The Capitol Fax Blog » *** UPDATED x1 *** So far, I’m wrong

Friday, Dec 18, 2009

* A coalition of human service providers held a press conference yesterday to demand that Gov. Pat Quinn, Comptroller Dan Hynes and Treasurer Alexi Giannoulias set aside their differences and approve a short-term borrowing plan to help out their most desperate members. From a press release…

“There is no sign that the legislature will raise meaningful new revenue in the immediate future to pay the state’s unpaid bills,” said Marge Berglind, President & CEO of the Child Care Association of Illinois. “Without a short-term loan, payment delays will grow even further, guaranteeing the collapse of programs and agencies in Illinois.”

Agencies represented by the Child Care Association are alone owed approximately $23,545,000 from various state departments, Berglind noted.

“They are running on fumes,” Berglind said.

Specifically, for example, the state of Illinois owes $1.1 million to the Children’s Home Association of Illinois in Peoria, which cares for children with mental health needs and youth with delinquency support needs throughout Central Illinois. The state has failed to pay most bills since the beginning of July.

The states also owes $743,00 to Kids Hope United in Springfield and Chicago, which provides youth services and family supports to young mothers at risk of child abuse and neglect statewide. Again, the state has failed to pay most bills since July.

The Peoria Journal Star closed its Statehouse bureau the other day, so the paper didn’t cover the dire straits of the group in its town. The paper did have space to rewrite an Aaron Schock press release, however.

The State Journal-Register still has an active bureau, but there was no coverage in the paper about the press conference. There was a story about possible snowfall in Springfield today and the fact that a state-backed resort was closed six months ago because of mold.

The Pantagraph did cover the story…

Tom Pollock, who runs a social service agency based in Danville, said the backlog could mean missed paychecks for his workers next month. […]

At an event in Springfield on Thursday, Hynes said he hasn’t changed his mind. He said the Quinn’s proposal to borrow $500 million wouldn’t come close to paying all of the state’s unpaid bills.

“The borrowing proposal that was put forward really doesn’t solve the problem,” Hynes said. “It doesn’t solve the cash-flow problem; it doesn’t solve the underlying budget problem. In fact, it gives false hope to providers who are waiting to be paid.”

[Don Moss, who represents United Cerebral Palsy of Illinois] and others say the disagreement between Hynes and Quinn is rooted in their bids for governor.

The AP moved a six-sentence story yesterday, ending with this line…

The Illinois Human Services Coalition warns that some local providers have shut their doors and many more will go out of business soon.

I wrote in my syndicated newspaper column this week that the extreme financial crunch on social service providers was a “ready-made story for the [holiday] season.” Apparently, I was wrong. At least for now.

*** UPDATE *** Progress Illinois has some video from yesterday’s press conference. Watch it…

* Related…

* Nursing home report draft expected in Jan.

* State to get $9M bonus for children in Medicaid

* State funds ease SIU’s cash crunch _ for now

* Ill. high court delays rule on medical malpractice

- posted by Rich Miller

53 Comments

- Michelle Flaherty - Friday, Dec 18, 09 @ 10:27 am:
Strange.
It doesn’t appear Capitol Fax covered it either, unless reprinting a news release counts.

- Reality is - Friday, Dec 18, 09 @ 10:29 am:
Appears this story ran at 6:24 AM in the online SJ-R.

- anon - Friday, Dec 18, 09 @ 10:31 am:
While it didnt get the press coverage it deserved, my guess is that the governor’s office had something to do with the press conference, and that’s a smart move. Having these organizations out there publicly saying that inaction by these constitutionals will lead to severe human services cuts really backs Hynes further into that corner. The “fussbudget” corner. Quinn keeps getting better and better at this thing.

- I know nothing - Friday, Dec 18, 09 @ 10:32 am:
It’s not shameful at all that our General Assembly would let these organizations fall apart by approving a budget that intentionally delays their payments and doesn’t include enough revenue to pay them. Doing the right thing and taking the hard vote on new revenue is a ridiculous idea.

