End and Means: Gov. Quinn's Speech Didn't Avoid Pension Subject

Mar 1, 2013

Charles N. Wheeler III
Credit WUIS/Illinois Issues
Listening to lawmakers’ reaction and reading the pundits’ commentary after Gov. Pat Quinn delivered his State of the State speech a few weeks ago was even more entertaining than the governor’s 38-minute performance.

A random sampling, with sources not identified to spare any potential embarrassment:

Quinn “made a campaign speech,” complained various lawmakers, most but not all of them Republicans.

He “did not lay out a plan for dealing with the state’s fiscal crisis,” complained one Republican second-termer; a freshman Democrat was disappointed the speech lacked “specific details on spending cuts that would adequately address the serious fiscal challenges we face.”

Instead of addressing budget issues, Quinn “gave a campaign speech about social issues, gun control and elections,” added a rookie Republican.

You get the picture, and you can be excused if you’re now thinking, “What a keen and immediate grasp of the obvious,” or as Homer Simpson might say, “D’oh!”

Of course Quinn’s speech was a campaign speech — he’s made it clear he intends to seek another term, and the filing date for the March 2014 primary is about nine months away.

Of course he didn’t lard the talk with nitty-gritty, nuts-and-bolts budget details. That comes later — in a few days, in fact — when he presents his budget for Fiscal Year 2014, which starts July 1.

Instead, Quinn starred in his own infomercial, just as his predecessors have done for ages. Brag a bit about your accomplishments, lay out a vision to move the state forward and save the specifics for later.

So the governor sprinkled his address with a laundry list of successes over the last four years, pointedly noting, “We did these things working together, in good faith.” 

Among the highlights: a $31 billion public works program, a $2 billion overhaul of the costly Medicaid program, education reforms that include student achievement in teacher evaluations, changes in workers’ compensation to shave employers’ insurance costs, the state’s first-ever limits on campaign contributions, moving people with developmental disabilities and mental health issues from state institutions into community settings.

Also woven into the speech were a number of initiatives Quinn said would move Illinois forward, most with a populist hue and none costing the state anything. Some clearly won’t get beyond Quinn’s imagination — think assault weapons ban and open primaries. Others will be difficult but not impossible, such as a gradual increase in the state minimum wage to $10 from $8.25 an hour, while a few look like near-sure things, with legalizing same-sex marriage at the top of the list.

Contrary to the critics’ argument that Quinn ignored the state’s massive pension problems, in fact the governor pointed out several times — in one case citing specific program cuts at several local schools — how pension costs were draining dollars from other programs.

He also pointedly endorsed pension reform legislation sponsored by Sen. President John Cullerton as “a comprehensive bill that stabilizes our pension systems and fixes the problem.” Those grousing who still want more pension details from the governor might wish to check out the bill he praised. Head to the legislature’s website and read all 403 pages of Senate Bill 1, the measure Quinn touted.

So the State of the State was pretty much what should have been expected: long on rhetoric, short on details. Indeed, perhaps the only surprise was how well the governor delivered it, especially after some of his earlier stream-of-consciousness meanderings. This time, he stuck closely to the well-written, coherent script, resulting in a solid performance.

Now comes the hard part: the budget address, when detailed dollar-and-cents specifics are mandatory. The challenge will be particularly daunting this time for Quinn in proposing a spending plan and for lawmakers in enacting one because of the underlying numbers themselves and the limited flexibility under new budgeting rules enacted a couple of years ago.

Consider first the rules, which require the legislature to adopt a revenue estimate upfront, which sets a ceiling for spending from the general funds, the state’s main checkbook account. Lawmakers then must set aside dollars for non-discretionary expenses such as the pension contribution and debt service payment on past borrowing. Finally, whatever’s left is divvied up among myriad competing needs and wants.

To their credit, legislators have held the line on spending in each of the last two years, ever since the new rules took effect. To do so required difficult cuts. Spending for elementary and secondary education this school year, for example, is more than $500 million less than in Fiscal Year 2011.

Underscoring Quinn’s call for reducing retirement costs, even more cuts will be needed to meet pension funding obligations in the coming year. 

The math is simple. Under current law, some $6.8 billion must go to the five state-funded retirement systems in FY 2014, almost $1 billion more than this year. But preliminary revenue estimates suggest general funds growth well below $1 billion. Official estimates are still in the works, but in a fiscal report in January, the governor’s office forecast about $600 million in new money, while last month, the legislature’s Commission on Government Forecasting and Accountability was more optimistic at $800 million. Either way, chances are slim that revenue growth will cover the added pension costs.

Moreover, money needed to repay the state’s borrowing is expected to increase by $150 million or more, and health care costs, now just below $8 billion in general funds, likely will increase by $400 million or more, based on current projections.

Together, pensions, debt service and health care are likely to require at least $1.5 billion more next year, roughly twice the available revenue. That means more cuts in education and human services, because that’s where most of the general funds dollars are spent, without some dramatic changes in the underlying equation. The options there are fairly clear: Reduce pension costs, increase revenue, or do a combination of both — but actually getting the votes to do anything is sure to be difficult.

However, as the governor repeated several times in the State of the State, “Hard is not impossible.” Given current conditions, it might also be unavoidable.

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

Illinois Issues, March 2013