
For the second year in a row, House Speaker Michael Madigan, D-Chicago, is sponsoring hearings around Illinois regarding the budget for the next fiscal year.
Rockford’s hearing is at 6 p.m. Tuesday, March 25 at the Zeke Giorgi Center. Citizens are invited to attend and sound off about their state’s spending priorities.
Madigan’s news release and accompanying schedule of hearings are here.
Background on the governor’s budget plan for the next fiscal year, which begins July 1, is here.
March 4th, 2008
State officials every couple years find new and creative ways to put off paying public pension debt, causing a greater financial burden for future taxpayers.
At any given time, the state’s backlog of unpaid bills tops more than $1 billion, causing doctors and other health care providers to wait months for reimbursement from the state when they care for Medicaid patients.
For the last five years, the governor and lawmakers postured over the details of a capital construction plan, failing to ever implement a new one necessary for road and school construction.
That governor, Rod Blagojevich, is as likely to fill out top-tier positions in his administration with political hacks as opposed to professionals with meaningful, relevant experience.
That same governor has no qualms with putting the full force of this taxpayer-paid staff behind his latest feel-good, politically charged initiative, yet he seldom puts even a fraction of this emphasis behind follow-through and completion of such projects.
Yet the Pew Center on the States awarded Illinois a perfectly acceptable “C” grade in a report covering how well the 50 states manage their money, people, information and infrastructure. A summary of the group’s report, showing how Illinois compares to other states, is here.
A detailed look at Illinois is here.
The Blagojevich administration has been troubled from the start, and the consequences for Illinois government have been serious. The administration began with high hopes: Blagojevich’s election victory in 2002, bringing his party control over all three branches and replacing a Republican regime tainted by corruption, generated widespread interest in bringing the state’s shaky management into good shape. But intraparty battles have continually stymied progress. Political disagreements have been delaying a new infrastructure-spending plan for years, to cite just one example, and the state may soon lose federal matching funds intended for roads and bridges.
Then, the report cuts the governor some slack:
It can’t be easy to manage a state such as Illinois, with huge outstanding bills and troubled revenue streams. But when the state’s leaders are effectively stuck in the mud, the difficult becomes all but impossible. Last year, the governor proposed a major expansion of health care supported by a gross receipts tax on business. The House rejected the plan 107-0. “We weren’t even talking about coming to some resolution,” says state Senator Christine Radagno. Months later, the legislature passed its own budget, Blagojevich vetoed about $500 million of it to make room for his health care expansion and the whole mess wound up in the courts.
Still, as the Post-Dispatch notes, this state’s grade fell:
Illinois fell from a C+ to a C, ranking it among the bottom nine states. Researchers blamed a dysfunctional relationship between Gov. Rod Blagojevich and the state Legislature.
“The Blagojevich administration has been troubled from the start, and the consequences for Illinois government have been serious,” the report says.
The administration’s response:
Blagojevich’s office released a statement saying the report didn’t acknowledge Illinois’ success at improving efficiency while reducing debt and budget deficits.
“Unfortunately, the Pew Center chose to focus on politics instead of fiscal facts,” the statement said. “The report does not accurately reflect the progress we’ve made.”
That’s classic Blagojevich.
First of all, this administration is notorious for skewing financial figures. Rather than stating the amount of new money the state sends to schools each, for instance, this administration prefers to state the sum of all the increases occurring since Blagojevich took office in 2003. Obviously, that’s a much bigger, more dramatic, number.
Oh, and when the state ran the biggest deficit in the nation, Blagojevich — who happened to be campaigning for re-election at the time, in 2006 — insisted that simply wasn’t possible. The “fiscal facts” in Illinois are sad indeed.
Second of all, as I already alluded to above, this administration also is notorious for putting politics before policy. And that’s not to say they even do well at that. Look no further than today’s headlines.
Illinois should be thrilled with its passing grade. I’m wondering how it did so well.
March 3rd, 2008
Sen. Brad Burzynski, R-Clare, said Monday that he doesn’t think NIU’s plan to replace Cole Hall, where a gunman recently killed five students plus himself, is going anywhere.
“Demolition is going to be taken off the table, and what I think is going to occur now is there is going to be discussion on campus of if there is good use for the building, what it should be and those kinds of things,” Burzynski said.
