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Real cuts, believe it or not
Friday, Feb 11, 2011 - Posted by Rich Miller * We’ve already talked about how the great budget cutter Chris Christie of New Jersey claims to have done yeoman’s work, but is somehow still facing a $10.5 billion budget deficit in the coming fiscal year, which is only $200 million less than this year’s deficit. Indiana Gov. Mitch Daniels has a national reputation for being a budget hawk. Moderate Republicans have pinned their hopes on him for 2012. But what has he really cut? Check out this chart from Purdue University. Daniels took office in January of 2005. Back then, Indiana was spending $11.75 billion. This year, state spending will be $14.45 billion. That’s a 23 percent increase. * Now, nobody can say that this state has been well-managed. You’d be laughed out of the room if you tried. But last night Gov. Pat Quinn’s office released some documents showing where real spending cuts have been made. $2.4 billion in Fiscal Year 2010 and $1.2 billion in FY11. I strongly urge you to take a look at those documents. Those are real cuts in discretionary spending. That’s not to say total overall spending decreased by that much. Pay raises, pensions, health care, etc. all contributed to what’s known in the biz as “budgetary pressures.” Other spending has been moved off-budget. But stuff has been cut. Make no mistake about it. What happens is the media latches onto a meme and just can’t let go. Illinois is the irresponsible state. New Jersey and Indiana are led by real deficit hawks. There is some truth to both statements, but it’s not reality. * All that being said, I’m hoping this freshman knows what he’s talking about…
It’s heartening to see the minority party offering to step up to the plate. Let’s see what they’ve got, debate it and then have a vote. That’s the way government should run. * Related…
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- cassandra - Friday, Feb 11, 11 @ 7:27 am:
It’s very difficult for a layperson to read this
for accuracy. For example, HFS 478 ( big item)-what does Healthcare Provider Relief fund mean. How does this affect supposed cuts.
Were some of these costs transferred to other line items and counted as cut.
Let’s hope some independent entity goes through these documents in more detail. Ideally, the opposition party should be spearheading a careful check of these claimed cuts but the Repubs seem rather toothless these days.
- Not Really - Friday, Feb 11, 11 @ 8:07 am:
Quinn can show us he is serious about budget cuts by getting rid of the Blago political hacks that re still running our state. Not only are they under qualified and over paid. They drive the morale of the rest of the workers down further decreasing productivity. You won’t convince state workers you are doing anything more than political hacking at the budget until they see the people who have made their lives miserable for the last 8 years escorted from the premisis.
- thechampaignlife - Friday, Feb 11, 11 @ 8:24 am:
Yes! I’m all for dissenting viewpoints so long as the dissenters bring a specific alternative to the table.
- Homer J. Simpson - Friday, Feb 11, 11 @ 8:33 am:
Ten dollar an hour minimum wage? Are these people insane?
- Hooiser Boy - Friday, Feb 11, 11 @ 8:35 am:
Indiana took on many local government duties in its tax reforms in 2008, which correspondingly reduced property taxes and increased sales taxes. That’s why overall state spending is up. It’s misleading to not mention this. Base state spending under Daniels has gone down.
- wordslinger - Friday, Feb 11, 11 @ 8:49 am:
The GOP in the GA has been crying out for a revolt. Last year, in a brutal economy, the national GOP rolled the Dems like Sherman through Georgia, making historic gains in Congress and state legislatures across the country.
In Illinois, they had the added benefits of Blago/Burris and total Dem control. They made big gains on the Congressional level and won some statewide offices.
Yet they barely made a dent in Dem GA majorities and are about to be redistricted to Whig status. Or maybe it’s Know-Nothing status, because they’ve brought nothing to the table in the form of clear, actionable plans.
- mokenavince - Friday, Feb 11, 11 @ 9:42 am:
Pip what a fine party.Lets raise it to $25.00 per hour.I feel like Alice in Wonderland.
- JustaJoe - Friday, Feb 11, 11 @ 9:43 am:
Re “Pension Paradox”:
First, the chart in the ChicagoMag.com piece presents a demographic that has been known for decades, especially with reference to Social Security. The question is what to do about it.
Second, state legislators never seem to refer to their own part in failing to fund the pension systems, for their use of the state’s pension contributions for other things. Then they pontificate in ways that imply blame to state employees for the pension crisis. I’d like to see a record of the votes on that funding “deferral” over the last 20 years. CBS reported that New Jersey failed to fund its pensions for 17 out of the last 20 years…is Illinois any better?
Third, the trend to reduce state “headcount” in state government is also mostly rhetoric. Politicians announce cuts. At the same time there is substitution of what is often a more expensive private-sector alternatives such as consultants, increasing the up-front labor cost and simultaneously undermining the contributions to the pension system that fund current retiree benefits. Additionally, additions to the state workforce are increasingly made to the politically connected, diminishing the effectiveness of the real workforce that remains.
Political considerations rule! Our political class never fails to take the short view and the expedient action for benefit of political rhetoric. Taking a long view, with real facts, and taking the time to explain reality to the electorate probably takes too much courage. Sound bites and simplistic talking points are much easier.