- Small Town Liberal - Friday, Dec 18, 09 @ 10:32 am:
I’m sick of Hynes’ rhetoric on this. No kidding it doesn’t solve the cash flow problem, no one thinks it does. It covers the “We don’t have money to continue providing services right now” problem. Whats Hynes’ answer to these providers? “We’ll pay you once we ammend the Illinois constitution to allow for a progressive income tax, get the GA to pass that tax increase, and then implement it and start receiving the new revenue.” Yeah, they probably have a couple years worth of savings to wait for that.

- Montrose - Friday, Dec 18, 09 @ 10:33 am:
“Strange.
It doesn’t appear Capitol Fax covered it either, unless reprinting a news release counts.”

Rich has been covering this issue on a regular basis for months.

- VanillaMan - Friday, Dec 18, 09 @ 10:36 am:
How is this news?
Everyone has known this would be happening. The writing has been on the wall for at least four years. We’ve been in a fiscal disaster for a year. I guess the bigger question for many is, “why has it taken so long to reach bottom?”

Perhaps we’ve reached a point where we consider our governments to be just another organization forced into layoffs and closures during this recession. We’ve been hearing about layoffs and unemployment issues all year. Perhaps the source of those layoffs doesn’t matter anymore.

Voters will seek revenge for new taxes. They seem to be willing to watch those dependant on their tax dollars to feel the pinch too. They are not heartless. They are putting their lives and families first and believe others should be doing the same.

How long do the pro-government champions expect to have citizens blindly hand over their wages during these times? How does this go? Since the pro-government folks always expects their coffers to be filled, they obviously didn’t plan for economic bad times, and they didn’t feel a need to remind voters why they were being taxed? How much blind faith do these people have?

Over the past twenty years we’ve seen non-profit organizations reach out for public support in new and in innovative ways. Our consumer society speaks consumer, and thinks like consumers. So, why wouldn’t these same thoughts not apply to governments? Governments have to remind citizens why they take about a third of their wages, now and then. You can’t keep expecting that citizens will just keep blindly coughing up the money they would have spent on themselves or their families without explanations, did you?

- wordslinger - Friday, Dec 18, 09 @ 10:37 am:
I don’t get it either. Growing up, my family and most friends were painters, carpenters, electricians, etc.

If you completed a job for someone, and they were more than 30 days past due on an invoice, they were deadbeat bums, the lowest of the low. They were taking food off your table.

It’s unconscionable that the state can allow this to get worse year after year.

- Michelle Flaherty - Friday, Dec 18, 09 @ 10:38 am:
Montrose,
So has every other news outlet in Illinois.

- Reality is - Friday, Dec 18, 09 @ 10:39 am:
“It covers the “We don’t have money to continue providing services right now” problem.”

Hynes said Illinois won’t have the revenue this fiscal year to pay it back and he would have to keep the money borrowed in order to make his obligated payments. They wouldn’t get the money anyway hence Hynes’ “false hope” statement.

- cassandra - Friday, Dec 18, 09 @ 10:40 am:
I think Hynes may be the more responsible actor in this debate, but I’m wondering why the state has to borrow $500 million. Why don’t they borrow a lower amount, say, $100 million, and pay them part of what’s owed. They’d complain, but they’d take the money. We’re all making various types of settle-for-less economic decisions these days.

- OneMan - Friday, Dec 18, 09 @ 10:43 am:
Rich,
It is ready made for Christmas, sadly it is going to take some deaths before it gets coverage.

- Will County Woman - Friday, Dec 18, 09 @ 10:47 am:
Quinn could have his 50 percent tax increase this year had he handled the budget correctly. He did not do what was needed and asked of him earlier this year to ensure that he had enough support, on both sides, for the a 50 percent tax increase.

Hynes is not responsible for the inaction and failure that resulted in a stopgap budget this year. He could and should argue that had he been governor there would not have been a stalemate or a stopgap budget.

It makes no sense at this point to continue borrowing when the state has no means to pay the money back. Quinn needs to get his 50 percent tax increase passed next year, and just do his job properly. He decided to wait until after Feb 2nd, 2010, so…

The suffering that the social services and vendors are experiencing is unnecessary, and it is wrong. However, borrowing now only ensures that Quinn will not do his job his job next year and will just keep borrowing all of next year. No one is helped by that. No one!