Our below post on this topic was getting far too long, but if want some more background on this rapidly evolving story please go here.
Burzynski said he was surprised by some elements of the $40 million plan to replace Cole Hall. After the excitement died down, Burzynski said he realized selling $40 million in bonds would not be fiscally prudent.
Gov. Rod Blagojevich, together with NIU President John Peters, announced the plan at NIU last Wednesday. Burzynski and Rep. Robert Pritchard, R-Sycamore, stood with them.
“Everyone got caught up in the governor’s announcement and willingness to try to help the university,” Burzynski said.Pritchard on Monday stood by his earlier position to help the university with its most pressing need – additional classrooms. He said solving the need for more classrooms may evolve as the NIU community and the Legislature continues to discuss the future of Cole Hall.
“We may come up with a plan that may look a little different than it is today,” Pritchard said.
Pritchard stopped short of concurring with Burzynski’s harsh assessment, saying it was not clear to him whether the $40 million rebuilding plan would get anywhere.
“Any legislation has to go through a process of input from both citizens and legislators, and as more people have time to weigh in on that decision, it is always typical that things could change,” he said.
UPDATE 1 — by AC
NIU officials today did not respond to repeated requests for comment.
March 3rd, 2008
State and local governments routinely borrow money to support long-term infrastructure programs. They borrow by selling bonds — notes purchased by lenders, guaranteeing them a fixed interest rate on their investment.
But do governments pay more than they should interest to secure such loans? This story, by the New York Times, says that maybe they do. Taxpayers, of course, get the bill.
The Times reports:
A complex system of credit ratings and insurance policies that Wall Street uses to set prices for municipal bonds makes borrowing needlessly expensive for many localities, some officials say. States and cities have begun to fight back, saying they can no longer afford the status quo given the slackening economy and recent market turmoil.
Municipal bonds, often considered among the safest investments, sank along with stocks last week, darkening the already grim mood in the markets. Several big hedge funds unloaded bonds as banks further tightened credit to contain the damage from mounting losses on home mortgages and other loans.
States and cities rarely dishonor their debts. The bonds they sell to investors are generally tax-free and much safer than those issued by corporations. But some officials complain that ratings firms assign municipal borrowers low credit scores compared with corporations. Taxpayers ultimately pay the price, the officials say, in the form of higher fees and interest costs on public debt.
This is just one more point to watch when Illinois finally gets around to approving a long-awaited capital construction plan. The state has not implemented a major capital plan since 1999, the first year of former Gov. George Ryan’s administration. There is much talk about approving another capital plan this year, just as there has been each year since Rod Blagojevich became governor in 2003.
There’s also the obscure but potentially significant matter of reinsurance associated with government bonds — an issue that’s driving up the cost of borrowing.
The state has also inflated its costs just by waiting so long to implement another infrastructure plan. The longer the state waits, the more expensive construction becomes. A road or bridge in a greater state of disrepair obviously costs more to fix. Plus, inflation each year drives up the cost of labor and materials.
February 29th, 2008
The New York Times editorial page recently took note of New Jersey’s fiscal crisis, and in doing so issued this warning to other states:
It is hard to remember when any governor used the sort of desperate language that New Jersey Gov. Jon Corzine chose this week to describe his state’s fiscal crisis. His words should be a sober warning to other states to get their fiscal houses in order before they face a crisis of Trenton’s magnitude.
The editorial went on to describe what it called a “self-destructive gimmick”:
… the state seriously underfunded its pension plan and used the money to pay for current spending programs.
And it concluded:
The Garden State’s woes should serve as a warning to other states, whose lawmakers might be inclined to use budget gimmickry to deal with shortfalls in revenue and get through immediate fiscal troubles. As New Jerseyans are learning the hard way, that is likely to lead to much bigger trouble in the years ahead.
Illinois should take note. As far as I can tell, this state is the capital of “budget gimmickry.”
Illinois for decades blew off its public pension systems, and future taxpayers will pay — big time. Believe it or not, state leaders didn’t even have a long-term plan for paying down pension debt until 1995, when they finally got around to instituting one.
No longer would the state take a “pay as you go” approach to financing public pensions — putting aside just enough each year to cover annual pension and benefit payments to retirees. Instead, the state would, once and for all, start putting aside enough money each year to cover long-term pension liability.
