Rauner signs first full spending budget since taking office in 2015
by KEVIN GROSS
Some Northwest Side legislators discussed the state budget for the next fiscal year that was signed this week by Governor Bruce Rauner.
Trying to avoid another budget impasse, legislators drafted the "bipartisan compromise" budget that projects $38.5 billion in total spending, with revenue projected to balance the budget.
This marks the governor’s first full budget that he has signed since he took office in 2015.
Although it avoids new taxes, the budget relies on revenue from last year’s state income tax rate increase from 3.75 percent to 4.95 percent, which was passed over the governor’s veto. The budget was approved by a 54-2 vote in the Senate and a 97-12 vote in the House last week.
"I’m signing this legislation because it is a step in the right direction, but it is not perfect," Rauner said in a statement. "We have a lot of work to do before we fully restore the state’s fiscal integrity. We still need to enact reforms that bring down the cost of government, make the state friendlier to job creators, and ignite our state economy so it grows faster than government spending."
"For the first time in years, we have an opportunity to manage our way into balance, and we don’t have to dip into the pockets of overtaxed Illinoisans to do it," Rauner said. "Balance is in reach because we were able to accomplish $445 million of pension reform and the economy is stronger thanks to federal tax reform, and we are benefiting from an unexpected boost in tax receipts."
Rauner stepped away from his "Turnaround Agenda" demands for reduced business regulations and union power and frozen property tax rates and asked for a balanced budget instead.
"I think the governor realized that certain things will not happen here in Illinois, where we have a very unionized state," state Senator Iris Martinez (D-20) said. "Many others felt that the ‘Turnaround Agenda’ is not going anywhere. If that didn’t go anywhere after 2 years, what would make it possible this year?"
Some legislators said that the budget was approved quickly by the General Assembly because of the gubernatorial election that pits Republican Rauner versus Democrat J.B. Pritzker on Nov. 6.
"It would not look good for (Rauner) to ask for people to elect him, and people to have to ask ‘What results?’" state Senator John Mulroe (D-10) said. "If he had never passed a budget on time, what history of results would people have to look for in him?"
"The budget (Rauner) signed is basically what we proposed 3 years ago. But later, after $12 billion in debt on the backs of taxpayers, he said ‘Sorry about that, lets approve that (budget).’ If its an election year you’re trying to do the politically correct thing," state Representative Robert Martwick (D-19) said. "My point is that things people in legislature are doing are no different than through the last 3 1/2 years .The only one that changed because of the election was Rauner."
Martinez said, "Many Republicans, as you saw what happened last year, broke ranks and said ‘We have to do something.’ I think that set the mood and tone for this year’s process. Last year it was proven that you can get ranks to break to show the state cannot continue to operate in the negative."
"Over the years we’ve had Republican governors but Democrat legislators, and we’ve always passed the budget," state Representative John D’Amico (D-15) said. "But I think camaraderie over the past years helps bring people together to seek common ground. Rauner had done so much damage that people realized that they can’t continue politics as it was."
The budget avoids about $1 billion in spending increases proposed by some lawmakers, but does provide $350 million in additional funding for public schools, as part of the increases promised through last years’ new state education funding formula signed last August. Childcare providers and early education programs will also see increases.
"The bottom line is when you have good schools, good neighborhoods, good parks, it helps everyone and increases property values," D’Amico said.
The budget also relies on a projected $445 million in pension savings from discounted cash buyouts, giving state pension recipients the option to opt into up-front payments for a reduced rate of return.
Martwick, who chairs the House Pensions Committee, explained that Tier 1 state employees normally receive a compound cost of living adjustment increasing their pension payment 3 percent annually after retirement, but could now voluntarily choose to receive a simple 1.5 percent inflation rate annual adjustment and receive immediate payment worth 70 percent of the difference between the figures.
"The question is ‘When do you die?’ No one knows the answer to that. But when you die, your pension ends," Martwick said. "The saying is that a bird in the hand is worth two in the bush."
The budget ignores the state’s unfunded pension debt and a $6.6 billion backlog, which accumulated throughout the historic budget impasse.
Martinez acknowledged that the budget is imperfect and hopes that legislators will "do something through some type of appropriations, based on conversations that will happen. They talk about a projected revenue surplus that might occur at the end (of the fiscal year). My hope is that it can be redirected to the backlog."
Martwick, who left calculators on Republican legislators’ desks during negotiations, hopes that legislators will acknowledge long-tern problems.
"Lets acknowledge the math," he said. "The idea of the calculators was to say ‘Don’t get up there to rail against someone’s ideas until you’re ready to put math up of your own.’"