| SPRINGFIELD, Ill., March 6
SPRINGFIELD, Ill., March 6 Illinois Governor Pat
Quinn presented on Wednesday what he called the most difficult
budget in the state's history, saying he was slashing spending
on programs such as education to pay the skyrocketing costs of
Democrat Quinn, the most unpopular governor in the nation
according to one polling firm, proposed a "balanced" operating
budget of $35.6 billion in revenue and spending in the fiscal
year starting July 1, up just over 3 percent from fiscal 2013.
All of the increased state revenue in fiscal 2014 would be
gobbled up by an $929 million increase in pension costs for
state workers such as teachers, bringing the cost of pensions to
nearly one in every five dollars, according to the budget.
Illinois faces a fiscal crisis with the worst funded state
pension system in the nation and the lowest debt rating among
the states analyzed by major agencies Moody's Investors Service
and Standard & Poor's.
A task force headed by Former Federal Reserve Board Chairman
Paul Volcker last October said Illinois also uses opaque
budgeting practices that mask the true extent of problems.
Quinn called his budget "balanced and honest."
"There are no gimmicks or fake numbers in this budget,"
Quinn said in a speech to the state legislature.
But John Tillman, chief executive of the free-market
Illinois Policy Institute, said that was an illusion.
"None of the governor's (Quinn's) budgets is balanced or
ends with a surplus. All of them had deficits," he said.
Quinn's budget documents showed it would be balanced only by
continuing to delay the payment of billions of dollars in bills
owed to vendors doing business with the state. The delays have
created hardship for services ranging from hospitals to
ambulance companies and dentists.
No other state systematically uses the late payment of bills
to hospitals, social service agencies and others to the extent
that Illinois does to balance its budget, according to the
National Conference of State Legislatures.
Quinn set a goal of paying off some $2 billion of the
state's backlog of unpaid bills during fiscal 2014, but provided
few details of how this would be done.
The Illinois Constitution's balanced budget requirement only
stipulates that expenditures not exceed estimated revenue,
leaving the door open to the use of unrealistic revenue
assumptions and chronic under funding of programs.
Reaction to Quinn's budget was mostly skeptical with many
lawmakers and special interest groups, including powerful
Democratic House Speaker Michael Madigan, calling into question
key assumptions underlying the numbers.
Madigan said the Illinois House of Representatives would not
agree to the governor's revenue level and would stick to a cap
some $500 million lower at $35 billion.
"We are not going to go over that cap. It will be a
difference with the governor," Madigan told a public television
station after the budget speech.
Lawrence Msall, president of the government finance watchdog
Civic Federation, said Quinn's budget lacked a specific plan to
resolve the pension problem.
"There are no roads out of the fiscal crisis except through
pension reform," Msall said.
Quinn's proposals to cut education funding to deal with
rising pension costs, particularly for teachers, and to suspend
corporate tax breaks to raise revenue to pay more bills also
The Illinois Chamber of Commerce blasted as "offensive" his
proposals to close business tax breaks.
"It is astounding that Governor Quinn speaks of improving
Illinois' business climate and growing jobs while once again
seeking to raise corporate taxes by nearly half a billion
dollars," the business lobby group said in a statement.
Quinn repeated on Wednesday what he told the legislature
last month in his state-of-the-state address - lawmakers must
act to rein in the ballooning pension costs.
A coalition of labor unions said it supported ending
business tax breaks, but opposed pension cuts.
"It is misguided to blame the modest pensions earned by
teachers, police, caregivers and other public employees for
harmful cuts to education and essential public services," said
the "We Are One" union coalition formed to fight pension cuts.
The Illinois House soundly rejected last week harsh pension
measures proposed by Madigan that would have eliminated annual
cost of living increases for retired workers, increased the
retirement age to 67 and forced workers to contribute 5 percent
more to the cost of their pensions.
"I think the time is arrived we start voting on these
questions," said Madigan, who added that he proposed the tough
measures to underscore to lawmakers the gravity of the
Madigan said he would offer new proposals in the Illinois
House on Thursday that would cap the amount an individual can
receive in pension payments.