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 Governor Rauner’s
Budget Address
As prepared for delivery
President Cullerton
Speaker Madigan
Leader Radogno
Leader Durkin
Lieutenant Governor Sanguinetti
Attorney General Madigan
Secretary White
Comptroller Munger
Treasurer Frerichs
Members of the General Assembly,
Thank you for your service.
I stand before you today with respect for our co-equal branches of
government – acknowledgment of our shared responsibility for the
future – and a deeply-rooted desire to work with each and every one
of you to right our ship of state.
Although we succeeded last year in eliminating an inherited $1.6
billion budget hole without a tax hike, we are now in our 8th month
without a state budget – and court orders are forcing us to spend
beyond our means.
Shocking, yes. Acceptable, not even close.
For more than two decades, we’ve had unsustainable unbalanced
budgets, undisciplined spending, increased borrowing from retirees
and vendors, rising taxes, inadequate infrastructure investment,
massive manufacturing job losses, and stagnant family incomes.
Dismal economic performance.
The truth is, we haven’t had a truly balanced budget in Illinois for
decades. In ways both obvious and hidden, we’ve overspent, and
raised taxes to cover it.
To win elections, politicians from both parties made promises to
special interests that the state could never afford – unaffordable
pension promises that are bankrupting our state.
Adding to the damage has been the cost of delay, the penalty we pay
for kicking the can down the road by not paying for our promises
when they were made. Postponing the day of reckoning is taxing
delayed, only with a steeper price, and increased pain for our
working families, when the bill finally comes due.
Years of unpaid bills – with their punishing 12% interest rates –
have cost taxpayers more than $1 billion in interest.
Worse: Delaying pension contributions through a slow ramp, which
didn’t pay in the actuarially required amount each year, was the
equivalent of borrowing from the pension funds at an 8% interest
rate – which is the long term yield on pension assets.
Eight percent is a stunningly high interest cost for our taxpayers
to bear – that’s the rate you pay on junk bonds! Illinois taxpayers
owe an additional $40 billion to the pensions because of this hidden
borrowing scheme.
Our costs of government have grown rapidly, while our tax base –
families and companies who pay for it all – is declining. Illinois
today has fewer jobs and lower family incomes than we had in 1999.
Think about that. Absolutely shocking. Unacceptable! Our people
deserve so much better.
Raising taxes without addressing the costs of government, and
improving the business climate of our state, merely drives families
and jobs out of Illinois. In the years after the last tax hike in
2011, Illinois lost $3.7 billion of taxable income. After the last
tax increase, Illinois’ credit rating was downgraded to the lowest
in the nation. Our pension liability went UP $28 billion. School
funding was cut. The finances in the City of Chicago and Chicago
Public Schools deteriorated. And now we lag the nation in job
creation.
That experience showed us that a tax hike by itself is just part of
an endless cycle of increased spending, borrowing and higher taxes –
a cycle that drives people and jobs out of Illinois.
We have to break out of this downward cycle – and build a positive
cycle of cost savings and job growth.
We must look beyond annual savings, and focus on changing long term
trajectories.
We already know what won’t work.
For one thing – this year cannot become a re-run of last year.
Twelve months ago, I proposed a budget with $6 billion in cuts, and
it was quickly rejected by the legislature. I offered to work
together to find a compromise, but our reform proposals were
ignored.
Instead, Democratic legislators passed a spending plan that was more
than $4 billion out-of-balance, and I had to veto it.
Democrats won’t support enough spending cuts to live within our
current revenues, and you won’t vote to raise taxes to cover your
deficit spending unless Republicans agree to support your tax hike.
I won’t support new revenue unless we have major structural reforms
to grow more jobs and get more value for taxpayers. I’m insisting
that we attack the root causes of our dismal economic performance.
Those are the dynamics.
That leaves us with only two choices: either you give the executive
branch the authority to cut spending to live within our revenues.
Or, we agree – together – on economic and governmental reforms, to
accompany a negotiated balance of spending reductions and revenue,
that ensures that Illinois can be both compassionate and
competitive.
You choose. But please, choose now.
Let’s stop wasting time by voting on spending bills you know must be
vetoed – and then doing it again and again and again.
The people of Illinois are sick and tired of this – they want us to
work together, not watch another pointless cycle of votes and
vetoes.
The people have been waiting long enough.
I stand ready to negotiate with each and every one of you – 24 hours
a day, 7 days a week.
The people of Illinois want action. The time to act is NOW.
A few weeks ago, one Democratic legislator – someone for whom I have
a great deal of respect – told the media that the solution to our
problems must include several things: reforms, cuts and revenues.
Quote: “Those are the levers that have to be pulled in order to get
out of this, and it’s just not that hard if reasonable people come
together.”
She is right – everyone in this chamber must come together in the
spirit of compromise and bipartisanship.
Let’s work together to enact a bipartisan, balanced budget with a
mix of reforms, cost reductions and revenue – just as that
Democratic lawmaker suggested.
