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More on Gov. Rauner’s budget proposal

Tuesday, Feb 20, 2018

* My weekly syndicated newspaper column

Last year’s state budget caused some real consternation among local government leaders because the General Assembly slashed their share of the state income tax by 10 percent for one year and skimmed 2 percent off the top of several local sales taxes.

Gov. Bruce Rauner vetoed that budget. His veto was overridden, but the governor’s new budget recycles those same two ideas as well as the overall concept of off-loading state costs onto local taxpayers.

The biggest is Rauner’s proposal to shift some teacher and higher education pension costs to the local and university/college levels. The governor would shift 25 percent of costs per year to school districts and universities over just four years. That means, in four years, taxpayers in downstate and suburban school districts would pay over $1 billion a year for pension payments that they don’t pay now. And Chicago Public Schools would lose 100 percent of its state pension assistance in the first year, costing the city’s taxpayers an extra $228 million.

I just don’t see how the governor could ever pull this one off. And that means whoever drafts the final budget will have to patch a $591 million hole.

The budget proposal for next fiscal year also relies on an assumption that the General Assembly will pass an emergency $1.1 billion supplemental appropriations bill for this fiscal year by March. Much of that money is for the Department of Corrections. Now that a new budget is in place, creditors are demanding payment.

Not to mention that other creditors are going to be forced to wait in long lines until somebody can figure out how to reduce the state’s current $9 billion backlog of unpaid bills because the governor’s budget proposal almost totally punts that problem into the future.

Yes, the governor has lots of new money from the tax hike, so he should’ve been able to propose a far more balanced budget without all these gimmicks that probably won’t pass (like the pension cost shift) and the deferrals (like the backlog problem) which have to be dealt with eventually.

Rauner also avoided making direct budgetary cuts with his tax reduction proposal that claims to cut the income tax rate by a miniscule quarter of a percentage point by relying on revenues from a pension reform idea that may be unconstitutional and has not yet been endorsed by House Speaker Mike Madigan.

We’re now left with two major unanswered questions.

First, is the governor finally serious about negotiating the budget? He had the legislative leaders over to his office last week, which is the first time that’s happened in 14 months. But it was just a quickie budget briefing.

Second, will the Democrats work with Rauner to solve those problems in an election year or will they wait to see if Rauner loses?

Senate President John Cullerton issued a statement last week that may answer both questions: “I met with the governor this morning. He said he wants to roll back taxes and put more money in education. Here’s the problem. His budget does the opposite. He spends the entire tax increase. And he cuts money for education. It’s almost like he doesn’t know what his budget does. I can’t explain the disconnect. It seems intentionally deceptive and it’s troubling.”

So, probably a “no” on both.

* Related…

* Finke: Don’t spend that tax cut all at once: Being the fiscally prudent guy he is, Rauner will not proceed with the tax cut unless the latest reform plan is found constitutional. At the pace the court works, that should be around the year 2021, assuming the law is passed this spring. If the law is found unconstitutional, we’ll probably hear more about the courts being under House Speaker MICHAEL MADIGAN’s control. If the reform should stand, you, dear taxpayer, will see a cut of 25 cents on every $100 of your state income tax bill. Go crazy.

* Rauner’s pension shift proposal ‘financially devastating’ to QPS: Quincy Public Schools Superintendent Roy Webb says a proposal by Gov. Bruce Rauner to shift pension costs to local schools would be “financially devastating” to the district. “It’s not in our budget at all. It’s not projected to be in our budget at all,” Webb said. “It would be very tough for Quincy Public Schools to try to take that on.”

* Editorial: School pension-cost shift still cause for concern: But if we try to fix what’s broken by merely shifting those cost to local taxpayers it will add to the crippling property tax burden that has homeowners moving to Iowa and other neighboring states.

* Kacich: Pension-cost shift a ‘nonstarter’ for many lawmakers: The keystone of Gov. Bruce Rauner’s 2019 budget — a plan to shift the cost of pension payments from the state to universities and local school districts over four years — is “a nonstarter,” says state Rep. Chad Hays, R-Catlin. He’s not alone in his assessment. Hays is among 46 House members (out of 118) who have signed onto a resolution (HR 27) sponsored by Rep. David McSweeney, R-Barrington Hills, that says that “an educational pension cost shift is financially wrong and would only serve to shift pension burdens from the state to the status of an unfunded mandate.”