- Angry Chicagoan - Friday, Feb 11, 11 @ 9:45 am:
The Republicans, especially nationally but to a significant extent even in Illinois, are not serious about tackling the country’s problems; they are only serious about scoring political points and keeping the oligarchs in control.
Aside from the obvious problems that arise when one party is purely on the take, it leads to a further big dysfunction in our system of competitive democratic politics, because it lowers the standards for politicians across the board. Democrats who would look awful by any objective standard look pretty good compared to the Republicans.
- Fed up - Friday, Feb 11, 11 @ 10:03 am:
Let’s see what the minority party has debate it and then put it up for a vote. Rich. Don’t let mike Madigan read this he will never speak to you again.
- thechampaignlife - Friday, Feb 11, 11 @ 10:03 am:
I’d like to see a balanced sheet amendment (actual, not budgeted, total expenditures cannot exceed actual total revenues in a given year) and sortition. Between the two of those, I have to believe these tough issues would work themselves out much more easily.
- Suggestion - Friday, Feb 11, 11 @ 10:04 am:
Does press release also show line by line budget increases that could offset some of his cuts? or maybe I just don’t understand?
- Fed up - Friday, Feb 11, 11 @ 10:08 am:
Rich why not show is Illinois state spending from 2005 to now. It’s a little misleading to say Indiana has increased spending and Quinn has offered real budget cuts but then not show Illinois numbers.
- Fed up - Friday, Feb 11, 11 @ 10:11 am:
Does it count as state spending if Illinois doesn’t pay the bill.
- Nilwood Northsider - Friday, Feb 11, 11 @ 10:14 am:
Rich, your Illinois reductions are appropriation reductions, not spending reductions. Do you have the corresponding actual spending changes? Also, some of the approp reductions are one time, add-on projects. Did they actually even get obligated?
- Jim - Friday, Feb 11, 11 @ 10:29 am:
Trying to promote Quinn by bashing Daniels and Christie doesn’t pass the laugh test.
- reformer - Friday, Feb 11, 11 @ 11:06 am:
Something tells me Republicans won’t be satisfied with the $billions that Quinn has cut. They’ll deny and nitpick instead of applauding real cuts.
- reformer - Friday, Feb 11, 11 @ 11:12 am:
I like the idea of legislators testing constitutionality by reducing their own pensions. Let them lead by example, instead of “do as I say, not as I do.”
- Johnny USA - Friday, Feb 11, 11 @ 11:12 am:
This continued bringing up Governors Christie and Daniels is a disingenuous distraction from Illinois’ real problems.
When Illinois is seriously considering borrowing $9 Billion (on top of billions already borrowed), with backloaded payments that come due after a temporary (snicker) tax hike is to expire, I really don’t care if Indiana spending is up or not.
I’ll know when Quinn is *really* cutting spending when the howling is deafening, not when there is a proposal to raise the minimum wage to $10.
Until then, it is kicking the can down the road and no props to Springfield.
Sorry.
- wordslinger - Friday, Feb 11, 11 @ 11:18 am:
Daniels and Christie inserted themselves into the Illinois conversation, loudly and often, and many in the state have pointed at them as examples to follow.
That being the case, their prevarications and hypocrisy became part of the discussion.
- zatoichi - Friday, Feb 11, 11 @ 11:29 am:
$10 minimum wage! Yes, all for it. I have no doubt the state will quickly increase the rates for all community based personal care assistants, residential workers, and direct care workers in social services jobs that currently pay under $10 because the current rates are so generous. McDonalds surely would not cut shift workers and raise that Big Mac to over $6 would they? No way. Businesses will gladly simply absorb the costs with no problem or adjustment. Excellent plan.
- This Little Piggy - Friday, Feb 11, 11 @ 11:36 am:
Wordslinger….my advice: ignore them.
You start listeng to kooks, you get distracted and lose.
- raining on the parade - Friday, Feb 11, 11 @ 11:36 am:
Approps are not the same as spending.
Cuts are great, but not if they are offset by increased spending elsewhere.
Also, weren’t ‘09 approps pumped up to capture ARRA funds? How do these compare to ‘08?
- raining on the parade - Friday, Feb 11, 11 @ 11:37 am:
There’s also this little nugget:
(450,211.2) FY11 reduction delays payments to healthcare vendors
It’s not a cut if you push into next year’s spending.
- raining on the parade - Friday, Feb 11, 11 @ 11:39 am:
Again — a shift from GRF to OSF is not a cut.
(217,427.6) $100M+ shifted to OSF for FY11 only
- raining on the parade - Friday, Feb 11, 11 @ 11:43 am:
A shift is not a cut
(1,848,786.6)
FY10 reflects creation of Healthcare Provider Relief Fund, appropriated at $1.5B; some individual Medicaid lines increase due to payment cycle issues
- Rich Miller - Friday, Feb 11, 11 @ 12:31 pm:
ROTP, that’s pointed out up top. But you are cherry picking.