- dupage dan - Friday, Dec 18, 09 @ 10:54 am:
The town I reside in, Downers Grove, just presented the new budget which seeks to address the deficit which is several millions of dollars. The plan is to reduce/eliminate some services and activities as well as some modest tax increases to cover the rest. It appears to be a 50/50 split between cuts and taxes. No one is happy about this and there are many who are fighting it. However, at least our local elected officials discussed the issues in the open and, in a timely manner, made the decision that had to be made. Once that happened some began to work on how to fill the gap especially in the area of needed services. Not an easy thing to do given the drop in charitable giving that has accompanied the economic downturn.

Too bad the state gov’t has failed miserably to even pretend they are doing the same.

- Rich Miller - Friday, Dec 18, 09 @ 10:55 am:
===Appears this story ran at 6:24 AM in the online SJ-R. ===

They ran the AP brief. Nothing more.

- Responsa - Friday, Dec 18, 09 @ 10:55 am:
Much of the issue is that although the problem of Illinois not paying bills is very real, the message is very stale. Social service agencies especially have been threatening to close for several years due to staff cutbacks and being owed money from the state. The public has very simply tuned it out (partly for self preservation) because they feel so helpless to affect it.

- Will County Woman - Friday, Dec 18, 09 @ 10:56 am:
“No kidding it doesn’t solve the cash flow problem, no one thinks it does. It covers the “We don’t have money to continue providing services right now” problem.”—Small Town Liberal

Maybe Quinn should have thought about that earlier this year instead of TRYING to play harball with the GA? Let’s not forget that we are in a recession, and it is never a good idea to raise taxes during a recession.

A repsonsible governor would have done whatever necessary to avoid the present-day situation. There was a right way and wrong way to go about getting a 50 percent tax increase, even DURING A RECESSION, but the right way inexpicably escaped Quinn. As a result he only managed to get a stopgap budget.

If we are being honest, then we must accept and understand that Quinn’s leadership style is just not suitable for the governor’s office.

- Small Town Liberal - Friday, Dec 18, 09 @ 11:09 am:
WCW - I don’t want to defend Quinn on something that I agree he has mishandled. I’m simply saying that no one else is providing ideas for paying these providers right now, and unless they’re crying wolf it seems like they need to get paid right now. I don’t like the idea of borrowing to pay off debt without a plan to pay for it all, but I don’t have a clue how to immediately address the issue in another way, and apparently neither does Hynes. What I like even less is the thought of providers that help children and disabled people shutting their doors, so I’ll take the bad borrowing plan in hopes that eventually the Governor and the GA get straightened out.

- Loop Lady - Friday, Dec 18, 09 @ 11:25 am:
STL: I agree that your post is the humane short term way out of this mess…WCW would rather that needy folks pay the price for years of IL’s poor fiscal management, and BTW blame it all on Pat Quinn…as I recall, did not the Comptrollers offcie under Hynes promote a Rainy Day Fund?
IMHO, it’s hailing right now and the winds are 50 mph…

- Josh - Friday, Dec 18, 09 @ 11:26 am:
I think you will find many folks running not-for-profit human services agencies are some of the most innovative individauls in the business. Many succussful not-for-profits have scoured for grant opportunities from the federal government, established private foundations, and sought out private donations. The problem in doing all of this is resources leverage each other. If a provider is not getting paid by the state, perhaps it can’t afford to keep a program available, perhaps that is a program that must be available in order to maintain a federal grant - a very real domino effect. Many of these providers are victims of their own success in doing innovative things because this state hasn’t valued human services in years. I am frankly sick of hearing democrats hiding beyond voters who say they don’t want an increase in taxes - well no kidding they don’t, who really does?

- DuPage Dave - Friday, Dec 18, 09 @ 11:32 am:
This is going to be a really bad year for anyone in the human services business. As Rich noted, they aren’t very good at getting publicity. But when they shut down or severely restrict hours of service, people will eventually notice. In an election year it’s unlikely that Quinn will be able to come up with the money owed to the providers.

It’s important to note that we’re not talking about increases to the providers- we are not paying them now for work they’ve already provided under contract with the state. Unlike hospitals that have other sources of revenue, the human service agencies are typically 90 percent state funded.

