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When 10 is really 30

Wednesday, Apr 28, 2010

* Woods Bowman has forgotten more about state budgets than most of us will ever know. Today he explains why a ten percent “across the board” state budget cut is actually much deeper than it appears

Nearly a quarter of the state budget goes to Medicaid. The good news is that the federal government reimburses nearly half of this amount. That is also the bad news, because $2 of cuts are necessary to achieve $1 in savings, and federal law imposes lower limits on types of services and scope of coverage a state must provide to receive any federal reimbursement. Simply put, that means sick people receive fewer services and they remain sick and get sicker instead of better.

Another quarter of state spending goes to school districts and local governments. Cutting state spending in this area only pushes the problem onto the property tax - the dominant tax source at local levels. Cutting appropriations to state universities and scholarship aid, which are 4 percent of the budget, would force increases in tuition and parental contributions.

Ten percent of state spending goes for debt service and pensions that, as legal obligations, cannot be cut - period. Finally, nearly 8 percent of spending is for transportation, which is financed by taxes on gasoline, license fees and the like.

These objects of spending account for more than two out of every three dollars flowing through the budget. Thus a 10 percent budget cut translates into a 30 percent cut, more-or-less, in the remainder of the budget. This is why it would be unwise to try to cut our way out of the problem.

The most visible proponent of the ten percent across the board cut is, of course, Republican gubernatorial nominee Bill Brady.

* Speaking of Brady, his running mate has a new Internet video of college students talking about why they support Jason Plummer. Watch

* Back to the session, there isn’t much faith out there that the General Assembly can adjourn by May 7th. Instead, as I’ve already told you, there’s an idea floating around to finish up the substantive issues by the 7th, then come back and do the budget…

“Do I believe that the General Assembly will recess May 7, or whatever that date is? Yes I believe they will,” [Sen. Dan Rutherford (R-Chenoa)] said. “Do I believe the budget will be put together properly? No I do not.”

But Sen. Toi Hutchinson, who is rapidly becoming one of my favorite freshmen for her reasonable outspokenness, is not enamored with the idea

Hutchinson said this is just the latest excuse for lawmakers to push the state’s serious budget problems further down the road.

“The state of affairs in the state of Illinois, and the number of people that they affect should be priority No. 1…I’d like to keep working, but that’s not my call.”

* If you watched the video in a post below, you know that Speaker Madigan is still hopeful they can adjourn by the 7th, but doesn’t want to make any “mistakes” in any rush to get out of town

* Related…

* Tribune: More kids, more choices: This is all far from a done deal. Opponents may have been caught by surprise by the strong approval in the Senate. We expect a tight vote in the House. And, unfortunately, an amended bill will have to go back to the Senate for another vote. That opens the door for more politicking. It makes this program vulnerable to getting lost in the rush to finish the legislative session.

* Illinois credits program changes with $300M Medicaid savings

* JG-TC: Lawmakers can’t keep delaying budget work

* Pension fund denounces IOU plan

* Pension argument pits ‘haves’ and ‘have nots’

* Reducing benefits, raising taxes among proposed pension fixes

* Ideas on how to fix the pension crisis

* First steps to solve pension crisis

* DH: First steps to solve pension crisis

* DH: Now is time for resolve, reason: But the solutions will not be found in demonizing the beneficiaries of a flawed system nor in lashing out defensively at the system’s critics. Solutions will come from doing what hasn’t been done - establishing firm standards on what constitutes a fair pension and how it will be paid for.

* Despite reforms, professor says Illinois pensions are still in crisis

- Posted by Rich Miller        

  1. - John Bambenek - Wednesday, Apr 28, 10 @ 12:16 pm:

    Just because, in theory, a 10% across the board cut isn’t possible doesn’t mean we can’t cut our way out of the mess. One does not follow from the other. In some cases, entire programs could be cut, others should be left alone. And, of course, we could fire all those people from boards and commissions down to civil service who bought their jobs with campaign cash to Rod Blagojevich.

  2. - Ghost - Wednesday, Apr 28, 10 @ 12:21 pm:

    If only QUinn had a campaign manager to run with the Bowman information.

    Waiting fo end of session is also a bad idea. The Campaign ads using Bowman style points might also influence he perception of the need for a tax increase. Getting that perception out there BEFORE the end of session could inflence what happens with the budget.

