June 14, 2009
 
Cut first, reform the budget process, then “discuss” new revenues.

This is the Republican creed on Illinois’ two-year, $12 billion
budget deficit. House Republican votes are needed to pass a budget that
doesn’t massacre services and state employees by the fiscal year’s July
1 start.

This principle is reasonable if considered in a vacuum.

But the impossibility of major budget reforms before the July
deadline and the near certainty of layoffs and service cuts if it is
blown make this an unreasonable stance. Legislators need to find the
revenue now.

Taxes or service cuts

Cutting and reforming, then “considering” new revenues is disingenuous.

House and Senate Democrats already did the gruesome math when they
passed an irresponsible doomsday budget — one that is still unbalanced
— using revenues projected without a tax increase. Gov. Pat Quinn says
it means:

*65,000 lose drug addiction treatment

*80,000 low-income, working mothers lose child-care services

*463,000 kids lose substance abuse, delinquency and teen pregnancy services

*An unknown number of state employee layoffs and further service cuts

The temporary income tax that failed in the House would have
brought in $4.5 billion to close the deficit. With the lowest
per-capita number of state employees in the nation, it’s doubtful
Illinois has $4.5 billion worth of fat to cut and reform. And even with
a tax increase, cuts will have to be made.

The Taxpayer Action Board, appointed by Quinn to find savings,
could barely find $500 million after two months of study. Member Steve
Schnorf, budget director under Republican governors Jim Edgar and
George Ryan, wrote that he “would be thrilled if there were $200
million in actual, achievable FY10 savings.”

So it’s not whether revenues will be “considered” after the cuts.
Either legislators vote for a tax increase by July or workers are fired
and people are cut off from services.

Schnorf summed it up succinctly:

“I don’t understand why some insist on denying that eggs must be
broken to make omelets. I suspect it is because many people believe
there is such waste in government it should be easy to realize painless
savings. … That is a fairy land in which we no longer dare reside.”

Options

TAB and Republicans have come up with lots of money-saving
suggestions, many of which seem to have merit. But when you look under
the hood, there’s intense debate over what rearranging the parts will
do, particularly with Republicans’ top money-saving proposal — placing
Medicaid recipients into HMOs.

Medicaid consumes 40 percent of general fund spending (but roughly
half of Medicaid revenue is from the feds) and 19 percent of residents
are on state-provided health care (not all technically fall under
Medicaid), according to the TAB report and its minority responses. No
one disagrees there are savings to be found.

TAB recommends managed care, but board member Dory Rand, president
of the Woodstock Institute, a Chicago economic development nonprofit,
wrote a scathing dissent taking issue with the assumption that Medicaid
growth will continue at a high rate and noting previous managed care
attempts resulted in fraud.

And Illinois Hospital Association senior vice president Howard
Peters wrote Quinn to say managed care will “cost the state more in
lost federal funds than it will save in state funds.”

This underscores the need for more study on this and other ideas than the two months spent by TAB.

Another option being touted is for Quinn to treat the doomsday budget as a six-month spending plan. That’s irresponsible.

If the General Assembly blows two deadlines, what social service
agency would craft a budget trusting that it would make the third? And
if the income tax increase is effective for only the second six months,
the revenue raised would be half of what it would be in a normal
budget. That could leave another gaping deficit.

People or process

“None of this stuff is going to happen overnight,” House Minority
Leader Tom Cross, R-Oswego, said recently of his caucus’ proposed
budget reforms. “We’re talking about some fundamental change before we
go where the governor would like to go.”

That’s a process-centered position that reduces ordinary people to
collateral damage in this political battle. State workers with a
mortgage payment due or a low-income single mom who needs someone to
take care of her child while she’s at work can’t wait for some grand
review of state government.

Legislators should pass a temporary income tax increase and adopt a
variation of a sensible Cross idea — a top-to-bottom review of state
government by a commission whose ideas would have to be voted up or
down in their entirety by legislators.

 
 
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