Yes, Illinois is worth saving, and it’s time to get started already.
I think if you listened carefully to both of Gov. Pat Quinn’s major public speeches this month, his State of the State address and his annual budget address, that’s the message you’re left with.
Illinois has had a rough run over the past dozen years or so, much of it self-inflicted.
First, there was the George Ryan saga, which landed him in prison. While he was still in office, though, Illinois took a big hit when an already-faltering national economy tumbled after the 9/11 attacks.
Then came Rod Blagojevich, who made things worse. He racked up bills that we still haven’t paid. He declared war on Illinois House Speaker Michael Madigan, and the resulting bloodbath led to two of the most counterproductive years in Illinois legislative history. It culminated with Blagojevich’s arrest, impeachment and removal from office, all of which happened during the most severe international economic collapse since the Great Depression.
By the time the dust settled, Statehouse denizens looked around and finally noticed that the whole world had literally fallen apart around them.
Attempts were made to address the crisis. An infrastructure program was enacted to help put folks back to work, for example.
But the state’s ever-growing budget problems were allowed to fester amid political paralysis. It didn’t help that the newly elevated Gov. Quinn just didn’t seem up to the task.
Quinn and the Democratic legislative leaders made a valiant attempt to stanch the red ink last year with an income tax increase, but it wasn’t nearly enough. And despite some cuts, this year’s budget is $2.4 billion out of balance with billions more in overdue, unpaid bills and skyrocketing Medicaid and pension costs.
While all this was going on, Republican governors throughout the country were ridiculing Illinois and promising to take companies away.
Quinn was slammed for his “too optimistic” State of the State address in early February. Quinn was trying, I think, to instill a bit of self-confidence so that we’d want to rescue our own future.
But after years of enduring seemingly intractable problems, Illinoisans have become adept at self-hate. We don’t want to hear about the positives.
Quinn’s budget address on Wednesday struck a chord with quite a lot of people. He finally demonstrated that he understood the huge budget problems facing Illinois and might even be up to the task of bringing all sides together to kick this state into gear.
Medicaid is too often seen by politicians as a tool to help friends. Democrats want the support of people who can’t afford health insurance and Republicans want to keep their backing from doctors, dentists, hospitals, nursing homes and other providers.
Nobody really wants to change anything. But Quinn demanded a solution, laid out a road map and threatened to keep the General Assembly in session throughout the summer if necessary. Let’s hope he sticks to his guns.
The pension payment schedule crafted in the 1990s put off tough choices and most investment for almost 20 years, skyrocketed the system’s unfunded liabilities, and is now seriously harming the state’s ability to fund other programs. Quinn said all reform ideas would be on the table and pledged a solution this year.
Basically, we need to pick ourselves up, stop acting like a bunch of losers and actually fix the damned problems here. I really hope Quinn is up to it, because this is the challenge of a lifetime.
I have to run out of the office for a bit, so chew on this until I get back. Thanks.
- Leroy - Friday, Feb 24, 12 @ 8:28 am:
I think your comment in today’s issue about the very same Medicaid providers who asked for a payment delay instead of cuts will likely use those delays as pressure points this year to prevent cuts is a generalized statement. I don’t at all disagree that it will be the case, but please keep in mind some issues. During ARRA, hospitals, nursing homes, and physicians were all getting paid close to 30 days for almost three years consecutively (and they all knew those commitments ended when ARRA expired). However, other providers such as those serving individuals with disabilities saw their Medicaid payment cycles drag out even further - and they suffer the same (if not worse) low rate issues as other Medicaid provider types.
Now, consider their perspective once ARRA provisions expired - there was an expectation that the lack of a 30 day payment cycle requirement for hospitals and nursing homes would create a payment parity situation - hospitals and nursing homes might have to wait a bit longer to get paid, while these other providers would see their cycles decrease a bit. Well, that was the thought coming out of the budget last year. You presume your cycle will improve somewhat so you take a slight delay instead of having to endure rate cuts that threaten you viability as a service provider. Unfortunately, the payment cycle parity never happened…
Medicaid gets generalized way too much, and legislators need to figure out sooner or later there are some providers that are 70% or more Medicaid, and some for which Medicaid is 30% less of the payor mix….
- reformer - Friday, Feb 24, 12 @ 8:53 am:
The key to finding solutions is whether Republicans are engaged in the process or not. If the GOP follows the hyper-partisan lead of its state chairmen, then we’ll just have another year of partisan finger pointing.
If, on the other hand, Republicans are willing to take controversial votes — including some measures that hurt their favorite interest groups — and if Democrats do likewise, then we can get 60 votes in the House and 30 in the Senate to do what needs to be done.