    Quinns lack of campainging which is launching brady into the Gov’s office is like watching a train wreck in slow motion.

  3. - Small Town Liberal - Wednesday, Apr 28, 10 @ 12:27 pm:

    John Bambenek - Yeah John, we all read the proposal you and Adam A. threw together when Rich called you out for not having the detailed plan on the website as you claimed. Straight up eliminating DCEO, finding “shoeboxes”, firing everyone, real helpful. Go stand next to Brady in the line to get a clue.

  4. - cassandra - Wednesday, Apr 28, 10 @ 12:30 pm:

    The Democrats who are in charge of Illinois politics would pass Pat Quinn’s regressive income tax increase on the middle class in a heartbeat if they were sure they wouldn’t pay a political price in the fall elections. Their attitude towards the recession-plagued middle class is basically, be grateful for the opportunity to give us more of you money, even if a big chunk of it will go to fund our lavish pensions. And lose all the talk about “cuts.” Only dinosaurs like the Tea Party want cuts. You don’t want to be like those uneducated losers,do you?

    I suppose as the fall approaches they’ll have a better feel for how risky a run on our pocketbooks will be. So keeping the budget
    unresolved, so to speak, is a political tactic.
    As soon as they are sure they’ll win, even if before the election, boom, up go the taxes.

  5. - Rich Miller - Wednesday, Apr 28, 10 @ 12:31 pm:

    —if they were sure they wouldn’t pay a political price in the fall elections—

    That argument makes zero sense. If there was no political price, then that would mean the public would be for it, or wouldn’t care.

  6. - John Bambenek - Wednesday, Apr 28, 10 @ 12:34 pm:

    Actually, Anonymous Hero, as soon as Rich mentioned that, we put the proposal on the website, it was an oversight that was quickly remediated.

    But you’re right… over a decade of spending billions more than we had, corruption gone rampant under Blagojevich, jobs and people leaving the state… the obvious problem is the taxpayer.

    We should raise the income tax to 7% at least.

  7. - cassandra - Wednesday, Apr 28, 10 @ 12:51 pm:

    If they aren’t going to stay and vote on a tax increase, what’s the point in staying on in Springfield. Why not do a six month budget and go home, leaving the governor with what powers he needs to make decisions and get through the next six months. The election then becomes a referendum of sorts on the tax increase.

    But now we hear there is talk of dragging budget talks out That provides an opportunity to call legislators back and submit a tax increase for a vote as soon as the polls and other indicators suggest there is little or no political risk for doing so. Despite all the talk about anti-incumbency, Illinois is one of the bluest states. The risk could be minimal. In fact, I’m surprised Democratic legislators are as nervous
    as they appear to be. How many of those up for election are running against serious opposition?
    Very, very few, I suspect.

  8. - ABCBoy - Wednesday, Apr 28, 10 @ 12:57 pm:

    —if they were sure they wouldn’t pay a political price in the fall elections—

    That argument makes zero sense. If there was no political price, then that would mean the public would be for it, or wouldn’t care.

    I think that was his point. They know they’re going to get whacked if they pass the tax hike. They’re just trying to figure out how badly & whether it will substantially impact their electoral prospects.


    1) Bowman is dead-on about the “federal matching” issue. Although nice to have dollars coming in, the dynamic makes it nearly politically impossible to ratchett any programs back. It’s a one-way ratchett. The same might be the case for other federal matching programs such as road construction, etc.

    2) Bambenek has a point. Within departments people could make surgical cuts to achieve their 10%–i.e. axe entire programs, cut some by 30%, etc. That being said, I think the surgical approach to the budget overall is best. The problem with that is, different interest gropus, fiefdoms, etc. will complain that they specifically are “targeted” while calling for an across-the-board haircut is more spinnable as being “fair.” Obviously Brady should make the caveat that the 10% should be “discretionary funding” or some such to make it clear they’ll make their interest or any mandatory payments, etc.

    3) Yes, cutting programs will push costs onto other people–including towns, counties, private non-profits and individual families. But I don’t see how pushing problems onto other people’s plates is unique here. Politicians do it all the time to each other. In addition, conservatives argue that the costs (and control) of any program or behavior ought to happen at the lowest level possible. Ideally the private individual, then private community groups, then local governments, and finally state or federal programs. If that non-profit theatre company really is worth the support, then Chicago will foot the bill in their budget–or the neighborhood association, local vendors, etc. will support it in the form of a local charitable arts fund.