* Opponents: Rauner insurance changes would hurt state workers, retired teachers: Rauner said his budget recommends “right-sizing employee health insurance plans so that government compensation is more in line with what the taxpayers have who are paying for it. Today, we pay almost 90 percent of the premiums for government employee health insurance policies that are way more expensive than plans in the private sector.” Rauner wants the split between the state and workers to be closer to 60/40. The American Federation of State, County and Municipal Employees, which represents about 38,000 state employees, said the governor’s numbers are misleading. The union says the state pays 76 percent of health care costs and employees pay 24 percent, which is the national median according to a 2014 study on state employee health plans by the Pew Charitable Trusts.

- Posted by Rich Miller        

38 Comments
  1. - Sue - Tuesday, Feb 20, 18 @ 10:00 am:

    Not making the proposed insurance changes will hurt the rest of us Illinois residents. About time the Dems think about taxpayers and no union members


  2. - PublicServant - Tuesday, Feb 20, 18 @ 10:06 am:

    Rauner never quits, but we’ll be firing him come November. Let’s hope he doesn’t do even more damage to the state in the meantime.


  3. - Oswego Willy - Tuesday, Feb 20, 18 @ 10:12 am:

    How does Rauner propose shifting that cost to locals AND strive for lower property taxes?

    “prevailing wage”… “collective bargaining”

    Without the destruction of labor element, it all falls apart, the smoke and mirrors don’t work.


  4. - Last Bull Moose - Tuesday, Feb 20, 18 @ 10:20 am:

    The Emergency Appropriation amount indicates they have already spent money that was neither appropriated nor ordered by a court. Sounds illegal to me.

    The only reason Rauner’s budget seems more reasonable is because of the revenues from the tax increase that he opposed. He shows no actual improvement in budgeting skills.

    The proposed cost shift results in higher property tax bills. That will not and should not pass.

    The State needs more revenue and the recent changes in the Federal Tax code made state taxes more expensive to the citizens. This will be brutal.


  5. - A Jack - Tuesday, Feb 20, 18 @ 10:22 am:

    The health insurance changes would require negotiation with employees which is something Rauner has failed to do.

    Since Rauner is unable to negotiate a new contract with state employees, savings from changes to the health insurance should be excluded from his budget.


  6. - wordslinger - Tuesday, Feb 20, 18 @ 10:24 am:

    –First, is the governor finally serious about negotiating the budget? –

    No. He’s going to flog that phony “billion dollar tax cut” until election day. That’s the purpose of the exercise.


  7. - Anonymous - Tuesday, Feb 20, 18 @ 10:35 am:

    Not so sure about retired teachers. If they’re paying 90% of TRIP payment, the plan must be far better than a platinum payment—-something unheard of. Yet the coverage isn’t out of this world. SO what is the deception there about how much is being paid?


  8. - Demoralized - Tuesday, Feb 20, 18 @ 10:40 am:

    Sue

    The people you want to double insurance rates on are also taxpayers.


  9. - Perrid - Tuesday, Feb 20, 18 @ 10:46 am:

    So, this: “an educational pension cost shift is financially wrong and would only serve to shift pension burdens from the state to the status of an unfunded mandate.” What? Right now the districts are writing the (pension) checks and the state has to come up with the money. How is making the person writing the check pay for it an “unfunded mandate”? Now I think it is way too fast of a shift, especially after the impasse and given the fact that IL has had the most regressive K-12 education funding structure in the nation for years, but calling it an unfunded mandate is ludicrous.


  10. - Jocko - Tuesday, Feb 20, 18 @ 10:58 am:

    ==calling it an unfunded mandate is ludicrous==

    I agree, but…in addition to trying to find any way to skip out on paying…McSweeney doesn’t want to acknowledge it’s a backdoor tax hike.


  11. - Sue - Tuesday, Feb 20, 18 @ 11:29 am:

    Demoralized- how about you keep your taxes but pay the kinds of premiums us taxpayers who don’t work for the state pay


  12. - Lucky Pierre - Tuesday, Feb 20, 18 @ 11:32 am:

    So the 40% Obamacare tax on platinum plans should just be paid by the state and not the employee and asking for a bigger contribution from the employee equals the “destruction of labor”?

    “Obamacare contains many taxes including the Cadillac tax. Of all the taxes in the ironically named Affordable Care Act, none is more onerous, a whopping 40% on top of all other federal taxes. It is an excise tax meant to discourage something specific.”

    “The Cadillac tax is increasingly under fire. Already, anyone who can avoid it is doing so. One survey showed that 62% of companies facing a 40% Cadillac tax hit in 2018 are already changing coverage to avoid it. Conversely, only 2.5 percent of companies say they will pay it.