- SO IL M - Friday, Feb 24, 12 @ 8:54 am:
Very Good column
- Infidel - Friday, Feb 24, 12 @ 9:06 am:
Well said, especially the part about self-hate. Each of us could probably stand to have a more positive attitude toward our state. Sure, we have our problems, but this is our home, and we’re not doing ourselves any favors by acting hopeless all the time.
- average citizen - Friday, Feb 24, 12 @ 9:08 am:
Let’s get this done!
- Louie - Friday, Feb 24, 12 @ 9:09 am:
Real pension reform and medicaid reform isn’t going to happen with a democratic Governor and democrats in control of the Senate and House. It’s not n their DNA to make tough spending cuts.
- Stones - Friday, Feb 24, 12 @ 9:28 am:
Well written and fair analysis.
- Nieva - Friday, Feb 24, 12 @ 9:30 am:
I think we all understand cuts are going to happen. The prolbem I have is the only increase Quinn recomended was in education. It’s time to stop throwing money at the education system in Illinois. We all know that not everbody is college material. The kids that are good students in school will move on and get their degree. We need schools to train carpenters,heavy equipment operators,truck drivers, welders, ect. It does no good for someone to get a degree in education and work at a fastfood joint.Not to mention the huge student loan that they will never be able to pay back.I worked all my life and never got that 4 year degree. We raised our kids and paid for our home and made a fair living without college.Not all people can be teachers,some have to do the work to keep your car running and toilet flushing.
- wordslinger - Friday, Feb 24, 12 @ 9:40 am:
There’s more than a bit of narcissism to the chronic whining about how tough things are. A quick check around the world and back in even recent history should disabuse most people of the notion that they’re somehow tragic victims.
There are always problems and always work to be done. The complaining and crying are excuses to do nothing. “Perfect” solutions are the enemies of progress, as well.
- This Little Piggy - Friday, Feb 24, 12 @ 9:41 am:
Amazing how no one saw any of this coming, especially since Illinois has some of the best political minds in the country.
- Bman - Friday, Feb 24, 12 @ 9:45 am:
It is time for all politicos to put Illinois ahead of their party and the next generation ahead of their next election!
- zatoichi - Friday, Feb 24, 12 @ 9:48 am:
These discussions always act as if there was one Medicaid process. There are two. One Medicaid is the medically based one that effects hospitals and physicians. It is the one that is easier to discuss and understand because many people touch it regardless of their economic background. These are the organizations that have multiple funding streams and were getting the 30 day payments. They are also the groups hesitant to provide more services because Medicaid does not cover their costs.
The other Medicaid is the community provider for residential, mental health, drug/alcohol, day program, aging, and other social services. Contact with this part of Medicaid comes only when someone qualifies for the services and that is generally a smaller portion of the population with limited resources. These groups are largely funded through Medicaid often at 85%+ of their budgets. They are the ones seeing 6-8 month delays in payments, who have not had rate increases in several years, are now looking at sizable cuts/program defunding, and usually have very limited financial reserves. These providers are not coughing up political donations, but are often an important local employer, particularly in rural areas.
When a hospital starts hitting 30% Medicaid, they have a serious financial issue. The community provider would be sitting nice if they had 70% coverage from some other sources, but not many insurance companies pay for the long term services most of them provide.
The state is in a financial mess that is going to be brutal to fix. The pain scale meter will be high with ripple effects that will have unintended consequences.
- CircularFiringSquad - Friday, Feb 24, 12 @ 10:09 am:
“Chew on this until I get back”
What are we? The house mutt with a chew toy or soup bone?
You should go back to having your valet/interns to run your errands!
- Small Town Liberal - Friday, Feb 24, 12 @ 10:12 am:
- “Perfect” solutions are the enemies of progress, as well. -
Man you really nailed it with that sentence. Even in my everyday work I’m amazed at how many people just say no because something isn’t perfect. Illinoisans all need to focus on a path to yes instead of some impossible ideological utopia.
- Retired Non-Union Guy - Friday, Feb 24, 12 @ 10:16 am:
Louie @ 9:09,
There has already been most of the pension reform that is legal. New hires already will get less, pay more, and work longer.
About the only measures left that will pass constitutional muster are (1) shifting the future pension payments for teachers from the state budget to local taxing bodies, (2) shifting future university pension payments to higher tuition, and (3) changing the 1995 pension ramp-up schedule to be lower and take longer.
Quinn has already floated items 1 & 2 in his proposal. Because they feed in to the misguided “we have to do something about the pensions” anger and the “local school districts have to have skin in the game” feelings, they will most likely pass at some time and require a long phase-in period, maybe 10 years, so immediate budget impact will be relatively minor on the state side. The impact on local property taxes will be huge.
