Protracted budget dispute produces positives for prison workers, state colleges and business
Fifty-four days and 17 special sessions after its scheduled May 31 adjournment date, the Illinois General Assembly approved a $45.5 billion state budget for the fiscal year that began July 1.
The budget boosts K-12 education by $364 million, closes no state facilities and cuts funding for most state agencies. The record-breaking overtime session came after Gov. Rod Blagojevich and Senate President Emil Jones failed to get House Speaker Michael Madigan to support a spending plan that relied on $300 million in business tax increases.
The impasse among the three Chicago Democrats gave new bargaining power to Republican lawmakers, who used it to cut spending, throw out some accompanying business tax hikes, keep prisons open, reform state borrowing practices and make Blagojevich consider a number of other issues.
"I'm sure that sometime after the end of May he and his advisers came to the judgment that they were into a different ballgame and there was nowhere to go," says Madigan, who had aligned himself with Republican leaders, Rep. Tom Cross and Sen. Frank Watson.
For his part, Blagojevich says he's pleased enough to declare victory. "I feel very good about this budget. It's a budget that does all the different things we asked for back in February, the key goals, the key priorities," Blagojevich says. "I'd much rather play 15 innings and win for the team then nine innings and lose."
FY 05 Budget Settled
One area of spending affected by the extra-innings is education. The budget includes a $154 increase in the state’s minimum per-pupil spending level, not the $250 hike the governor desired. The shift freed up $95 million for transportation, special education and other grants suburban schools can tap regardless of local wealth.
Health care programs for the poor got a $600 million boost that Blagojevich says will expand coverage to 56,000 more working adults and 20,000 more children from low-income families.
To help balance the ledger, lawmakers approved nearly $1.3 billion in cuts, or about $400 million more than the governor had originally sought. That means most agency budgets were trimmed by as much as 4 percent. Consequently, state employee unions fear hundreds of layoffs, but the administration hopes a severance package for middle management will pare the payroll by 3,000 jobs.
State universities, which have sustained two years of cuts, managed to remain on level ground. Blagojevich originally called for additional cuts for higher education, but most state colleges are located in GOP legislative districts.
Republicans also represent prison workers in Pontiac, St. Charles and Vandalia. Those facilities will remain open under the budget agreement, a reversal for Blagojevich, who had said the state should not operate old prisons just to provide jobs.
Lawmakers force the governor to put it in writing
Pledges not to close those prisons were among more than 50 agreements legislators forced Blagojevich to put in writing. “It brought a level of comfort to the participants of this negotiation,” Madigan says of the unprecedented memorandums of agreement. Last year, the governor used his veto power to slash the budgets of the secretary of state and other elected officers just weeks after the leaders agreed on the budget.
This year, most of the state’s new construction projects were put on hold, including those outlined in Blagojevich’s Opportunity Returns program. Blagojevich began promising projects under the regional economic development plan last fall, several months before asking legislators to approve $2 billion in bonds to fund it. The governor’s four-year $2.2 billion school construction program also is on hold until fall. Madigan says those efforts will need a new financing source, something Blagojevich did not attempt to identify.
Madigan also sided with Republicans in forcing the governor to adopt reforms limiting the size and scope of state borrowing. The governor can no longer put off principal payments for several years and must make level payments each year.
Excluding money reappropriated for ongoing construction projects, the FY05 budget is $437 million smaller than the governor’s original proposal, according to Madigan.
The spending is financed, in part, by skimming $260 million from dedicated funds. Another $151 million comes from what Blagojevich calls corporate tax loopholes. Another $35 million will be generated by new or increased fees, including a mandatory $500 fine for first-time DUI convictions, late fees for vehicle registration stickers and a $16 hike in state I.D. cards, which had been $4.
Meanwhile, truckers who lost a sales tax exemption and were saddled with a 36 percent hike in registration fees will get relief under legislation the governor plans to sign. Smaller communities also will get a break on a wastewater fee imposed last year. And the surcharge employers pay on workers compensation insurance was cut by one-third.