And by reforms, I mean REAL reforms that will allow Illinois to grow
jobs, expand our tax base and steadily reduce the total tax burden
on Illinois families.
The reforms we’ve put
forward would make our government more efficient and save taxpayers
money.
We’ve introduced procurement reform to save half a billion dollars
in the coming fiscal year alone. We have begun the work to sell the
Thompson Center and save hundreds of millions. And we are
negotiating a new labor contract that is fair to both state
employees and taxpayers – to save hundreds of millions of dollars
this year and $3 billion over the next three years.
Since last spring, we’ve been bargaining in good faith with all of
the public sector unions whose members serve in state government. We
are negotiating on behalf of taxpayers who pay their salaries; on
behalf of school children, the vulnerable, and the elderly, whose
services depend on taxpayer funds. I am negotiating for all of them.
Our government employees are terrific people. They deserve to be
well paid. And under our proposal, they will still be the highest
paid state workers in the Midwest.
In the end, I know we will have an agreement that is good for state
workers and good for taxpayers. Political attempts by the
legislature to intervene at the 11th hour, and alter a binding
contract, are a direct attack on Illinois taxpayers – a direct
attack on all the people across Illinois whose services depend on
state funding. We simply can’t afford to increase the cost of our
bureaucracy by three billion dollars. Legislation to force that kind
of spending, and blow a giant hole in our budget, will be vetoed.
Three weeks ago, during the State of the State address, I said I
would support President Cullerton’s pension plan as a first step
toward major pension reform – and I urged this legislature to pass
it without delay.
President Cullerton’s pension reform can save taxpayers a billion
dollars a year starting in fiscal 2018.
Our administration lawyers met with Senate staff and made clear we
will support whatever legislative language President Cullerton wants
to use.
Unfortunately, as of today, no bill has even been introduced. Now is
the time to set politics aside and do what is right for taxpayers.
No more delays. No more stalling.
We also have to implement structural reforms that lower the cost of
government, while generating revenue through economic growth.
There’s a perception among some of you that the Turnaround reforms
we’ve put forward won’t help our budget crisis. That they’re quote
“non-budget” items. That they don’t matter enough to move the
needle. That they’d do more harm than good. Well, nothing could be
further from the truth.
Workers’ compensation
reform and lawsuit reform. Mandate relief, consolidation, local
control of bargaining and bidding to drive down property taxes.
These reforms will provide many billions of dollars every year in
government cost savings. But even more critically, they’ll help our
economy grow faster by rebuilding job creators’ confidence in our
state. More businesses, more jobs, more people working and paying
taxes.
Right now, middle class families face crushing property tax burdens
– they see factory workers in Indiana, Iowa, Wisconsin and Texas
making more than here in Illinois – and they see jobs and
opportunity fleeing our state. I’m fighting for those middle class
families every single day.
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To create jobs and
raise incomes, we’ve got to change our state’s reputation as being
hostile to business. If our workers comp costs were in line with the
median; if our tort system was typical of most states; if our
property taxes were average for America; if our government had
long-term fiscal discipline with structural balanced budgets that
restore confidence in our financial future – then Illinois would
become much more attractive to business – and our economic growth
rate would rise from the bottom.
According to the Illinois Department of Revenue, if our state’s
economy had grown at just the national average over the last 15
years, we would have generated $19 billion in additional revenue –
even without the 2011 tax hike.
Just think about that. Today, we’d have no bill backlog with a
billion dollars of interest payments. No budget crisis. And billions
more for our schools, human services and infrastructure.
The true solution to fixing our budget is to raise revenue by
expanding our tax base and growing our economy – not by raising
taxes and driving more jobs and families out of our state.
My point is this: we need to change the way we think about the
budget. This isn’t a binary choice between program cuts and revenue
increases.
This is about economic growth and opportunity – a more efficient
government with more value for taxpayers – a better future for
everyone in Illinois.
When we adopt reform – and our economy grows – and the cost of
government shrinks – at that point, no matter what mix of spending
cuts and revenue we consider in the short term, the overall tax
burden on Illinois families will decline for years to come.
To take this path, we don’t have to enact every item of our
Turnaround Agenda in their current forms, but we must pass REAL
reforms this year.
The savings for taxpayers from our Turnaround reforms would increase
over time and could be many billions of dollars a year – potentially
much larger than our current annual deficit.
Even if we only implemented a portion of these recommendations, in a
few years we’d have a balanced budget without a tax hike, and we’d
have billions of dollars in surplus funds to invest in our schools,
our human services, and our infrastructure.
We’d be putting a priority on the next generation, not the next
election.
Let us commit today to working together to enact a reform agenda,
alongside a responsible, compassionate budget that together forms a
sensible long-term financial future for the state.
For a year now, I’ve believed with all my heart that this
common-sense approach could win majorities in both the House and
Senate – if everyone was willing to compromise.
But as elected officials, you have to deal with political realities.
Primary elections. Special interests. Campaign supporters.