And by putting more money away into its public pension funds, those funds would ultimately earn enough interest — dollars going back into the funds — that the state’s annual obligation would become minimal.
Or at least that was the idea behind the 1995 plan, which established in Illinois law a formula under which the state would get its pension systems 90 percent funded by 2045 — over 50 years.
But state leaders just can’t help themselves from putting off those payments each year in order to free up cash for all their favorite projects. In 2005, they took their policy of procrastination all the way by wholesale restructuring the 50-year plan. Rod and the gang called their move a “pension holiday.”
Then there was that clever pension maneuver during Rod’s first year in office, 2003. The state borrowed $10 billion to bolster the pension systems. But rather than dumping the entire $10 billion straight into the pension funds, the state skimmed more than $2 billion off the top and used those dollars to offset the state’s mandatory annual pension contribution.
In doing so, Rod and the gang freed up more than $2 billion they could spend on other stuff.
How cool is that! Pretty cool if you’re Rod, and you’re eager to spend some taxpayer money. Not so cool, if you’re a future taxpayer.
As I explained at the time, in a previous job:
Imagine getting a home equity loan for $100,000, spending $27,000 of it on a new car and investing the rest — then counting on the interest earned to cover the interest paid, as well as the cost of the car. That’s the essence of Gov. Rod Blagojevich’s $10 billion pension bonding plan, which became law in April.
This isn’t a new idea. Buying and selling in separate financial markets in order to profit from the difference in rates is called an arbitrage. It’s commonly used by banks, which invest their customers’ money for a higher rate of return than they pay on, say, checking or savings accounts. …
But counting on the performance of any investment is risky. When the market slumps, as it did during the last two years, an arbitrage can fail; there’s a chance the rate of return on the investment could be less than the cost of the loan. Pension bonding plans can put governments on the hook for additional, unforeseen contributions to their systems — while they continue to pay the debt service on the bonds.
This state’s pension bonding plan, which doubles the state’s total bonded indebtedness and constitutes the largest such scheme to date, is no exception to the rule. And there’s an additional twist that heightens the risk. Rather than realize gains as they occur, the administration is realizing, and spending, the projected 30-year gain in the first year of the plan. Like the homeowner who spent 27 percent of an equity loan for a car, the plan dictates that some 27 percent of the bond proceeds be spent immediately.
What’s the bottom line? The state is in lousy shape financially, particularly with regard to pensions. As the state comptroller noted in a recent report:
The funding level of the state’s five retirement
systems remains among the nation’s lowest.
The five state systems — the State Employees’
Retirement System (SERS), the State Universities
Retirement System (SURS), the Teachers’ Retirement
System (for teachers outside of Chicago –
TRS), Judges’ Retirement System (JRS), and General
Assembly Retirement System (GARS) – were
funded at a 62.6% ratio at the end of fiscal year
2007 (assets vs. liabilities). Even with the infusion
of the $10 billion pension funding bond proceeds
into the system in July 2003, the funded
ratio has failed to reach the highs seen prior to the
last recession, where the systems’ funded ratio
reached 74.7%.
UPDATE 1
The Legislature’s fiscal forecasting agency has compiled a chart showing the state’s future pension liability and how it changes based on the payments made each year. I posted it here.
February 21st, 2008
I am a couple weeks shy of my two-month anniversary here in the state capitol, but it didn’t take more than a few days to figure out one thing.
Whenever there is a major day here in the Legislature, lobbyists and interests groups flood the capitol with people wearing coordinated T-shirts, memorable gimmicks and news releases for the pressroom.
Wednesday was no different, in fact it is probably one of the most important days for lobbyists and legislators alike as the governor sets the year’s legislative agenda through his budget address.
Predictably, the news releases began streaming into the pressroom and into our e-mail inboxes even before the speech began. Of course, it is impossible to put every post-speech response into our stories, but since this blog is more for insiders this is a perfect place for them.
