The question isn't whether Illinois' finances are in dreadful shape, it's how to fix the problem. Or perhaps more accurately, will legislators have the political will to fix it when they return to Springfield for their spring session?
Even though the legislature and Gov. Pat Quinn last year imposed a temporary 67 percent state income tax increase, Quinn's office expects to have a $500 million budget deficit this year.
Quinn is calling for a 9 percent cut in most areas of state government, except education and health care. But even with cuts at that level, the state would have a projected $800 million budget deficit for fiscal 2015, the year when most of the tax hike expires.
Quinn's budget spokesman, Kelly Kraft, said the state's fiscal situation is not pretty.
"These projections clearly demonstrate that action must be taken to control not only Medicaid costs but also (pension) costs, or all other areas of government will continue to be squeezed," Kraft said.
Looking at the bigger picture, the state has a backlog of about $8.5 billion in unpaid bills and owes about $27 billion in outstanding bonds. And then there's the roughly $80 billion owed to the state's public employee pension funds.
Now, legislative leaders and Quinn are floating ideas to cut the two areas that account for the biggest chunks of the state budget -- pension contributions and Medicaid.
In the proposed $33.7 billion budget for fiscal 2013, the state's pension payment will be $5.3 billion, and Medicaid will cost taxpayers about $7 billion.
Proposals include reducing the benefits or the eligibility for Medicaid. On pensions, ideas include decreasing the benefits and increasing the contributions for current employees. A new pension system was approved last year, but it's only for new employees, and there's debate on whether the benefits for existing employees can legally be changed.
One of Quinn's ideas for reducing the state's pension costs is to shift the burden somewhere else: to local school districts.
"About 21 percent of what the state puts in ... is for state employees," Quinn told reporters earlier this month. "More than half of the money we contribute every year is for teachers who are outside of the city of Chicago -- suburban and downstate teachers."
Supporters of the idea say it would make school districts think twice about giving employees big raises at the end of their careers to boost their pensions. School districts would have some skin in the game if they had to pay for those pension boosts, rather than the state, the supporters say.
Opponents argue that shifting costs to local school districts isn't real reform, and would just force them to increase local property taxes.
Improving the picture won't be easy when the legislature reconvenes Jan. 31, particularly in an election year, when politicians might find it difficult to cut services for constituents or hurt the feelings of unions that represent state workers.
Local legislators know the situation is not good. Here is a summary of their thoughts:
Rep. Jerry Costello II, D-Smithton: "Getting our state's finances back on track and creating opportunities for employment are paramount. To make an economic recovery, it will first require a commitment to living within our means. Simply put -- we must not spend money that isn't there. Just like families and small businesses must live within a limited budget, so too should the state of Illinois.
"While I have not been in office long enough to vote on a state budget, I believe eliminating wasteful spending is key. For example, the state owns a fleet of vehicles, and several of those vehicles go essentially unused. In my opinion, taxpayers shouldn't be footing the bill for inefficient or unnecessary items. Waste should be rooted out at all levels because even smaller-dollar items can add up to meaningful savings."
Rep. Paul Evans, R-O'Fallon: "Our personal income taxes increased 67 percent this year and we are still billions of dollars in debt. That is because the Democratic leadership has no will to make tough spending cuts.
"The only way we will get our fiscal house in order is to make deep cuts in spending. There is a blueprint to follow -- that of the Republican Edgar administration of the 1990s when Republicans led the state to make deep cuts in spending and reforms that raised our bond ratings, paid our bills on time and eventually led to a budget surplus. The Blagojevich and Quinn administrations forgot what every family in Illinois knows -- you can only spend what you take in."
Rep. Eddie Lee Jackson, D-East St. Louis: "The financial condition of the state, as well as our nation and world, is troubling. By focusing on job creation and helping businesses thrive, we will have more money being earned and spent in our economy, which will do the most toward repairing our finances."
Sen. Kyle McCarter, R-Lebanon: "The situation is very serious but it is definitely possible to turn it around. We have a spending problem, not a revenue problem. The businesses and families in Illinois are tapped out and we must make the tough decisions to get our spending under control. I have provided a plan that works at www.illinoisrealitycheck.com."
Rep. Dwight Kay, R-Glen Carbon: "The governor's Office of Management and Budget estimates Illinois' revenue this year to fall short by $507 million. Moody's investment services has downgraded Illinois' bond rating from A1 to A2, which is the lowest rating of any state in the nation. Underfunding of state-managed pension systems was given as the primary reason for the downgrade.
"Illinois can turn things around but it will take bipartisan support to change weak management practices that plague the state and the political will of the General Assembly to start living within our means so that we can provide funding for essential services."
Sen. Bill Haine, D-Alton: "The state's financial condition is slowly getting better. We saw an increase in revenue last year that has helped in significantly reducing the state's debt. We also passed a balance budget last year by making over a billion dollars in cuts to the budget.
"We're going to have to continue making budget cuts each year in the near future to get our finances in order, which includes paying off the state's backlog of unpaid bills."
Sen. Dave Luechtefeld, R-Okawville: "I believe the problem is worse than people know. Most everyone in Illinois is aware that our fiscal condition is very grim, however we have already walked 'over the cliff,' and things get worse on what seems to be a daily basis.
"If the same people who are in charge, and have been in charge for the past 10 years, remain in charge, I don't hold out much hope. Gov. Pat Quinn, Speaker Michael Madigan and Senate President John Cullerton have shown little to no will to dramatically cut spending. To really reduce spending, we must hold the line on new programs and really scale state government back to its core functions."
Rep. John Cavaletto, R-Salem: "The state's financial condition is bleak and will only get worse. To get our fiscal house in order, difficult decisions will have to be made. For example, House Republicans have offered up proposals to reform Medicaid that would save the state at least $1 billion, but Democratic leadership has opted not to implement the reforms which are already in statute."
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