In addition, the budget agreement ends the administration’s ability to siphon $140 million a year from a state road fund financed by gasoline taxes and vehicles fees. That frees up money for road construction.
On other issues:
* Lawmakers failed to agree on medical liability reform, an issue that tops the GOP agenda, especially in southern Illinois and the Metro East area, where officials say the cost of malpractice premiums are driving doctors out of practice or across state lines (see Illinois Issues, “Code Blue,” April 2004, page 22).
“It’s still an issue that I think at some point in time is going to be felt all over this state, maybe it isn’t now,” says Watson, who had considered withholding Republican votes on the budget to force action, but ultimately did not.
Watson has asked Blagojevich to call a special session on the issue. Without elaborating, the governor says he will publicly address the issue in early August.
* Blagojevich backed away from a plan to free up cash by crediting $215 million already in the pension system toward this year’s obligation. The administration argued that the success of last year’s pension bond sale made the move possible, but actuaries warned it would create an enormous future liability (see “Risky Math,” May 2004, page 23).
The pension system will be short $310 million this year while lawmakers discuss ways to shoulder the burden created by an early retirement offered in 2002. The program was supposed to cost $70 million annually for 10 years. The cost ballooned to $380 million a year. Blagojevich put up $70 million now and wants to review options, including stretching out the 10-year repayment window.
* Retired downstate teachers who rely on the state for health insurance received a temporary reprieve via a stopgap measure signed by Blagojevich.
It caps annual premium rate hikes at 9 percent or less while requiring working teachers, school districts and the state to pay more into the fund. In addition, the state will establish a commission to further study the program’s financial future.
* Fourth-year teachers across Illinois now have another year to complete recertification requirements under legislation enacted in late June. The move came in response to a muddled and often frustrating renewal process the state will now streamline (see “Certified Mess,” June 2004, page 20).
Ryan drops out
Republican Jack Ryan withdrew his candidacy as U.S. senator from Illinois. A court unsealed custody documents containing accusations that he had forced his ex-wife to attend sex clubs. The former investment banker turned teacher was to have faced off against Democratic state Sen. Barrack Obama. The Wilmette Republican blaimed an "out of control" media for his decision. The Chicago Tribune sued for access to sealed documents related to divorce proceedings between Ryan an his ex-wife, the actress Jeri Ryan. The decision to withdraw followed criticism by party leaders who argued that Ryan had not been forthcoming about whether the documents contained damaging information.
Illinois Issues July 8, 2004
Reagan dies
Ronald Reagan, the only U.S. president born in Illinois, died June 5. He was 93. The conservative icon, plagued by Alzheimer?fs disease in his final years, was entombed near the Reagan Presidential Library in California. Thousands paid respects at the library, in Washington and, in Illinois, at Reagan?fs alma mater, Eureka College, his boyhood home in Dixon and at his birthplace in Tampico. Gov. Rod Blagojevich renamed a stretch of I-88 from Sterling to the Quad Cities as the Ronald Reagan Memorial Highway.
MORE information:
Illinois Issues OBIT-Ronald Reagan
Ronald Regan Presidential Library
Eureka College
Illinois Issues July 8, 2004
New labor director
Union leader Art Ludwig has been named head of the Illinois Department of Labor. Ludwig, who was business manager of Local Union 701, International Brotherhood of Electrical Workers, replaces Esther Lopez, who had served as acting director. Lopez now serves as deputy chief of staff of Labor and Professional Regulation.
Illinois Issues July 8, 2004
Case summary of Operation Saferoad
(updated December 17, 2003)
http://www.usdoj.gov/usao/iln/osr/osrcasesummary.pdf
Press release, the Ryan indictment
http://www.usdoj.gov/usao/iln/pr/2003/pr121703_01.pdf
