Policy group: Illinois needs to slash $4.3 billion from budget

[March 10, 2012]  SPRINGFIELD -- One of Illinois' private fiscal watchdogs says lawmakers need to slash billions, not just trim millions, from Gov. Pat Quinn's proposed state budget.

The Illinois Policy Institute, a free-market think tank with a focus on Illinois' fiscal policy, on Thursday released a budget proposal it says slashes more than $4 billion from the budget that Gov. Quinn introduced last month.

The institute's plan would:

• Cap state spending at $29.4 billion. Quinn proposed spending $33.9 billion; the House and Senate have told the governor they will not spend more than $33.7.

• Cut salaries for state employees by 10 percent.

• Shift the costs for downstate teacher retirements to local school districts.

• Reform Medicaid to save $1.7 billion.

Ted Dabrowksi, the institute's vice president of policy, said, "What we're talking about is fairness and fiscal accountability."

Dabrowksi said the institute's spending plan is based on the assumption that lawmakers will repeal 2011 personal and corporate income tax increases in January 2013

State spending "goes to $29.4 billion in our plan, and then to $28.7 (billion) in 2014," Dabrowksi said.

"From there we're recommending that (spending) only grows at inflation plus population growth," he said.

Kelly Kraft, Quinn's budget spokeswoman, would not comment on the specifics of the Illinois Policy Institute plan. Instead, she said the governor is "working on this budget with members of the General Assembly" to come up with a "responsible budget for the people of Illinois."

Dabrowski said Quinn's budget calls for too much spending. But, he was quick to say that the governor's spending plan is not all bad.

"He seemed to recognize some of (Illinois') problems," Dabrowski said. "But what we didn't see in (the governor's budget) were the reforms. We need to see action tied to his rhetoric."

The institute's plan claims to save the state $800 million by shifting the cost of retirement for downstate teachers to local school districts. Right now, Chicago taxpayers cover the costs for Chicago teachers, but taxpayers across the state cover the costs for teachers in all the other school districts.

Dabrowski said shifting the costs to local taxpayers would not necessarily result in higher property taxes, because local schools will become much more frugal with salaries and benefits when they have to cover their own costs.

"We shouldn't have one group of government incur a cost and someone else have to pay for it," Dabrowski said. "We've all been to an open bar. We all know what happens at a bar when someone is paying: Things go crazy."

State Sen. Dan Kotowski, D-Park Ridge, said lawmakers have been talking about shifting retirement costs, and he is not ruling it out.

"If people have good ideas -- regardless of if they're Republicans or Democrats -- to save money to make sure we can keep the doors of government open when it comes to public safety, education, transportation, we take all of it very seriously," Kotowski said.

There is more opposition, however, to the institute's suggested 10 percent salary cut for state employees.

Andres Lindall, spokesman for Illinois' largest public sector labor union, the American Federation of State, County, and Municipal Employees, said the institute's proposal ignores reality.

"Responsible people recognize that harmful cuts have gone too far already, undermining public services," Lindall said. "Instead of further cutting essential public services and jobs for the middle class, we should ask corporations and rich people to pay their fair share."

Dabrowksi said the institute's $1.7 billion in savings from Medicaid reform would come from restructuring the program from a service that has the state pay for medical care for low- and moderate-income families to one that would help those families buy private insurance.

"Those who need the most help would get the most," Dabrowski added. "Those who have higher means would receive less support."

The institute's plan would set a price for private insurance for low-income families, then use money that is being paid now to hospitals and doctors to help buy that insurance. Some families also would be able to access a medical savings account to have more Medicaid dollars to pay for doctor visits or prescription copays.

Dabrowski said Illinois will have to "revisit" Medicaid eligibility, meaning some people would be removed from the state's Medicaid rolls.

But Mike Claffey, a spokesman for the Illinois Department of Healthcare and Family Services, said Illinois is bound by federal regulations that will not allow the state to change Medicaid radically or deny services to people already enrolled in the program.

[Illinois Statehouse News; By BENJAMIN YOUNT and ANTHONY BRINO]