We’ve already given you many of the press releases from our local delegation. Now here some excerpts from a few more:
A statement from Illinois Federation of Teachers‘ President Ed Geppert, Jr.:
“We appreciate Governor Blagojevich’s recognition that preK-12 education needs additional funding and that school construction dollars must be madem available to build an repair schools throughout ILlinois. However, the funding methods listed in the Fiscal Year 2009 budget proposed by the governor today do not appear to be sufficient to address the underlying structural deficit under which our state struggles. …
Today we … urge members of the General Assembly and the governor to pass an income tax proposal that would once and for all fix the education funding problem in Illinois.
We are also concerned about the continued lack of funding for higher eucation. Our colleges and universities are constantly forced to raise tuiion because the level of state funding has decreased over the years. … This downward trend must stop. …”
From the Transportation for Illinois Coalition:
Leaders from the Illinois business, labor, local government and transportation industries today said they were pleased that the Governor proposed a transportation capital investment packagae in his Fiscal Year 2009 budget, but cautioned lawmakers and the public that the size of the capital program being proposed appears to be so modest that, if approved,woul require lawmakers to revisit tranporation funding in just two or three years.
“For years, the members of the Transportation for Illinois Coalition have worked to make ivestment in our transportation infrastructure a priority of state lawmakers and the Governor, and we are encouraged that the issue has risen to a level of prominence,” said Doug Whitley, president of the Illinois Chamber of Commerce and co-chair of the TFIC. “Unfortunately the modest size of this proposal makes it clear that, though some investment will be made, we won’t come close to meeting the needs of the infrastrucutre in any significant way. If a proposal of this modest size is approved thisyear, we will all be bakc in Springfield in two or three years to approvea new funding package that will enable the state to invest adequlately in our transportation infrastructure to ensure our economy is not crippled.” …
From the Illinois Community College System:
A coalition of Illinois community college supporters urged Governor Blagojevich and the Illinois General Assembly to invest in Illinois’ community college system at a morning news conference today at the State Capitol. Representatives included the leadership of the Illinois Community College Trustee Association, the Council of Community College Presidents, the Cook County College Teacher’s Union, and a Student Trustee from a suburban community college.
The Community College Coalition for Funding was formed to advance the cause of Illinois community colleges, which have suffered from declining state revenues.
“We are beginning a campaign to articulate the benefits of a community college education, not just to the students who attend, but to the public who benefit by the educated workforce our colleges produce,” said Kathy Wessel, president of the Illinois Community College Trustees Association and a board member of the College of DuPage in Glen Ellyn.
The campaign will kick off with an unveiling of billboards all across Illinois. It will then be followed by promotion of the Community College Impact Study, released in fall 2007, that describes the many economic benefits that Illinois community colleges provide to our state. Finally the campaign will bring its message to the General Assembly for consideration.
“Students are facing a much more difficult time affording the rising cost of tuition,” said Lesliefaye Gogins, student trustee at Prairie State College in Chicago Heights. “Community college tuition has risen by almost 50 percent in the last five years.”
Perry Buckley, president of the Cook County Teachers Union, noted that community colleges enroll the vast majority of minority students in Illinois higher education. “When you make access to higher education more difficult for students in community colleges, you are making it particularly painful to the students who need it most,” he said. …
February 20th, 2008
Gov. Blagojevich today put aside his big-spending vision and proposed something of a maintenance budget for the fiscal year beginning July 1. Here is a copy of the governor’s budget plan.
But while the governor’s budget plan lacks the huge spending and tax increases he sought last year, it nonetheless rests of several tenuous assumptions and no doubt will meet stiff resistance from lawmakers.
For instance, Blagojevich is again seeking to privatize the state lottery to generate cash necessary to support his spending priorities. But this year, he wants to lease just 80 percent of the lottery — allowing the state to keep 20 percent — rather than part with the entire asset.
His budget assumes this 80/20 lottery lease would raise $7 billion for the state over the long term. Still, the governor’s lease/sale plan last year won little traction — if any at all — among lawmakers. These dollars would be the central revenue support for a capital construction plan the governor also proposed on Wednesday.
Here is the capital budget. Here are the highlights:
The governor’s plan provides $1.9 billion in state funds and $1.9
billion in local matching funds for construction and maintenance of
schools, including $1.75 billion in school construction projects and
$150 million for school construction maintenance projects, plus $30
million to fund a new early childhood facilities program. The program
proposes $642 million to expand and make capital improvements
and repairs at the state’s public universities, $200 million to support
the capital needs of the state’s private colleges and universities and
$250 million for the state’s community college system to construct
new buildings, repair existing facilities, and replace temporary
facilities.