Item 3 is what is driving the pension increases every year, actually paying back the money that was diverted from the pension funds every year. It has to be paid back, period. The only governors who made the fully required pension payments the past 30 some years were Ryan and now Quinn.
The only way to lower and slow that increase is to stretch out the payments over more years and make the funding goal a lower number. Just like credit card debt over the long run, you can pay less in total by making big payments now or you can pay more in total by making smaller payments now. In any case, you need to make not only the payment for the current year employer contribution but you also have to pay something more. It’s not as headline grabbing as cutting benefits, but it’s the only real approach but will take 50 years. Another approach to changing the ramp-up would be to issue bonds for the entire pension debt; same result, different method.
All the other stuff that has been floated (cutting current benefits, higher contributions by employees, cutting colas or changing the cola base, etc.) runs in to the ’shall not be diminished’ clause of the Illinois constitution, which has been supported by various court decisions.
The problem with the pensions was underfunding. The solution is to pay it back, even though it kills the state budget. The sooner the State tells the public the truth, the sooner they can work on one of the actual solutions.
- dupage dan - Friday, Feb 24, 12 @ 10:18 am:
The search for, and demand, for the “perfect solution” to be available before commencing the work is the excuse of the weak. A shield to protect the feckless.
Reform of Medicaid and the pensions is going to be incredibly tough in this year of full turnover and legislative remapping. Remember, GA, the state is watching.
- Shock & Awww(e) - Friday, Feb 24, 12 @ 10:34 am:
Very well stated, Rich. Sincere, clear message in there. One of your best columns. Thanks for writing it.
While IL has been busy infighting, some other states have been busy doing heavy lifting. Michigan, for example, recently announced a $457 million surplus after years of making many difficult decisions.
Let’s hope this is our moment to finally get down to brass tacks. It won’t be pretty, but the medicine will cure the patient and help protect our future.
Then again, this could be nothing more than pillow talk. I want to believe, but PQ may still wake up tomorrow and yell “Fooled you” as he runs out the door with some pay hikes for supporters, lol.
- Wensicia - Friday, Feb 24, 12 @ 10:37 am:
Excellent column, but I question how much will actually be achieved in an election year.
- PublicServant - Friday, Feb 24, 12 @ 10:41 am:
Any way to find out what “solutions” are being discussed by the Pensions Working Group?
- Louie - Friday, Feb 24, 12 @ 10:56 am:
@Retired Non-Union Guy
If private industry pensions were structured like these pension plans, the companies would be out of business or the pensions signficanlty restructered.
Underfunding may have been some of the problem, but the ability of retirees to get huge increases in pensions in the last year has a dramatic impact on costs over a 20 or 30 year period.
Why not tax the current retiree benefits?
Stretching out these payments just pushes the problem down the road.
The legislure should pass reforms including,cutting current benefits, higher contributions by employees, cutting colas or changing the cola base, etc. and let the courts rule. And don’t just have the legislators pass legislation with language they know will get overturned by the courts to court votes in the upcoming election. Remember the MedMal reform legislation.
- Kerfuffle - Friday, Feb 24, 12 @ 11:00 am:
Talk is one thing - real action another. We will see what Quinn is made of by the end of this session.
- jake - Friday, Feb 24, 12 @ 11:03 am:
Rich,
Your column strikes the right note. This should be an exercise in problem-solving rather than demagoguery.
Nobody has all the answers, least of all me, but two components of the answer might be:
1. Couple the increases in education funding with a requirement that educational institutions pick up the pension contributions of their employees.
2. Move forward with the Constitutional Amendment that is now in the House Finance Committee permitting the GA to enact a graduated personal income tax.
- Leave a Light on George - Friday, Feb 24, 12 @ 11:04 am:
@ Louie
“Why not tax the current retiree benefits?”
I assume you mean all retirees benefits not just state retirees.
- Its Just Me - Friday, Feb 24, 12 @ 11:08 am:
I find it mildly insulting that the only reason Dems don’t want to cut Medicaid is because they enjoy the votes of the uninsured and the only reason the Republicans don’t want to cut it is because they enjoy the money of hospitals and pharmacists. I assume/hope some people actually enjoy providing a service to those that need it.
- Rod - Friday, Feb 24, 12 @ 11:09 am:
I thought Rich’s discussion of the history of the decline of our State’s fiscal fortunes was very interesting. But isn’t it maybe a little bit too much personality based. By this I mean even without the George Ryan saga and the Rod Blagojevich saga wouldn’t we have ended up where we are now just the same.
Doesn’t article 9 section 3 of the Illinois Constitution that enshrines the flat income tax and a corporate tax linked to that flat income tax have something to do with the situation we are in also?