- budget boy - Friday, Dec 18, 09 @ 11:33 am:
If Quinn cared at all about these agencies, he would have started firing state employees,froze their salaries, cut thier pension benefits, retiree health care benefits and increased their required pension contributions. The Demecrats have created a bloated and overpaid state bureacracy and have no one but themselves to blame for the fact that they have run out of money to pay their precious social service agencies. The credit card governement had to come to an end at some point.

- Will County Woman - Friday, Dec 18, 09 @ 11:59 am:
Small Town Liberal,

to follow-up on budget boy’s post, I think quinn has not demonstrated that he is truly serious about resloving Illinois’ budget issue even if that means he has to put the state’s interest ahead of his own political interests. Earlier this year when he was talking about courage, I believed him because I had no reason not to. But since lisa madigan decided not to run for governor that’s when quinn’s credibility took a hit and dive for me. Talk about a Dr. Jeckyl and Mr. Hyde type!

i am not swayed by any of his political supporters who try to claim that quinn is the right person to lead through (fiscal) crisis, and the fact that they are all saying it word for word makes it feel/seem all the more contrived. It seems like they have all been handed a script because they are all on that same scripted “he’s honest; he can lead through crisis”. If that were true, he wouldn’t be conveniently waiting until after Feb 2nd, OR MAYBE NOT, to push for his 50 percent tax increase, nor would he push for borrowing at this juncture. given the fiscal condition that illinois is in, if he were a true leader he’d stand up and say we are heading into a new year and here is where we stop with excessive and abusive borrowing–we stop it right now and break from our troubled past fiscal practices.

- Bill - Friday, Dec 18, 09 @ 12:04 pm:
==If Quinn cared at all about these agencies==
All he cares about is getting elected.
Quinn and anyone else who thinks that right after the primary the GA is going to rush to pass Quinn’s tax increase is sadly mistaken. It ain’t gonna happen. They might as well start the cutting process now rather than wait until it gets even worse. Even if he does win the primary he can’t borrow enough to get through November.

- Scooby - Friday, Dec 18, 09 @ 12:28 pm:
It’s worth pointing out that Illinois Issues is also covering the story. It’s nice to see their blog pick back up again.

- budget boy - Friday, Dec 18, 09 @ 12:58 pm:
Quinn’s whole plan has been to spend us into a tax increase. He’s going to announce in Janauary that the state will be facing a 20 billion deficit at the end of FY 2011 unless we raise taxes. It’s unfortunate, but do the math — fy09 deficit is 4 billion, fy10 deficit will be around 8 billion — the two added together equal the 12 billion most everyone quotes. But, that 12 billion will be rolled into fy2011 which will have about the same revenue as fy2010… so 20 billion deficit. What in the heck is this state going to do when the tax hike doesn’t pass. The bond markets will be closed to us at that point. The only hope to avoid a complete collapse will be a federal bailout.

- Will County Woman - Friday, Dec 18, 09 @ 1:05 pm:
Re: Nursing Home report draft

well duh! federal/state welfare programs are often abused and exploited by people simply looking to cash in.

now the mentally ill felon who raped an elderly nursing resident, which appears to be the incident that triggered the tribune’s investigation of nursing home saftey, has pleaded guilty. okay. if he convicted of the crime where will he go to serve his punishment? can we (citizens and taxpayers) be sure that he will serve his full sentence? will the advocates of the mentally ill try to intervene on his behalf to prevent what they perceive of as “too harsh” treatment? I’ll have to wait until January 31st to find out the answers to these and other interesting questions, in a state that has no money. The Nursing Home task force started in late september/early october? I watched Chicago Tonight on the nursing home issue the other night, but I’m curious are the mentally ill/felons still living in the nursing among fragile elderly/infirm populations?

http://www.chicagobreakingnews.com/2009/12/maplewood-care-nursing-home-sexual-assault-guilty-christopher-shelton-elgin-abuse-felon-mental-illne.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+ChicagoBreakingNews+%28Chicago+Breaking+News%29

- Will County Woman - Friday, Dec 18, 09 @ 1:17 pm:
What is the penalty for a state not balancing its budget, so far as the law is concerned? A state can’t go into receivership, can it? if so, by whom or what?

Why does quinn (or anybody) want to be governor of this state?

- Loop Lady - Friday, Dec 18, 09 @ 1:22 pm:
Budget Boy: there’s that term again:Federal bailout…could this be the solution Governors will demand after all the corporate/banking/brokerage bailouts?

