Spending? Taxes? Borrowing? Ill. budget proposal raises complicated questions

Ill. budget proposal raises complex questions

SPRINGFIELD, Ill. — Democratic legislators are on the verge of passing a state budget that would patch over a $13 billion deficit. Critics call it a farce that digs the state further into debt. Even supporters admit it doesn’t fix the state’s long-term problems.

Here’s a look at what the budget would do to state finances, government services and taxpayers’ wallets:

Q: Would the budget be balanced?

A: Not really. It’s built on borrowing money and leaving bills unpaid. Advocates say it will keep the doors of government open for another year, but they don’t claim it resolves the worst budget crisis in Illinois history.

Q: What kind of borrowing?

A: The state could borrow up to $4 billion to make its annual payment to government pension systems. Gov. Pat Quinn also could take $1 billion from special funds supported by fees, with a promise to repay the money later. It’s a little like a family putting the monthly car payment on a credit card and dipping into the kids’ college fund to pay the electric bill.

Q: What bills would be left unpaid?

A: Anything from rent on legislative offices to school aid to day-care services for poor families. State government uses an army of local businesses and charities to provide services. They’re now waiting months to be paid for their services, forcing them to cut services, borrow money or even go out of business.

The budget proposal assumes Illinois will end the coming year with about $6 billion in unpaid bills, maintaining the same backlog as under the current budget.

Q: Would taxes go up?

A: No. The Legislature ignored Quinn’s proposal for a one-third increase in income taxes. Even if it had passed, the increase would have generated about $2.8 billion a year, a fraction of what is needed to balance the budget. An increase in cigarette taxes is still on the table, but legislators doubt it will pass.

Q: Would spending go down?

A: Yes, says Quinn’s office. General funds, the key measure of state spending, would total about $25.9 billion, Quinn’s office says. That’s a drop of roughly $1.3 billion, or 4.8 percent, from the current budget. What’s more, lawmakers are giving Quinn broad authority to decide where to spend the state’s limited dollars. He’ll be free to cut back further.

But some Republicans maintain Quinn is glossing over other expenses, such as the interest on Illinois’ growing debt. When everything is taken into account, they say, government actually would spend more.

Q: Aren’t legislators supposed to decide where and how to spend tax money?

A: Yes, but most of them don’t want to, so they’re approving large lump sums and letting Quinn divvy up the money. Some legislators argue the governor needs great flexibility to respond to changing financial conditions. Others call it a move to avoid responsibility.

Quinn seems to lean toward that second option. “There’s a reluctance on the part of legislators of both parties, both houses to actually put their names on cuts,” the Chicago Democrat said Wednesday.

Q: What are some of the major cuts?

A: State support for education would drop about $585 million, or nearly 8 percent, according to a House Republican analysis. Higher education would see a 4.5 percent cut. The agency that provides medical care for the poor would be cut 10.7 percent. The Department of Children and Family Services would see a 28.7 percent reduction.

Q: Why not cut state employees’ salary and benefits?

A: Salaries are a relatively small part of the state budget. They could be eliminated entirely and still not solve the crisis. In addition, salary and benefits are set by contract, so officials can’t suddenly impose cuts. The largest state workers’ union has accepted smaller raises and some unpaid furlough days. The governor, lawmakers and many other state employees are taking furloughs, too.

Q: What else is in the package?

A: A tax amnesty, for one thing. People who owe back taxes would be able to step forward and pay their bills without facing penalties. Officials hope this will generate $250 million that would otherwise go uncollected.

Another idea is to get some cash now for the rights to future revenue the state is supposed to collect from a huge tobacco lawsuit. That could bring in $1.2 billion, but it might shortchange government programs that were counting on that future money.

Q: Is there a downside to those kinds of budget maneuvers?

A: Yes. The biggest problem is that they bring in money just once, but government expenses will go on and on. So next year, when Illinois can’t offer another amnesty or sell more tobacco money, the state will be stuck with another big hole in the budget. Similar concerns apply to dipping into special funds or borrowing money to pay pension costs.

Q: What budget ideas were rejected?

A: Mostly to prove a point, House Speaker Michael Madigan introduced legislation that would have slashed spending by $4 billion, much of it from schools. Legislators couldn’t hit their “no” buttons fast enough. The idea of cutting retirement benefits for current state employees went nowhere, largely because most legislators believe the idea is unconstitutional.

Sen. Bill Brady, the Republican nominee for governor, has called for sweeping cuts but never offered a specific proposal. Other GOP legislators offered a raft of smaller ideas, such as restrictions on use of state planes, that were ignored by the Democratic majority.

Q: Would this budget make Illinois’ financial problems better or worse?

A: It depends who you ask. Republicans argue it pushes the state deeper into debt. Many Democrats see it as letting the state tread water for a year, so long as revenues don’t plummet and create a new crisis.

“We’ll be in the same position we are now,” said Rep. Elaine Nekritz, D-Northbrook. “It will just be a year later.”