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Budget: first hand

Charles N. Wheeler III


The question to Gov. Jim Edgar was blunt: How can you claim a no-gimmick budget when you're financing the gaming board with money from riverboat gambling and there's not a boat in the water yet? "Well, you gotta have some faith," the governor told an inquisitor during a budget briefing last month. "I've gotta admit, it's a gamble."

In fact, the governor's plan to bankroll the gaming board is downright penny-ante compared to some of the other gambles built into the $25.6 billion budget he proposed for the fiscal year starting July 1. Even so, Edgar's forthright approach to the state's crushing financial problems had legislative Democrats scrambling to cover their bets as the budget debate got underway in mid-March.

For Edgar, the stakes are high; if he fails to put the state's fiscal house in order, he conceded, he likely will be a one-term governor. He offered a high-risk budget balanced on a series of assumptions that may not be warranted. Its underlying premises include:

The current 20 percent income tax surcharge will be extended AND the current distribution formula will be revised to shift money from local governments to schools and state general funds coffers.

By proposing to cut the local government share, Edgar runs the risk of alienating Chicago's Democrat lawmakers: Winning their votes will be even harder if he continues to insist on a 5 percent property tax lid and a partial shift of welfare costs to local funding. As Senate President Philip J. Rock (D-8, Oak Park) noted, "He can't have it both ways." But Edgar's case with hard-core GOP conservatives was strengthened by the fiscal facts of life contained in the budget message, especially his willingness to cut welfare spending. Indeed, some rank-and-file Republicans called the plan "the first Republican budget" in years.

State revenues will remain immune from recession and federal aid will be maximized.

The budget's estimate of general funds revenues for fiscal year 1992 is $14.3 billion, or about $825 million higher than this year's $13.5 billion figure. The figure includes $156 million from changing the income tax surcharge distribution and $273 million from increased federal reimbursement for human services spending.

For "normal" revenue growth, the governor's Bureau of the Budget is projecting a $396 million increase, described by Director Joan Walters as "moderate.'' That's "a nice, conservative forecast . . . that balances the risks,'' said Chuck Burbridge, chief economist for the legislature's Illinois Economic and Fiscal Commission. The commission, meanwhile, is projecting $417 million growth in general funds revenue in a preliminary fiscal 1992 forecast, based on "pretty much a stagnant economy next year," he said.

Besides increased federal dollars due to higher spending as caseloads for social programs grow, the governor is counting on $122 million from what his budget book calls "proposed actions." Some could need legislative approval, while others would require local service providers to assume additional paperwork burdens and to deal with extra red tape.

The legislature will agree to cuts. All of the gored oxen can be expected to bellow, of course, but several interest groups are of particular note, including welfare recipients, medical providers and state workers. Advocates for the poor raised a hue and cry about possible welfare cuts before the budget was unveiled, and black lawmakers were particularly critical once it was. "These are survival programs,'' said Sen. Earlean Collins (D-9, Chicago). "You can't cut survival programs to talk about early childhood development because people got to live first."

Moreover, not only would the governor's budget end all state-paid medical care for more than 100,000 persons and ax coverage for most optional services for the rest, it also would slash provider rates by

4/April 1991/Illinois Issues

5 percent. The prospect of less pay on top of the state's well-established history for slow pay could cause some caregivers to drop out of Medicaid altogether, making access to primary care more difficult for many. One plausible result could be an increase in poor people showing up in hospital emergency rooms. The Illinois Hospital Association already has the state in court for paying what it says is only 79 cents on the dollar for Medicaid patients; the state's legal position won't be helped by deciding to pay zero cents on the dollar for thousands of persons.

In addition, the budget assumes laying off 1,400 state workers and giving those who remain NO pay raise and reduced fringe benefits (most notably, health care). It's hard to imagine that the state's largest public workers' union, the American Federation of State, County and Municipal Employees, would settle for this deal and equally difficult to envision any sweeteners that wouldn't cost money.

Despite such dicey underpinnings, the state's distressed financial condition affords Democrats little wiggle room to revamp Edgar's proposed budget. At first blush, none of their options seemed particularly appealing. Consider:

Choosing to restore welfare programs by cutting across-the-board elsewhere would take the most dollars from education, including Chicago schools.

Delaying payment of leftover 1991 bills would hit hardest at medical providers who account for almost 90 percent of them and could be fatal for the state's credit rating with New York bond-rating agencies.

Ditto for refusing to boost cash reserves to a minimum of $200 million by the end of fiscal 1992.

Opting for an old standby, inflated revenue estimates, to boost appropriations would bring a veto, Edgar promises, not just of a few offending line items, but of the entire package.

The same fate awaits perhaps the most honest alternative for those distressed by Edgar's cuts, a tax increase above the surcharge level to pay for more spending.

Democratic strategists could well devise more attractive responses, of course, before the session ends. After the first deal, though, Edgar seems to be holding all the high cards.

Charles N. Wheeler III is a correspondent in the Springfield Bureau of the Chicago Sun-Times.

April 1991/Illinois Issues/5

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