The state's good fiscal health should be welcome news to all of us
by Charles N. Wheeler III

Just two days after Edgar returned home to the Executive Mansion, the state of Illinois received similar good news about its fiscal health. A national bond-rating agency, Moody's Investors Service, boosted the state's credit rating a notch to Aa2, following similar upgrades last year from Moody's and from another New York rating agency, Standard and Poor's.

Unlike Edgar's favorable prognosis, though, Moody's appraisal was not Page One news. Instead, the story was buried in those papers that even bothered to run it. Yet the higher rating no doubt was almost as welcome to the governor as his doctors' report. "It is gratifying to know these important rating firms have recognized that we have met the fiscal challenges of the 1990s," Edgar said.

Average Illinoisans should welcome it, too, both for what it portends and for what it signifies. Looking ahead, an improved credit rating means that Illinois should be able to sell general obligation bonds at a lower interest rate, thus saving taxpayers money on long-term financing of capital projects. In a broader sense, the judgments by the rating firms recognize what arguably is the greatest achievement of Edgar's eight-year tenure: the restoration of the state's financial well-being. That's quite a turnaround for a state that just a few years ago was in such dire fiscal condition some suggested "The Deadbeat State" would be a more fitting sobriquet than "Land of Lincoln."

Looking ahead, an improved credit rating means that Illinois should save taxpayers money on long-term financing of capital projects.

Much of the credit goes to the booming national economy, of course, for helping to push the Illinois workforce — and state tax collections — to record highs over the last few years. But the governor can rightly claim a major role in the amazing turnaround for the forceful steps he took, along with the Illinois General Assembly, to deal with a budget crisis he inherited, then saw exacerbated by a national recession and sharply rising costs for Medicaid and other social programs.

Consider the contrasts. The day after his inauguration in 1991, Edgar called for spending cuts to try to close a projected $300 million gap between spending and receipts for that budget year. In fact, when fiscal year 1991 ended six months after he took office, income and sales tax receipts were $391 million less than initial projections, and the state posted a $666 million budgetary deficit. The following year was worse: Income and sales tax receipts came in $354 million below estimates, and more than $1 billion in old bills were rolled over into fiscal year 1993, causing an all- time record $887 million budgetary deficit. At one point, the backlog of Medicaid bills topped $1 billion. To keep the state afloat, Edgar and lawmakers cut services and slashed agency spending in midyear, enacted new taxes on hospitals and nursing homes and borrowed money to withstand cash-flow problems. State computers even stopped writing checks because there was no money in the bank to cover them.

Now flash to the present. Income and sales tax receipts for the fiscal year ending June 30 will be close to $600 million greater than initial projections, providing a balance large enough to cover all leftover bills and give the state a modest budgetary surplus for the second year in a row. Not only will Medicaid bills continue to be paid on time in the new fiscal year, but the fiscal year 1999 budget Edgar and lawmakers crafted in May also increases rates for hospitals, nursing homes and other health care and human service providers. Funding for elementary and secondary education will increase some $574 million — the largest boost in history. The spending plan also provides dollars for other Edgar priorities, including children's health care, welfare reform and more prison beds, while at the same time offering modest

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Of the goals the governor set forth in his first State of the State message in 1991, clearly he's been most effective in putting the state's fiscal house in order.

In no other key area have his successes been as complete. Edgar's career-long efforts to reform school finance, for example, resulted in funding boosts for poorer school districts, but he couldn't convince Republican legislative leaders to deal with the underlying cause of the resource gap, the state's heavy reliance on local property taxes to fund education.

Early on, Edgar set up innovative programs to help ease people into the workforce from welfare and a year ago centered those efforts in a new umbrella agency for human services, credited with helping pare welfare rolls by a quarter. But critics claim more effort is needed in job training and child care to ensure that recipients can remain in the workforce.

Of the goals the governor set forth in his first State of the State message in 1991, clearly he's been most effective in putting the state's fiscal house in order.

Edgar's dealings with other political leaders have run hot and cold. Chicago Democratic House Speaker Michael Madigan, once the governor's chief nemesis, backed his ambitious school finance reform plan last year even as GOP legislative leaders saw to its demise. The governor gave Chicago Mayor Richard M. Daley the power to change the Chicago public school system from one of the nation's worst into a model for reform. Yet Edgar has blocked the casinos Daley covets, while the mayor has stymied the governor's plans for a new airport in Peotone, and the pair have feuded on issues as trivial as Meigs Field.

Thus, Moody's recent upgrade may foreshadow what future historians will come to regard as the Edgar legacy.

Charles N. Wheeler III is director of the Public Affairs Reporting program at the University of Illinois at Springfield.

43 ¦ July/August 1998 Illinois Issues