How fast can the Feds print money?
How much more can we leverage our children’s futures? Stay tuned…

- Anon - Friday, Dec 18, 09 @ 1:32 pm:
“If Quinn cared at all about these agencies, he would have started firing state employees,froze their salaries, cut thier pension benefits, retiree health care benefits and increased their required pension contributions. The Democrats have created a bloated and overpaid state bureacracy and have no one but themselves to blame for the fact that they have run out of money to pay their precious social service agencies. The credit card governement had to come to an end at some point.”

Budget Boy…please learn about the budget. Our entire state payroll is 4 billion dollars. We could wipe out state government tomorrow and we still wouldn’t close this gap. Our “overpaid bloated bureacracy” is a made up Republican talking point that isn’t grounded in any fact. Governor Ryan created the early retirement program to get rid of higher paid long term staff so we could hire newer lower paid staff. But Blago came in and immediately did a hiring freeze. As a result we have the lowest number of state employees per capita in the country. And that is not a good thing evidenced by critical staff shortages creating ridiculous overtime that costs us more than hiring people would.

Come up with a solution that is grounded in fact. Its not 1989 and we can’t continue to run on 1989 dollars in 2009. Adjusted for inflation, we spend 1 billion less today than we did 10 years ago. Quit the revisionist history and get real.

Also…who do you propose take care of our developmentally disabled people? Our children, our seniors, and our vets? These are the times when demands on these agencies increase. But we aren’t talking about increasing programs, we are talking about paying bills we owe them for services they have already provided. They aren’t Democrats precious programs…they are programs for people who need help. But I guess you don’t know any people who need help. Or know any people who work in one of these agencies. Are there some people who game the system? yes. Majority of people NO! Many people hate they have to resort to taking services.

What we need is people to tell the truth about the crisis we are in. There is already enough blame to go around.

- Reality is - Friday, Dec 18, 09 @ 1:37 pm:
Anon - we had a hiring freeze under Ryan also. The only difference in hiring that was very apparent under Blago was a huge increase in the numbers of executive staff, even with a hiring freeze.

- budget boy - Friday, Dec 18, 09 @ 1:42 pm:
==what is penalty for a state not balancing its budget, so far as the law is concerned?==

It’s an interesting question. Chapter 9 is the bankruptcy code provision for municipal BK, but it does not includes states. The congress does not have the ability to legislate on the issue because it would violate state sovereignty. But, what will Illinois do in May of 2010 when it has 7 billion in unpaid Medicaid bills and faces the possibility of defaulting on a bond payment? If the federal government agrees to give support, won’t they want something in return — like spending cuts. Is that a constitutional or does it violate state sovereignty?

- budget boy - Friday, Dec 18, 09 @ 1:56 pm:
anon, your state re lowest number of state employees does not include contract workers or the fact that illinois has more municipalities than any other state. Let’s include those employees in those numbers and have a genuine conversation. Stop using a made up liberal talking point and get real.

AFSCME and the teachers unions have bled this state to death with their fat pensions.

I know plenty of people who need help and they would be getting it except for the fact that the state employees think they are entitled to retire at 50 along with a pick any doctor, no co-pay health care program.

If the state employees really care about kids and the disabled, they can give up some of their benefits.

- Anon - Friday, Dec 18, 09 @ 2:09 pm:
Reality is…fine. Even with the increase in numbers of executive staff…we still don’t have a bloated over paid bureacracy that if we just did a little nip here and tuck here would even come close to solving the problem. I think the tone I was responding to is that is what people yell when the issue of revenue comes up. Its political speak that isn’t helping us solve the problem. Firing everyone one of them tomorrow won’t help. It might make republicans feel better, but it won’t help. The problem isn’t employees..we hardly have any and we need to hire more. The problem is that our revenue system is structurally broken. Period. We don’t take in enough to cover basic governmental expenses. And I do mean basic. We have a tax system that is based on a manufacturing economy that we don’t have anymore. We have a services based economy. And our property taxes fund too much. Until we fix what is structurally broken and accept the fact that it is 2009 and we will never go back to yesteryear…we will ALWAYS be in this mess. So yelling that we over spend…(we really don’t), or screaming that we can’t do anything until we handle ethics legislation (when all we really need is real time transparent reporting so everybody can see everything) only holds the whole state hostage by playing into political fears that don’t do anything but grind everything to a halt while we blame republicans if we’re democrats and democrats if we’re republicans. 12 billion is too big of a problem to keep doing the same political things and expecting different results. We ought to be able to work on ethics, efficiencies, and revenue at the same time. Not hold revenue hostage to millions of other things we need to fix.