  9. - cassandra - Wednesday, Apr 28, 10 @ 1:05 pm:

    But ABC boy–how are they going to get whacked?
    Who is going to lose who might have won? Quinn?
    Please. If Dillard were running, but not with Brady. Which legislators? How many?

    I probably shouldn’t be making this point since I am strongly opposed to an income tax increase.
    But aren’t the Dems overdoing the risk aversion
    part? Or are they just lazy.

  10. - BloomingtonDem - Wednesday, Apr 28, 10 @ 1:05 pm:

    That video is entitled College Republicans for Jason Plummer. College Republicans (and College Democrats) tend to much more partisan than the general college population. I’m not saying it diminishes the effectiveness or importance of the ad, but it would be more compelling if it was done as a “man on campus” video asking “regular” college students their opinions. But then again, if you were to ask most college students about Jason Plummer (or any other state politician) their answer would be “Who’s that?”

  11. - John Bambenek - Wednesday, Apr 28, 10 @ 1:05 pm:

    If you want budget cuts to avoid the various interest groups… you’d need to structure it like the BRAC commissions on the federal level.

    ILGA can vote up or down on the whole package, no amendments.

  12. - Small Town Liberal - Wednesday, Apr 28, 10 @ 1:10 pm:

    John, I know you’re so brave for using your real name everywhere, I can only hope to be so brave some day. And I never said the taxpayer was at fault, you’re creating straw men. All I’m saying, as I’ve said before, and all reasonable people have said, you can’t solve this with cuts alone. I know you love your fantasy world where disabled people earn their keep and people born into poverty have the same opportunities as upper middle class kids, but the rest of us try to look at things from a real world perspective that requires funding to programs that help these people.

  13. - wizard - Wednesday, Apr 28, 10 @ 1:16 pm:

    stl-everyone is entitled to their beliefs. go ahead and provide the funding you describe, but use your $s and $s of others with the same beliefs. BUT please keep your hands out of my back pocket.

  14. - Small Town Liberal - Wednesday, Apr 28, 10 @ 1:20 pm:

    - everyone is entitled to their beliefs. -

    So whats your belief, let those who are disabled fend for themselves?

  15. - ABCBoy - Wednesday, Apr 28, 10 @ 1:25 pm:

    But ABC boy–how are they going to get whacked?
    Who is going to lose who might have won?

    We’d only know this in retrospect. But any incumbent Democrat that votes for a tax hike and then ends up losing their race this November by less than, say, 5% is certainly going to wonder.

    I know you love your fantasy…but the rest of us try to look at things from a real world perspective that requires funding to programs that help these people.

    I’m sure John can fight his own battles, but two quick points:

    1) Many disabled folks can and do support themselves. Certainly not all, but a good percentage.

    2) I doubt he’s advocating the abolishment of ALL social programs. But even if he were, we pretend that if the government doesn’t do it, then somehow it doesn’t get done. This is nonsense. First, large social safety nets dis-incentivize work. Some of these folks have the ability but not the motivation–not unlike subsidized adult children still living w/ their parents because it’s easier than working hard for self sufficiency. Second, for the truly helpless, “government” is not the same as “community.” There are many other layers between Springfield and the helpless individual, including private non-profits. Again, I’m not saying that all programs are bad and that all should be banned. But they ain’t all great either–they often created very bad unintended consequences. So I think the picture is more complex than you’re painting it.

  16. - ABCBoy - Wednesday, Apr 28, 10 @ 1:30 pm:

    So whats your belief, let those who are disabled fend for themselves?

    I’m not sure you’re understaning what folks are saying here. Just because the state government isn’t doing it, it doesn’t meant folks are “fending for themselves.” Local government, civic organizations, private non-profis, private community groups, and families are all a part of social safety nets. I believe what wizard is saying is that if you feel strongly about XYZ charitable issue, then spend your own private time, money, and energy supporting it rather than trying to use the cohersive power of the state to do it.

  17. - jaded voter - Wednesday, Apr 28, 10 @ 1:34 pm:

    Message to Bill Brady: you only need to avoid screwing up in order to win. Stay smart & let Quinn be well, Quinn.

    With that understanding send the tall cherub, Jason Plummer, far away until after the election–perhaps Dick Cheney’s underground lair is available.

    Jason Plummber can offer NO help to you and could damage you with awkwardness and ill advised comments. Take no chances here, hide the kid away.