    Avoiding it usually means changing to higher deductible plans, reducing benefits, shifting more costs to employees, or dropping plans altogether. If no one pays it, how else will we pay for Obamacare? More tax increases? Cuts elsewhere?”

    I guess you can count on the Democrats to insist state employees join the 2.5% of the private sector whose policies will remain unchanged. Talk about out of touch with their constituents.

    https://www.forbes.com/sites/robertwood/2015/08/10/new-irs-guidance-suggests-obamacare-40-cadillac-tax-could-get-even-worse/#6711c7f7c9d3


  13. - Demoralized - Tuesday, Feb 20, 18 @ 11:35 am:

    Get a different job Sue if you don’t like your insurance instead of looking to take something away from someone simply because you don’t get the same thing. The “it’s not fair” argument is juvenile


  14. - up2now - Tuesday, Feb 20, 18 @ 11:35 am:

    Can someone tell me how changes in health insurance premium shares would affect retirees with enough service time so they don’t have to pay for any of their health insurance? Zero percent of anything is zero, after all.


  15. - Demoralized - Tuesday, Feb 20, 18 @ 11:36 am:

    up2now:

    It doesn’t affect them.


  16. - Perrid - Tuesday, Feb 20, 18 @ 11:49 am:

    I assume it wouldn’t affect people who have already retired, but in the Guv’s last offer to the union he changed retirees health benefits, put them into the same rate structure he was proposing for current employees (plus retirees would pay 100% of the dependents premiums), so would/could it affect current employees who retire after this takes effect? Assuming it ever does.


  17. - DuPage - Tuesday, Feb 20, 18 @ 11:51 am:

    @- up2now - Tuesday, Feb 20, 18 @ 11:35 am:

    ===Can someone tell me how changes in health insurance premium shares would affect retirees with enough service time so they don’t have to pay for any of their health insurance? Zero percent of anything is zero, after all.===

    Retired teachers (TRS), and retired community college employees (SURS) do not get the same deal. They pay hundreds of dollars per month for their insurance, Rauner want them to pay hundreds more.


  18. - Langhorne - Tuesday, Feb 20, 18 @ 12:06 pm:

    As always w brucie–words and deeds.

    Words–free money, rollback, madigan bad

    Deeds–not a chance of happening (aka, deliberate lies)

    Meanwhile, rauner gets to fill the airwaves unchallenged


  19. - RNUG - Tuesday, Feb 20, 18 @ 12:07 pm:

    up2now

    It won’t affect the 20 year SERS (and some SURS) retirees on their insurance, but it WILL affect their dependents; I expect you will be paying more.

    I’ve heard from knowledgeable sources that Rauner’s goal is to have State employees (and retirees where possible) paying 100% of their health insurance. He has kind of already done it to Medicare age retirees by forcing them into a Medicare Advantage program where the State isn’t paying anywhere near as much as they used to. The State just has to pick up any difference between traditional Medicare and the Advantage program, primarily the prescription coverage.


  20. - Langhorne - Tuesday, Feb 20, 18 @ 12:11 pm:

    ===Can someone tell me how changes in health insurance premium shares would affect retirees with enough service time so they don’t have to pay for any of their health insurance? Zero percent of anything is zero, after all.===

    If bruce cant impose benefit cuts and cost increases, he can revert to tried and true “starve the beast”. Slow pay so horribly that your provider drops you.


  21. - RNUG - Tuesday, Feb 20, 18 @ 12:15 pm:

    == Slow pay so horribly that your provider drops you. ==

    That’s already baked into the budget where (a) they are still behind on payments and (b) where it proposes to short the FY 19 group health budget line.


  22. - thoughts matter - Tuesday, Feb 20, 18 @ 12:17 pm:

    Sue
    what do you pay?

    I pay $137 per month for me. $129 per month for my spouse. I have co-pays for doctors, prescriptions, ER visits and hospital stays, etc. According to the state, the full premium for health care for about 900 a month combined for state and employee portions.

    I won’t have free health insurance for me when I retire because I won’t have 20 years in. I expect to pay somewhere between $300 and $400 a month between the ages of 62-65. That’s around 35-45 percent of the cost. I will pay half that amount once Medicare is primary, plus I’ll pay Medicare part B. My spouse’s coverage will remain at $126 even after Medicare is primary plus we will pay Medicare Part B for him also.

    If I go to a out of network doctor or hospital (easily done if traveling out of state on vacation), I will pay 40% of reasonable and customary charges and all of the excess.
    that’s without any changes.