- steve schnorf - Friday, Dec 18, 09 @ 2:12 pm:
bb, no state has, in my lifetime (I’m 65 now) defaulted on a full faith and credit bond. An Illinois ffc bond today is safer than any corporate AAA bond. Its simple, and I suspect you know it. The credit markets will not be “closed” to us. Look at the ratings on the recent “Build Illinois” bonds, and you know as well as I that they are very safe, but not safer than ffc.

The cash flow borrowing is a tough question. We owe the providers and they deserve to be paid. But, I suspect Hynes is probably right about it being very difficult to juggle more repayments by June 30. Also, borrowing doesn’t solve the unable to pay right now, it simply moves it to later in the fiscal year, which is in and of itself part of the problem. We’ve been able to treat the symptoms for so long no one has felt sufficiently compelled to step up and treat the disease.

Perhaps it might be plausible to long term bond some cash flow money into the rainy day fund (say 2B?) which could be done with tax free bonds and re-payed over an extended period of time and therefore be budgeted for.

- Lakefront Liberal - Friday, Dec 18, 09 @ 2:12 pm:
Anon,

Thanks so much for your dose of reality — the spin around here is bizarre sometimes. For example — talking about how people don’t want to pay for these services because they want to spend the money on their families. These programs ARE taking care of people’s families! It is hard for me to belive that there is anyone on this blog that doesn’t have at least one member of their immediate or extended family that is either developmentally or physically disabled or elderly or ill to the point where the family couldn’t adequately care for their family member without help. In my family my father has altzheimers and my mom depends on the adult day care that my dad gets because he is a Korean War veteran. If that center was shut down it would either drive my parents into complete isolation or end their ability to live on their own in their own house.

These programs make it possible for people to take care of their own family members with some level of dignity. Please stop talking about them like some sort of frivilous luxury.

- Anonymous - Friday, Dec 18, 09 @ 2:14 pm:
Locally we have social agencies who daily feed over 1000 seniors and who will close after Christmas. Several human services have gotten a fraction of the state payments they should receive and are dropping services because their costs continue. For profit companies are laying off employees because they will not take state contracts when payment is unlikely. There is no end to this in sight. Even with a tax increase in the next 6 months, it will be a long time before that tax money begins to be collected.

The message may be very stale as Responsa says, but what are you supposed to say? Life is rosy? Having a good time? You going to step in and provide the services that are going away?

If “We don’t have money to continue providing services right now” why don’t the GA and state admin officers join Tom Pollack’s employees and miss several payrolls next month? Not a couple days of furlough, just 2-3 full paychecks. When these social agencies close where will the people they serve go and how soon will the unemployed staff be expanding the state unemployment benefits roles. In rural areas human services are often, as a group, some of the larger employers in the area. Surely they will continue to spend the same amount in local retail stores as they always have, right?

Many of these social agencies who are Medicaid based could be churning more FMAP dollars if the dollars came back to them instead of going to GRF.

- budget boy - Friday, Dec 18, 09 @ 2:22 pm:
Steve,how quickly we have forgotten that the subprime bonds were AAA.

What happens to the market when Quinn announces that we are facing a fy2011 budget gap of 20 billion? You really think we can go to market with bonds after Quinn’s state of the state in mid-january? What kind of numbers do you put into official statement?

- steve schnorf - Friday, Dec 18, 09 @ 2:28 pm:
BB, I haven’t forgotten at all. My point, and I think you already know it, is that a very low rated state (Illinois?) ffc bond is much safer than the most highly rated corporate bonds (the relative unsafeness of which you point out), at least partially because you aren’t going to lost all your investment in bankruptcy court.

Would I want to be doing the official statement? NO. Would I want to trying to figure out just what in the hell you say in the Feb budget speech? No. But we won’t lose our ability to go into the markets, we’ll just pay more.