Dan Hynes during his 2010 campaign for Governor laid this out the problem of the flat tax pretty clearly and many people listened because he only lost to Quinn by a margin of about 8,300 votes out of 915,726 votes cast.
Doesn’t Article 13 section 5 of the Illinois Constitution that guarantees pension rights for not just state workers, but those of “any unit of local government or school district, or any agency or instrumentality thereof,” have something to do with this crisis too?
- Jechislo - Friday, Feb 24, 12 @ 11:21 am:
Louie - tax current retiree benefits? That just might be what pushes a lot more retirees to another state. Taxing retiree benefits will include retirees from Sears, Caterpillar, State Farm, and on, and on - not just State retirees. In an election year, raising taxes on all Illinois retirees is pure suicidal.
- Rich Miller - Friday, Feb 24, 12 @ 11:28 am:
===the only reason===
It’s not the only reason, but it’s a big one.
- Retired Non-Union Guy - Friday, Feb 24, 12 @ 11:47 am:
Louie @ 10:56
You’re missing the point. The courts have already ruled on those types of things; I’ve cited the cases before so I won’t repeat them. If you haven’t read the pension brief prepared for Cullerton, go read it. All the Illinois cases are cited there. Similar decisions have been reached in AZ & NY; they have similar language in their constitutions.
As far as private pensions, they never could have gotten away with the underfunding in the first place …or if they had, someone would have been sent to jail.
The IMRF, with similar benefits, where the payments were made, and investments on the principal earned, is in good shape. It clearly demonstrates that underfunding was /is the problem.
Most the state employees don’t have the ridiculous pensions you read in the paper. Those are exceptions by politicians creating special rules for themselves and then gaming the system. The same politicians who underfunded the system; the same politicians who aren’t including themselves in the reforms. That is where your anger needs to be addressed.
- Demoralized - Friday, Feb 24, 12 @ 11:50 am:
==Basically, we need to pick ourselves up, stop acting like a bunch of losers and actually fix the damned problems here.==
I couldn’t say it any better.
- Anonymous - Friday, Feb 24, 12 @ 12:02 pm:
@ Louie -If private industry pensions were structured like these pension plans, the companies would be out of business or the pensions significantly restructured.
Underfunding may have been some of the problem, but the ability of retirees to get huge increases in pensions in the last year has a dramatic impact on costs over a 20 or 30 year period.
Why not tax the current retiree benefits?
Stretching out these payments just pushes the problem down the road.
The legislure should pass reforms including,cutting current benefits, higher contributions by employees, cutting colas or changing the cola base, etc. and let the courts rule. And don’t just have the legislators pass legislation with language they know will get overturned by the courts to court votes in the upcoming election. Remember the MedMal reform legislation. –
Believe it or not, working for the state isn’t all puppies & rainbows. State workers work in run-down facilites which often contain high levels of astbestos & a generally poor work environment. Many work in some of the more stressful fields that you could imagine (prison gaurds, police, child abuse case workers, mental health, veterans home nurses/doctors, etc ) I know it’s easy to think this, but not all state employees drive a desk. Not to mention the numerous studies that show that without the pension benefits that state workers are granted, their compensation would be considerably lower than those in the private sector, while often working more stressful & dangerous jobs.
Why not tax retirement benefits? That’s a good question……this is something that I actually agree with, to a certain extent. I’d like to see a floor on this, so people are only taxed on retirement income over say $40-50K. So that elderly people that are already scraping by aren’t punished.
Passing a law which you know will get overturned only costs the state money in legal fees & wasted time. If the GA can enact the reforms that Retired Guy stated above, we could achieve real savings, all while not bumping up against the constitution.
- TCB - Friday, Feb 24, 12 @ 12:35 pm:
Anon 12:02 is me……sorry
- steve schnorf - Friday, Feb 24, 12 @ 12:52 pm:
Louie, your statement that the Ds won’t do pension reform sounds good but is silly: did you miss Tier 2?
- reformer - Friday, Feb 24, 12 @ 12:59 pm:
Louie may not be aware that Madigan is the chief co-sponsor of SB 512.
- mokenavince - Friday, Feb 24, 12 @ 2:01 pm:
It is time we start looking ahead it seem to me
Quinn is sincere about moving the State ahead.
We must continue to look for positive solutions.
Beating a dead horse never got anyone anything.
Change is a very hard thing to accomplish weather
or not we are Republicans or Democrats we are all
in when it comes to our State. We must challange our polictians to work together,name calling and back biting never get you any where.
- Ahoy - Friday, Feb 24, 12 @ 3:27 pm:
–Basically, we need to pick ourselves up, stop acting like a bunch of losers and actually fix the damned problems here–
Quote of the year, i think we need to put that quote on all the legislators lockers.