If, in the end, you won’t compromise on the reforms we’ve proposed –
and if you’re unwilling to work with us to enact a balanced budget
with a mix of reform, cost reductions and revenue – we still must
fulfill our shared responsibility to enact a balanced budget.
No reform means we cannot in good conscience raise taxes on the
hard-working families of Illinois. Instead, cuts will have to be
made.
If that becomes necessary, I would ask the legislature to work with
us to make these tough decisions.
If you are not willing to do that, then give the Executive Branch
the flexibility to reallocate resources and make reductions to state
spending as necessary.
The Unbalanced Budget Response Act would put everything on the table
to help us balance our budget – everything except funding for early
childhood education and General State Aid to our schools. To balance
the budget without reform, we’ll have to take a microscope to every
other category of state spending.
You’ve given emergency budget authority to governors in the past –
other states have too – and no one can dispute that we have an
emergency on our hands. It’s not my preferred course of action. It
wouldn’t solve our long-term challenges. But it would, at the very
least, allow us to stop digging the hole deeper.
No matter which of these paths you choose – we must make the
education of our children our top priority. The one thing I won’t
back down on – the one thing that’s non-negotiable for me – is
increasing education funding.
That is why Leader Durkin and Leader Radogno will be introducing a
standalone appropriations bill for early childhood education and our
K-12 schools.
No matter how this session unfolds, send that education bill to my
desk – CLEAN – NO GAMES – and I’ll sign it immediately.
The greatest investment we can make as a community is in our
children. And the earlier we begin, the bigger the return.
That is why our budget for early childhood education increases state
support by $75 million, a nearly 25 percent increase. With that
level of funding, we’d keep more than 85,000 kids in preschool and
create 2,900 more full-day preschool slots.
The $393 million this budget proposes investing in early childhood
education is the most in state history – and will allow us to make
giant strides towards ensuring every child in Illinois enters
Kindergarten with a chance to succeed.
We have a new Executive Director at the Governor’s Office of Early
Childhood Development – Kelley Washington – and I want to recognize
her presence here today.
Our budget also proposes fully funding the General State Aid
foundation level for the first time in seven years.
This will mark the most state money we’ve ever invested in our
school funding formula, and eliminate the need for any proration – a
practice that has forced teachers, administrators and school boards
to make cuts that negatively impact our kids.
We must fully fund this foundation level as a first step toward
reforming our school funding formula. Our current formula doesn’t
meet the needs of our children. Past attempts to fix the formula
didn’t work because they pitted communities against each other.
This year, we are already seeing this cynical strategy being
deployed. After years of financial mismanagement, our largest school
system is threatening a lawsuit against the state. Such a course
could set back funding formula reform for years to come, and ignores
reality.
Not only did Chicago Public Schools ask for the current arrangement,
they are benefiting from a special deal. CPS receives an extra $600
million more every year than school districts with similar student
demographics. Any school funding reform proposal that involves
taking money from one school district and giving it to another, is
doomed to fail.
To achieve formula changes, we must increase state support for
education so that no community has state funding taken away as part
of reform. I pledge to work with you on this issue to find a
bipartisan way forward. But – nothing should delay the General
Assembly from funding early childhood education and K-12 schools for
the coming fiscal year.
I restate my request – send me that appropriations bill right away –
CLEAN – NO GAMES – to give our schoolchildren, our parents, and our
teachers the security of knowing that education is our top priority.
Send me that education bill for students all across Illinois –
students like Diamond Jackson. Diamond is a student leader at
Springfield Southeast High School – she’s a student board member for
District 186 – she’s a rising star and she’s with us here today.
Thank you for joining us here, Diamond.
Send me that education bill so that every student like Diamond has
the opportunity to succeed.
Send me that bill for teachers around the state like Kim Thomas from
Peoria. Kim is the 2016 Illinois Teacher of the Year – and she’s
here with us today. Kim, thanks for all you do.
Send me that bill right away, and make sure teachers like Kim have
the resources they need to give our kids a world class education.
Ladies and gentlemen, the paths before us are well-defined. Now it’s
time to choose.
With my hand outstretched – with a genuine desire to compromise –
with respect – I humbly ask you to join me in transforming our state
for the better.
Turnarounds are about changing direction. From loss to growth. From
decline to expansion. From deficit to surplus. For the economy. For
jobs. For taxpayers. For our children. For our future.
Right now, we’re headed in the wrong direction. We need to work
together to change the trajectory.
If we do this– if we come together to fix our long-term challenges –
we will deliver world class education to every child in Illinois –
no matter where they live or where they came from.
If we do this– if we come together to fix our long-term challenges –
we will support the human services safety net on which so many
depend.
If we do this– if we come together to fix our long-term challenges –
we will lead the nation in the 21st century in economic growth, job
creation and infrastructure – the envy of the world – the engine of
North America once again.
We CAN do this. We MUST do this. Every hard working family across
this great state deserves no less.
Let’s get this done TOGETHER.
God bless you. God bless the State of Illinois. And God bless the
United States of America.
[Office of the Governor Bruce Rauner]
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