- Fed Up - Friday, Dec 18, 09 @ 3:09 pm:
“If Quinn cared at all about these agencies, he would have started firing state employees,froze their salaries, cut thier pension benefits, retiree health care benefits and increased their required pension contributions. The Democrats have created a bloated and overpaid state bureacracy and have no one but themselves to blame for the fact that they have run out of money to pay their precious social service agencies. The credit card governement had to come to an end at some point.”

Budget Boy

The pension mess is not the fault of state employees. About 20 years ago, the state, in order to reduce costs, agreed to pick up the 4% state employees paid towards their pension in lieu of a pay raise. This cost the state less than a pay raise because of reduced payroll and unemployment taxes, lower life insurance premiums and lower future wages (because the 4% was not counted in future raises). The state then defaulted on making its payments for years & years. It was the same as if they had agreed to a 4% pay raise & then didn’t pay it.

The myth that cutting state employees & freezing wages continues out here. Will someone please show me a plan that fixes the state’s budget woes with staffing cuts & wage freezes ??? I recently spoke with a Republican candidate for GA who was running on a platform with this idea as the centerpiece of his campaign. When I pointed out to him that if you fired every state employee the state would still be 7-8 billion in the hole, he told me that he would make other cuts, but he couldn’t name one. It makes great press to blame state employees for the current situation. In reality, it is irresponsible actions on both sides of the aisle created the mess. All the Democrats want to do is spend money. All the Republicans want to do is cut taxes. Both sides have to sit down, can the back and forth, and work out a responsible plan, a plan that includes both revenue enhancement and compassionate cuts. Freezing salaries and laying off employees will not resolve this issue. Please stop implying that it will.

- wordslinger - Friday, Dec 18, 09 @ 3:33 pm:
–What is the penalty for a state not balancing its budget, so far as the law is concerned? A state can’t go into receivership, can it? if so, by whom or what?

Why does quinn (or anybody) want to be governor of this state?–

The State of Illinois is a going concern and will have to pay its bills.

There’s no razzle-dazzle available here. Do it now, or pay more juice later.

- cassandra - Friday, Dec 18, 09 @ 3:37 pm:
Doesn’t the jobs bill that just passed the House, contain significant state and local aid. The Senate is likely to pass some version of it. I think we need to see what that aid will be before we either panic or commit to a tax increase.

Given Quinn’s haphazard and not entirely honest approach to managing the state’s budget “crisis” I could see this scenario:

Quinn does another doomsday push. The legislature gives him his income tax increase on the middle class. It’s “temporary” but we know that’s unlikely. In exchange, Quinn promises to make some cuts. He is actually specific about what they are. Then the federal jobs bill cash comes rolling in. Quinn decides surprise! that we don’t need those cuts.No cuts take place. But the middle class tax increase is forever. Quinn makes plans to expand the state bureaucracy, expand programs, hire more political hacks and so on.

Once again, the middle class is left looking foolish and paying the tab.

I’d like to see some real cuts (not just cuts in what some Democratic political type wanted to do next year, but real cuts) first. They haven’t happened.

- wordslinger - Friday, Dec 18, 09 @ 3:38 pm:
Fed Up, no one says you can balance the budget by laying off state employees. But unless things turn around in a hurry, that’s going to be a part of the equation.

Like Pat O’Connor said, if you didn’t like this year, buckle up; next year is going to be worse.

- Fed Up - Friday, Dec 18, 09 @ 4:03 pm:
Fed Up, no one says you can balance the budget by laying off state employees. But unless things turn around in a hurry, that’s going to be a part of the equation.

Wordslinger

This is the basic republican retoric and it is repeated frequently on this blog. It sounds good to blame all the “lazy, overpaid, pension fatcat state employees”, but in reality, crisis was created by years of irresponsible spending. Creating programs like the upper tier All Kids that the state can’t afford, but not being willing to enhance revenue to pay for them. That is the cause. The only way out of this mess is to raise enough revenue in the short term to pay what the state already owes, then sit down and figure out what the state can afford, taking into account the people’s needs as well as the state’s ability to pay. The Democrats need to stop promising programs we can’t afford & the Republicans need to stop constantly promising tax cuts. Both parties are pandering to the public. Neither is in touch with the reality of cost of government. We can’t afford everything, but we need to have enough resources to provide for certain basic needs.

