Non-partisan Watchdog Group Give Budget Solutions a Failing Grade

Watchdog barks at governor, assembly
Group: Proposed budget clashes with fiscal reality


By BERNARD SCHOENBURG
POLITICAL WRITER

Monday, May 12, 2008

The Civic Federation of Chicago, accusing Gov. Rod Blagojevich and the General Assembly of not facing the state’s fiscal crisis, is opposing new spending and borrowing proposals in the governor’s proposed budget, but backing across-the-board cuts and sweeping money from special-purpose funds to help the state live within its means.

The governor’s plans, the influential government watchdog group says, “do not adequately address the grim fiscal reality facing the state of Illinois.”

In an analysis released today of the operating budget proposed by Blagojevich for the next fiscal year, the influential government watchdog group also calls for state pension reforms, including a moratorium on new benefits, a 1 percent increase in employee pension contributions, and a more affordable retirement package — including a higher retirement age — for people hired by the state in the future.

“The Civic Federation opposes the state of Illinois FY2009 operating budget and urges dramatic recasting of the state’s financial priorities,” the report states.

“Governor (Rod) Blagojevich has proposed a $49.7 billion operating budget that includes $1.9 billion in new initiatives, $1 billion in new business taxes, $16 billion in new pension obligation debt, the lease of the state lottery in the form of a partial concession, and a massive $25 billion capital plan,” the report says.

The report says that the new programs for the fiscal year beginning July 1 are “unaffordable and imprudent during an economic downturn” and that the pension borrowing plan is not linked to reforms to eat into more than $44 billion in unfunded liabilities.

Selling off part of the lottery to fund a building program before specifying what projects should be funded provides “no basis to evaluate whether the plan adequately addresses the state’s most critical needs,” the federation says.

Blagojevich spending initiatives the federation opposes include a $300-per-child tax credit for qualifying families — a $900 million program the governor pushed in his February budget address as a state stimulus package. The group also opposes a $417 million expansion of the governor’s Illinois Covered health insurance plan.

The group also withdrew its earlier approval of a 1 percentage point increase in the state income tax.

“Until the State can clearly demonstrate its dedication to putting its fiscal house in order, the Civic Federation and the public will not be convinced that any new tax dollars will be well spent,” the report says.

The Civic Federation supports other Blagojevich budget ideas, including a 3 percent across-the-board cut in non-priority spending, which the federation said would cut personnel by 1,464, and moves to increase efficiency. It also supports “proposed special purpose funds sweeps and the governor’s efforts to consolidate special purpose funds into the General Fund when appropriate.”

While the report keys on the proposals made by Blagojevich in his combined State of the State and budget address in February, that address merely laid out his ideas. It remains up to the General Assembly to pass a budget.

The scheduled adjournment date of the General Assembly — and the date by which a budget for fiscal 2009 would be passed if all goes smoothly — is May 29. However, last year, several months of post-deadline wrangling were needed to fashion a budget, and this year, many lawmakers have again been skeptical of some of the governor’s proposals.

The Blagojevich administration responded to the report by saying the governor’s plan tries to meet the needs of people in the state.

“While we are pleased that the Civic Federation recognizes that we have taken steps to increase government efficiency, what their report fails to recognize is that there is a huge human aspect to what government does, especially when there is an economic downturn,” said Katie Ridgway, spokeswoman for the governor’s budget office.

“Being more efficient and saving money is important because it allows us to meet the needs of people — from creating jobs, to making sure that people have access to health insurance, ensuring that all kids have access to quality schools, and guaranteeing that our roads, bridges and other infrastructure is safe.

“We would like to hear the federation’s ideas on how the state can really help people during the national economic downturn,” Ridgway said.

Bernard Schoenburg can be reached at 788-1540.

Civic Federation positions in brief:

Opposes
*Selling lottery unless building program is spelled out
*$300 per child tax credit stimulus
*Expansion of Illinois Covered health insurance program
*State income tax increase until state puts its “fiscal house in order”

Supports
*State employee pension reforms, including higher retirement age
*Cuts in non-priority spending
*Special-purpose fund sweeps

The Civic Federation of Chicago
At 115 years old, the Civic Federation of Chicago, whose members include business and professional leaders from a wide range of Chicago-area institutions, is considered the oldest taxpayers’ research organization in the country.

The federation “is a non-partisan government research organization working to maximize the quality and cost-effectiveness of government services in the Chicago region,” the group says on its web site.