- 47th Ward - Friday, Feb 11, 11 @ 1:10 pm:
===”Real cuts, believe it or not”===
I think “not” is winning, despite plenty of evidence to the contrary. The meme that Quinn and the Democrats won’t cut anything is pretty hard to overcome.
That doesn’t mean it isn’t happening. It just means people don’t believe it.
- wordslinger - Friday, Feb 11, 11 @ 1:50 pm:
Cassie, I think that’s the first post I’ve ever seen from you that did not include the phrase “middle-class taxpayers.”
- steve schnorf - Friday, Feb 11, 11 @ 2:26 pm:
Folks, if you look at the simple math, approps are going to continue to be cut and spending is going to continue to rise, and that is still an indication of a pretty good job by Quinn.
Some unavoidable spending increases each year (e.g., pension payments, debt service, health insurance costs). If Governor Quinn is able to keep total spending increases to, let’s say a 2% growth rate, he is going to have to virtually freeze approp growth in nominal dollars, probably actually cut it. If he accomplishes that for the next 4 years we will owe him a debt. It will be a job well done.
- Freighttrain - Friday, Feb 11, 11 @ 2:41 pm:
Rich, It mostly boils down to having effective an ineffective government. They key to Indiana is having a positive balance, which is mandated by the Indiana constitution.
I can say that Indiana might be in trouble when the health care law is enacted.
- Rich Miller - Friday, Feb 11, 11 @ 2:42 pm:
No denying that, Freightrain. We have not had an effective government. And I don’t make any claims in that regard. Indeed, it’s pointed out above.
- Freighttrain - Friday, Feb 11, 11 @ 2:52 pm:
I find that Mitch Daniels will be become more of an issue in Illinois if he decides to run for President. He will constantly use Illinois for analogies.
- wordslinger - Friday, Feb 11, 11 @ 2:54 pm:
I don’t know. We had a real killer storm this time and that got taken care of pretty well.
No snark. What are the tangible examples between “effective” and “ineffective” government in Illinois and Indiana that are a result of the states’ constitutions? What does “positive balance” in Indiana mean, anyway?
- wordslinger - Friday, Feb 11, 11 @ 2:57 pm:
–I find that Mitch Daniels will be become more of an issue in Illinois if he decides to run for President–
You’ll have a hard time finding him unless he buys some heels. The dude’s short.
Seriously, in U.S. presidential history, the shortest guy rarely wins. If you factor out FDR in his chair, it’s even more daunting.
- Freighttrain - Friday, Feb 11, 11 @ 3:01 pm:
ection 5. No law shall authorize any debt to be contracted, on behalf of the State, except in the following cases: to meet casual deficits in the revenue; to pay the interest on the State Debt; to repel invasion, suppress insurrection, or, if hostilities be threatened, provide for the public defense.
Indiana is limited in their ability to borrow
- Jim F - Friday, Feb 11, 11 @ 3:33 pm:
With all due respect to former Governor Ryan’s State budget director, cutting approps and increasing spending is exactly how we got into this mess. Want to know why? Because while approps were cut, programs were not. Therefore spending continued apace. As just one example, Medicaid liability (cost) has increased by almost $1.5 billion in the two years Quinn has been governor. Only last month was anything done to begin addressing those increases and those reforms won’t really start bearing fruit for another 12 months or more.
BIG programs must be cut. Just so you have some perspective, Medicaid costs went from around $9.2 billion in FY09 to $9.8 billion in FY10 to $10.6 billion in FY11. While this is matched by the feds at a 50% rate (once ARRA expires on June 30), it stills means a $400 million cost that the state must pick up - FOR ONE PROGRAM.
- There, I said it! - Monday, Feb 14, 11 @ 11:33 am:
The look at Indiana’s budget deserves a better look- “But what has he really cut?” and citing the budget change 2005 to 2010 is over-simplistic.
As opposed to Illinois, Mitch Daniels has been running a balanced budget in most years. And, when deficits appeared, took steps to promptly address the matter.
Despite Illinois’ constitutional requirement for a balanced budget, Illinois lawmakers have failed to balance the budget. Worse, there has been an ongoing, intentional effort by the Democrat majority to fail to address the spending problem, and “kicking the can down the road” for years.
Republican lawmakers, and, ultimately, Illinois voters, can share some responsibility for enabling this to occur.
When we look at Indiana’s budget, we see that there are spending cuts and savings that do not appear on the budget totals.
Indiana has, in fact, performed BETTER than its budget.
Please see the “Reversions” line item:
According to definition, the savings is due, in part, to spending reductions by the governor.
http://www.agecon.purdue.edu/crd/localgov/topics/essays/State_Budget.htm
“Reversions occur when state agencies spend less than their appropriations. This happens every year to some degree, for example when bills don’t come due until the next fiscal year, when tasks are delayed from one fiscal year to the next, when employees resign or state jobs remain open unexpectedly, or when tasks can be accomplished for less than the amount originally expected. Reversions are also a method that the governor can use to reduce spending during revenue shortfalls, by requiring some state agencies to spend less than the budget authorizes. These are the Governor’s budget cuts. That’s why reversions were especially large in 2009 and 2010, and why they will be large in 2011.”