The $14.4 billion highway portion of the Capital Budget funds bridge
repair needs, maintenance and improvements to the state’s system
of roads, highways and interstates, and provides for new system
expansion projects; $250 million of this will provide direct assistance
to local communities to make improvements to transportation
infrastructure. Funding for rail totals $160 million, which will be used
to improve rail tracks and signals, enhance Amtrak stations,
purchase new rail passenger equipment, and make improvements to
rail freight facilities. Capital funding for airport projects total more
than $300 million for airport improvements throughout Illinois.
Illinois Works Capital Program invests $2.7 billion in funding for mass
transit agencies to purchase buses and rail cars, build train stations,
bus garages and rail yards, and reconstruct commuter rail bridges
and elevated rail structures, among other projects.
Over $1.0 billion will provide access to capital in communities
throughout Illinois to stimulate job growth, provide affordable
housing, improve community healthcare centers, make investments
in energy, improve infrastructure, develop new industries and
technologies, and attract new businesses to Illinois.
The governor’s energy plan, a component of Illinois Works, will
reduce Illinois’ dependence on foreign oil and gas, stabilize gasoline
and home heating prices, create jobs, and reduce energy use while
protecting the environment. The energy plan includes the
development and construction of ethanol, cellulosic and biodiesel
production facilities, construction assistance for up to 10 new coal
gasification plants, and the addition of 900 more E-85 pumps at
fueling stations statewide by 2010.
The governor is not seeking an increase in the income or sales tax rate, but he does propose raising a series of user fees. For instance, the Department of Natural Resources would charge “a consultation fee … for performing threatened and endangered species or natural area reviews, which are currently done for free,” under his budget. “Another example will be charging for work done on processing floodway permits, which will allow the Water Resources Program to recover its direct costs.”
Blagojevich aides said during a morning briefing that they could not immediately produce a list of all fee increases in the governor’s budget plan.
The budget does not call for entrance fees at state parks, despite published reports indicating his budget might include them.
Blagojevich also proposes selling $16 billion in bonds to bolster public pension systems — another plan that failed to gain traction last year.
The governor proposed another $300 million in spending on Illinois public schools, but he did not specify how exactly he would like the state to allocate those dollars.
The governor’s plan acknowledges that the current budget, which runs through June 30, has a $750 million deficit. Blagojevich’s budget director went out of her way to blame lawmakers for this budget hole, saying their revenue forecast was too optimistic when they approved the budget last summer. The budget plan says this hole could be filled through “fund transfers and loophole closures.” Otherwise, said Blagojevich budget aide John Filan, the state will need to cut spending.
Nonetheless, the governor’s budget plan assumes new revenue totaling $1.7 billion in the next fiscal year, which begins July 1. Blagojevich aides could not provide an exact accounting of this figure, but said it includes $300 million in new revenue from higher taxes on riverboat casinos and $575 million from the sale of the state’s 10th casino license, which has long been mired in litigation. It also includes $140 million from closing corporate tax “loopholes” and $40 million from the sale of unspecified state assets.
UPDATE 1
There are two basis prongs of Blagojevich’s budget plan: tax breaks for families and businesses, and a capital plan for Illinois infrastructure. His plan for universal health care apparently is on hold; he offered no specific plan in this budget.
The address he just delivered was as modest as his actual budget proposal. It was the most conciliatory State of the State/budget address of his administration.
Gone was the super-charged rhetoric that defined his previous speeches. He did not vilify businesses for “not paying their fair share” in taxes, as he did last year. He did not attack the State Board of Education as a “Soviet-style bureaucracy,” as he did in a previous year.
Instead, he said he looked forward to working with lawmakers and highlighted the resounding defeat last year of his own legislative agenda. He joked that he now understands the meaning of the Hank Williams tune, “I’m So Lonesome I Could Cry.”
He told lawmakers, referring to his failed plan last year for a gross receipts tax, “Needless to say, I’m not asking you to do that again.”
At one point, the famously self-centered and single-minded governor had to this to say about how best to pay for a capital plan: “I’m flexible.”
