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 Instead, the $32 billion general funds spending plan for the
fiscal year that begins July 1 would dramatically reduce spending by
$6.6 billion, with one-third of the savings coming from shifting
government workers into pension plans with reduced benefits,
according to budget documents.
Those proposals are likely to hit roadblocks in the
Democratic-controlled Senate and House and also antagonize public
labor unions which are now negotiating for new contracts.
Michael Madigan, the powerful Democrat and longtime House speaker,
called tapping the anticipated pension savings for the budget
"reckless conduct." He also took issue with Rauner's rejection of
additional revenue in the proposed budget.
"I think that the elimination of the deficits will require a blend
of service cuts plus new revenue," Madigan told reporters, adding he
would once again push for a 3 percent income tax surcharge on
earnings over $1 million to raise about $1 billion for schools.
Illinois has a chronic structural budget deficit, as well as the
lowest credit ratings and worst-funded pension system among the 50
states. The fiscal crisis is the most severe the state has seen in
decades, according to budget experts. Rauner said reforms must
precede new revenue and that his budget plan was a first step.
"It will take time to restore Illinois to fiscal health," he said in
his budget address to the legislature.
Rauner, a political neophyte who took office in January, is the
first Republican elected governor in Illinois since 1998.
Medicaid, the state and federally funded healthcare program for the
poor and the biggest single cost item in Illinois' budget, would be
cut by $1.5 billion, according to a budget briefing by Rauner's
staff. Ironically, the Rauner administration considered opting out
of the U.S. Affordable Care Act, despite Illinois' status as home
state of the act's leading advocate, President Barack Obama.
Rauner also plans to put $700 million in savings in worker
healthcare coverage on the table during ongoing union contract
negotiations.
LOOMING LABOR BATTLE
Fiscal pain would spread to higher education, which would get a $400
million funding drop, and to mass transit, with the Chicago area's
bus, rail and subway services losing $127 million. Revenue sharing
to local governments would fall by $600 million as the governor also
seeks a two-year local property tax freeze. Primary and secondary
schools would receive a $300 million funding boost.
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Rauner proposed moving future retirement benefits for all state
workers into the less-generous pension plan that the state imposed
on workers hired after Jan. 1, 2011. The move would save more than
$2.2 billion in the coming fiscal year and more than $100 billion
over 30 years. A buyout option would give workers a lump sum payment
and a defined contribution plan in return for a voluntary reduction
in cost-of-living adjustments.
State pension payments are squeezing spending on essential state
services and a 2013 law aimed at easing a $105 billion unfunded
liability is being challenged in court by unions and others. The
Illinois Supreme Court on Tuesday set oral arguments over the
constitutionality of the law for March 11.
Unions immediately blasted Rauner's pension proposal.
"These unfair cuts are clearly in violation of the plain language of
the constitutional pension clause," said a statement from union
coalition We Are One Illinois.
State Senate President John Cullerton, a Democrat, said Rauner's
budget "raises significant questions about its viability in the
legislative process."
"For all the pain that Governor Rauner’s budget plan would extract
from the most vulnerable people with human service needs, the basic
math still doesn’t work in his proposal," Cullerton said in a
statement, taking issue with the $2.2 billion budgeted from pension
savings.
Republicans, on the other hand, were heartened by Rauner's budget
message.
"It's refreshing to hear a governor say we're going to live within
our means," House Republican Leader Jim Durkin said in an interview
on local public television.
(Editing by Matthew Lewis)
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