    Play it safe & conservative Mr. Brady .

  18. - VanillaMan - Wednesday, Apr 28, 10 @ 1:34 pm:

    The Jason Plummer video reminds me of the fact young people have a bright future, and need to listen to those of us with wisdom and experience to achieve that bright future, because they sure as hell don’t know what they’re talking about.

  19. - Small Town Liberal - Wednesday, Apr 28, 10 @ 1:36 pm:

    - Many disabled folks can and do support themselves. Certainly not all, but a good percentage. -

    Ok, you have me there and I apologize if my statement was offensive to anyone, I’ll definitely be more careful in the future.

    That said, JB is very generally critical of government sponsored social programs, so I am being very generally critical of his positions. If he or anyone else wants to debate specific programs, I’m all for it. Until then, I’m assuming his fantasy is what it appears to be from his opinions.

  20. - wizard - Wednesday, Apr 28, 10 @ 1:40 pm:

    abcboy-thanks stl-apology accepted will also offer apologies if i offended you. abcboy articulated my point much better than i.

  21. - Small Town Liberal - Wednesday, Apr 28, 10 @ 1:41 pm:

    - believe what wizard is saying is that if you feel strongly about XYZ charitable issue, then spend your own private time, money, and energy supporting it rather than trying to use the cohersive power of the state to do it. -

    I understand this, and do this, as I know many others do as well. I still believe without government involvement, many people will suffer, so I support government social programs. When people suggest extremely broad cuts to these types of programs, I assume they are against them in general.

  22. - wizard - Wednesday, Apr 28, 10 @ 1:48 pm:

    stl-in my small town a couple of us set up a fund to pay water/sewer/garbage fees for those who can not and have been successful in getting donations. doubt there is a state agency who would help these folks. there are many other types of assistance like these that are better off with little or no governmental interference. they can mess up anything; ie look at the state.

  23. - VanillaMan - Wednesday, Apr 28, 10 @ 1:49 pm:

    Today he explains why a ten percent “across the board” state budget cut is actually much deeper than it appears.

    So the problem really isn’t the cuts, it is in the phrase, “across the board”, because there are several different conditions set up in many programs where a simple cut won’t work.

    Yeah - I agree. “Across the board” cuts sell politically due to the simple message stated, but aren’t a feasible approach in the real world. On the other hand that doesn’t mean cuts aren’t feasible, right?

    What is it about the majority of voters rejecting tax increases that pro-government types seem to be missing? If you want a governmental solution to the issues facing us, you need to re-establish the credibility lost over the past decade in Illinois government. Getting rid of all the incumbants will help restore it.

    Today’s best and brightest minds in Springfield could create the best and brightest solution to our situation, but don’t have enough credibility with voters today to get them to support it.

    The problem isn’t the solutions being proposed, the problem is Illinois needs a new slate of legislators and leaders to implement any proposals. Democratic or Republican.

  24. - The Doc - Wednesday, Apr 28, 10 @ 1:53 pm:

    ==Just because, in theory, a 10% across the board cut isn’t possible doesn’t mean we can’t cut our way out of the mess==

    That’s precisely what it means, John. Ignoring the economic ramifications of cutting entire programs, including the job losses associated with such cuts, is highly problematic.

  25. - Greg B. - Wednesday, Apr 28, 10 @ 2:01 pm:

    There is a lot gaming the Medicaid system going on in Illinois and in other states. Nothing wrong there. So the $1 for $1 match is more complicated than we make it when talking about the program. In IL I believe the match can fall to as low as $.65 on the dollar to much more depending on the service being provided.

    For example, undocumented immigrants can be covered by Medicaid in Illinois but the feds won’t cover the match. In HCR, a huge chunk of new medicaid entrants will be funded by the feds, entirely.

    Where you wring the money out of Medicaid is revamping the system say much like IN. FL has also implemented plans that have saved money w/out hurting services.

    In criticizing these 10% across the board cuts, we tend to look at the budget as an exercise in double-entry book keeping. But there is a lot that can go on between credits and debits.

    Jim Nowlan has the really cool hand out where you balance the budget and the +’s and -”s politically are tallied. Too low and lose office. It’s a flawed because of what I said above, but it’s an awesome tool to explain how the budget process works politically in Illinois.

    Maybe Rich could get his hands on it, sometime for readers.