He challenged lawmakers directly at just one point, saying it’s their responsibility to send him a capital plan he can sign.
UPDATE 2
Blagojevich’s critics are not impressed. Local Republicans called the governor’s budget more of the same — feel-good programs the state can’t afford (tax credits), borrowing (bonding to bolster public pension systems) and selling assets (the lottery).
Doug Whitley, president of the Illinois Chamber of Commerce, noted that the budget plan includes a new tax on business payroll — a tax Blagojevich unsuccessfully sought last year. Whitley said businesses would rather not pay the payroll tax than get the proposed tax credits.
The payroll tax is designed to fund the expanded health care, a program the governor calls Illinois Covered. From the governor’s budget:
Illinois Employer Assessment – The costs of
Illinois Covered will be fully funded in fiscal year
2009 and thereafter, entirely through its own
revenue sources including the enactment of an
employer healthcare assessment. The proposed
employer assessment, to commence January 1,
2009, will require that all employers of more than
10 employees who spend less than 4 percent of
their payroll costs providing healthcare to
employees pay an assessment of 3 percent each
pay period. The Employer Assessment is
estimated to generate $417 million in fiscal year
2009 and nearly $1 billion per year when fully
annualized.
February 19th, 2008
The Capitol used to have a reliable rhythm.
Early each spring, the governor would announce his budget plan. Lawmakers would spend the spring debating the governor’s plan, as well as their own myriad plans. And by May 31, the official end of spring session, they all would either have a deal or be close to one. Once they finalized the deal, they would all go home for the summer. The budget they approved generally contained most of what the governor sought when the session began.
That rhythm is gone.
Gov. Blagojevich and lawmakers spent last year in a bitter fight over the budget and other matters that dragged session from the spring straight into this year. There were many firsts, from the governor suing the House speaker over procedural matters, to the Senate president violating an agreement he made with other legislative leaders to stick with them even if it meant overriding the governor’s wishes on the state budget, to the governor cutting more than $400 million in spending from that budget and claiming he could somehow unilaterally re-appropriate the spending on his own priorities.
This year promises to be yet another step toward the chaos of last year. The governor’s annual State of the State/budget address, the spring session’s formal kickoff, is Wednesday. But House Speaker Michael Madigan and Comptroller Dan Hynes, two of his fellow Chicago Democrats, have already moved to put the governor’s back against a wall — before he has a chance to get both feet on the ground.
Madigan and Hynes have attempted to redefine, or at least reframe, the spring session. Read more about Madigan’s strategy here, and about Hynes’ move here.
By the time state officials settled on a new state budget last fall, it little resembled the one Blagojevich introduced last spring. The governor’s ambitious plan for universal health care did not pass. Neither did his plan for a gross receipts tax on Illinois businesses (it would have been the largest tax hike in state history). Lawmakers took the budget in another direction. Blagojevich retaliated by cutting more than $400 million of their earmarks and other spending.
When Blagojevich announces his next budget plan on Wednesday, the question will be: How much does his budget plan even matter?
UPDATE 1
So much for keeping lawmakers in the loop on his budget plans. In a befuddling break from tradition, the governor’s office has not scheduled briefings for the staff of any legislative caucus.
Spokespersons for the four legislative caucuses — Senate Democrats, Senate Republicans, House Democrats and House Republicans — say the governor’s office has not alerted their budget staff to any briefing before the governor’s budget address on Wednesday.
In past years, budget staff for each of the four caucuses were briefed before the address. The staff are responsible for analyzing and explaining the governor’s budget plans to their respective lawmakers. Without a briefing, and the budget documents that come with a briefing, the staff obviously cannot do this.
Fascinating.
UPDATE 2
Cap Fax Blog weighed in on the no-budget-briefings fiasco, adding:
Reporters, legislators and a whole lot of others are pretty upset today because the governor will not hold any budget briefings tonight. Historically, off-the-record briefings are held the evening before a budget address, which allows reporters to get their stories ready (or simply break the embargo altogether) and allow appropriations staffs to prepare analyses for their respective caucuses.
So, no briefing means no analyses tomorrow, and no analyses means seriously grouchy legislators. I’ve talked to several today (in the House and the Senate in both parties) who all had about the same response: “This is not a good way to start off the session.”
Indeed.
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