- budget boy - Friday, Dec 18, 09 @ 4:08 pm:
SS, sure, I don’t disagree with you on the bond rating system. But, the ratings system does not work well with once in a lifetime scenarios. The fact that we were on a huge real estate bubble and AAA ratings went to junk status in weeks is case in point.

At a certain point the unpaid bills mount too high and it will be coupled with the risk that the feds will undo the fed stim money because we aren’t paying our bills on time. That is the point at which we will lose access to the bond market.

I think the bond market will look very different to Illinois after Quinn’s earlier than usual state of state in January.

- budget boy - Friday, Dec 18, 09 @ 4:15 pm:
Fed Up, I’ll settle for a 10 percent reduction in workforce and a 10 percent salary cut for the rest. That comes out at around 1 billion. Move Medicaid from 10 percent managed care to 50 managed care (national average) — another 1 billion. Increase employee contribution to pensions — 500 million. Medicaid reforms on eligibility, long term care, acute care, vendor management, prescription drug reforms. 1.5 billion. Copay and managed care for state employees and retireees. 500 million. And if AFSCME cares so much about the unpaid bills why don’t they short change their pension by 1 billion this year. That’s more than enough to cover the gap between revenue and expenditures in FY 2010. Freeze spending at that level for the next threes years until revenue grows enough to pay down bills and debt.

just because the media tells says you need to raise taxes, doesn’t mean its true.

- wordslinger - Friday, Dec 18, 09 @ 4:16 pm:
–This is the basic republican retoric and it is repeated frequently on this blog. It sounds good to blame all the “lazy, overpaid, pension fatcat state employees”,–

Brother, I don’t roll that way.

With the exception of a couple of frequent, government-hating state employee bloggers who don’t know which side their bread is buttered, I have no problem with state employees. They work as hard, if not harder, than anyone in the “legendary” private sector.

The discussion for many months here has been how to solve the deficit problem. You can’t do it solely by any tactic — layoffs, cuts or tax increases. It will take all of them, and maybe some help from the feds.

It’s all going to hurt.

- wordslinger - Friday, Dec 18, 09 @ 4:20 pm:
Budget Boy, you’re wrong about the bond market. From my experience, the bonds will sell in 20 minutes. We’ll just have to pay more juice.

All your mutual funds and 401Ks are invested in a lot more risky stuff than State of Illinois (or State of Anybody) bonds.

- Rich Miller - Friday, Dec 18, 09 @ 4:30 pm:
===a 10 percent reduction in workforce and a 10 percent salary cut for the rest. That comes out at around 1 billion.===

It’s more like half that. $3 bil payroll. Plus, the ten percent salary cut would have to be negotiated. Actual reduction: $300 million.

===Move Medicaid from 10 percent managed care to 50 managed care (national average) — another 1 billion.===

IL already has one of the lowest costs per Medicaid recipient of any state. I doubt you’ll get those savings. The cost here is the number of people on Medicaid.

===Increase employee contribution to pensions — 500 million. ===

Contract doesn’t reopen for a long while. Actual savings for this fiscal year: $0

===Medicaid reforms on eligibility, long term care, acute care, vendor management, prescription drug reforms. 1.5 billion. ===

If “reforms” translates into kicking people off the rolls, good luck passing that.

- Anonymous - Friday, Dec 18, 09 @ 4:32 pm:
Anonymous 2:14. Could you use another handle, please? That one’s already taken by another blogger.

Thanks!

- Rich Miller - Friday, Dec 18, 09 @ 4:36 pm:
Anonymous, please choose a new username. Your constant posts long ago became tiresome.

- zatoichi - Friday, Dec 18, 09 @ 4:54 pm:
I was Anonymous 2:14. Got distracted and hit the Say It too fast. Didn’t see it until now. Anonymous 4:32, hope you sleep easier now.

- steve schnorf - Friday, Dec 18, 09 @ 6:27 pm:
And, as was pointed out in the paper issued yesterday, actual state dollar savings is only about 33% of any Medicaid cut, so a lot of negative impact on the economy for a relatively small state savings.

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