  26. - Small Town Liberal - Wednesday, Apr 28, 10 @ 2:11 pm:

    - there are many other types of assistance like these that are better off with little or no governmental interference. -

    Agreed, great, but there are many types of assistance that aren’t better off with no governmental interference. Think you could come up with enough donations to cover the medical bill for every child whose parents don’t have medical insurance for whatever reason? Or should that child just not be able to receive treatment because his/her parents are idiots?

  27. - (Formerly) Angry Republican - Wednesday, Apr 28, 10 @ 3:31 pm:

    Illinois may not be able to cut it’s way out of the budget problem, so I am betting they will default their way out of it.

  28. - George - Wednesday, Apr 28, 10 @ 3:33 pm:

    Where you wring the money out of Medicaid is revamping the system say much like IN. FL has also implemented plans that have saved money w/out hurting services.

    Illinois spends less per beneficiary than they do in Indiana and in Florida.

    Where is there money to wring out?

  29. - anon-e-mouse - Wednesday, Apr 28, 10 @ 3:46 pm:

    Having a “disability” is different than being “disabled”. Many people with disabilities are still able to work and support themselves - but by definition those people are rarely “disabled”.

    Disabled people rarely support themselves - for most government purposes “disabled” means unable to work. By the standards applied by Social Security - if you are able to work and support yourself you aren’t actually “disabled”.

  30. - Robert - Wednesday, Apr 28, 10 @ 4:14 pm:

    the partisans on this site will have trouble with this comment: I like that Bambenek and Quinn are offering specific ideas to cut the budget deficit. This is very different than the approach taken by Madigan and Brady.

  31. - Greg B. - Wednesday, Apr 28, 10 @ 4:23 pm:

    George: We’ve expanded eligibility & services etc. beyond those states. There are lots of differences there. We have a wider pool. You have to look at more than price per beneficiary. Different types of patients also figure in to it…

    However, by changing the structure of the program — how you deliver the services you deliver — they’ve wrung out some efficiencies.

    Might not be the total answer but it’s a start.

  32. - wordslinger - Wednesday, Apr 28, 10 @ 4:36 pm:

    –And, of course, we could fire all those people from boards and commissions down to civil service who bought their jobs with campaign cash to Rod Blagojevich.–

    You could. And the current problem would remain unchanged. Not even a drop in the bucket.

    At some point, you have to do the heavy lifting. From Bowman’s column, I’d suggest a good starting point would be the unpaid bills. You take some extraordinary measures to get square.

    A bonus would be, I suspect, that most of the money paid will stay in the Illinois economy. A $6 billion shot in the arm. You’re going to have to pay eventually. Bite the bullet now, and save yourself some juice costs.

  33. - Quinn T. Sential - Wednesday, Apr 28, 10 @ 8:35 pm:

    {Cutting appropriations to state universities and scholarship aid, which are 4 percent of the budget, would force increases in tuition and parental contributions.}

    He is only half right here. While cuts could result in tuition increases, they could also result in a reduction in spending instead, while they hold the line on tuition.

    There is also nothing that says that parents would have to increase their contributions even if they did increase tuition. Students could first reduce their costs by staying home for the first two years and taking the core courses through the local community college. They could also work opart time and save more money during the process as well.

    Students have access to loans, as well as jobs even though the unemployment rate is higher than it has been in a long time. Getting the first phase of their academic expeirence at the school of hard knocks might be the best education they could receive.

  34. - steve schnorf - Wednesday, Apr 28, 10 @ 10:05 pm:

    Just saying, I thought the Great Depression pretty much ended our national belief that private charities and good hearted people could take care of the down and out. So now we have unemployment compensation, social security, worker’s compensation, Medicare, Medicaid, farm supports,SSI, etc. Are you Darwinists saying we can just get rid of that stuff and private charities, religious groups, etc can pick up the slack?

    I hope not, and don’t think so. If I’m right, then the debate is not over whether we should have/need such programs, but over at what level we should have them. I have a sneaky suspicion that the antis on here are talking about cutting back or getting rid of programs that help other people, not themselves.

  35. - the Other Anonymous - Thursday, Apr 29, 10 @ 9:28 am:

    The Brady campaign video: Ouch. Just ouch.

    It’s like watching that old SNL ad parody interviewing people outside the hypnostist show: “I loved it. It was better than Cats.”

Sorry, comments for this post are now closed.

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