    Compare, please.


  23. - thoughts matter - Tuesday, Feb 20, 18 @ 12:18 pm:

    oops. sorry, Sue

    I got a raise, so that $137 is now $186. Does your premium go up just because you got a raise?


  24. - RNUG - Tuesday, Feb 20, 18 @ 12:19 pm:

    == would/could it affect current employees who retire after this takes effect? ==

    Assuming you are part of the “20 year” group (primarily SERS), no it shouldn’t affect the retiree insurance. The Kanerva ruling was crystal clear on that. It could probably be changed for new hires.


  25. - RNUG - Tuesday, Feb 20, 18 @ 12:21 pm:

    == Does your premium go up just because you got a raise? ==

    There are salary break points where it does. Sounds like you just crossed a line.


  26. - thoughts matter - Tuesday, Feb 20, 18 @ 12:23 pm:

    RNUG - I did and I was not surprised by it. I understand it, holds costs down for the people who can least afford it. I however forgot about it when I was giving Sue the figures.


  27. - Nick - Tuesday, Feb 20, 18 @ 12:58 pm:

    I’ve heard from knowledgeable sources that Rauner’s goal is to have State employees (and retirees where possible) paying 100% of their health insurance

    Isn’t this for newly hired after date of ratification of contract


  28. - illinifan - Tuesday, Feb 20, 18 @ 1:20 pm:

    Yes the 20 year plus retirees would continue to have premiums paid (settled by the courts in Kanerva). The change would be significant for retirees who do not have Medicare. The group accesses the same plans as the employees. If deductibles, copays and coinsurance increases then the retiree would be responsible for these higher expenses. The higher these costs the lower the premium so it would mean for retirees eligible for full coverage the state would be paying a lower premium and the retiree would actually have a higher out of pocket expense.


  29. - RNUG - Tuesday, Feb 20, 18 @ 1:26 pm:

    == Isn’t this for newly hired after date of ratification of contract ==

    No. The only thing really governing employee health insurance is the AFSCME (primarily SERS) union contract. Most the other union contracts cite it. And past practice had the State extending the same health insurance to non-union employees. What kind of coverage and at what cost depended on the AFSCME contract. It even dictated the available coverage for SURS and TRS.

    And what Rauner would like to impose would apply to every employee.

    There is no constitutional protection to employee health insurance. At hest, you can argue there is a contractual right as a condition of hiring. If Rauner could get the GA to remove health insurance from collective bargaining (not likely), the State could decide to contribute $1 a month and make the employee pay the balance.


  30. - Barrington - Tuesday, Feb 20, 18 @ 2:22 pm:

    Pierre/Sue
    Not sure what you are talking about. Wasn’t the penalty for Cadillac plan implementation delayed until 2022?


  31. - Blue dog dem - Tuesday, Feb 20, 18 @ 3:04 pm:

    In terms of LGDF, Rich, you may be right. Going to be hard to make happen. But it should be halved. The pain of decades of state mismanagement,whomever to blame, MUST be shared throughout the state.


  32. - Last Bull Moose - Tuesday, Feb 20, 18 @ 3:29 pm:

    BDD. The sharing of state income tax revenue with local governments is in lieu of allowing local income tax surcharges. It is simpler and cheaper to have one rate statewide.

    Local politicians will have to raise property or sales taxes. Unless, as some believe, they can simply cut services.

    Naperville has cut its police force, and I feel less safe.


  33. - Blue dog dem - Tuesday, Feb 20, 18 @ 3:44 pm:

    LBM. Dont disagree. But. If we dont cut some spending…..


  34. - Demoralized - Tuesday, Feb 20, 18 @ 3:45 pm:

    ==But it should be halved==

    You seem to be a big fan of random percentage cuts but don’t seem to have the slightest idea as to what the results may be. Do you have a basis for saying half other than just pulling it out of your rear end?


  35. - McLincoln - Tuesday, Feb 20, 18 @ 5:35 pm:

    “…It seems intentionally deceptive and it’s troubling.”

    -Isn’t there a word for that?


  36. - Blue dog dem - Tuesday, Feb 20, 18 @ 5:57 pm:

    Dem. Unlike a bunch of mealy mouth.political types, I am not afraid to make tough decisions. Raising income tax on the working poor and middle classes hurt millions. Bet you dont have the slightest idea of all that pain. But you probably know whats best for those less informed than you.


  37. - Joe - Tuesday, Feb 20, 18 @ 6:54 pm:

    @RNUG (Tuesday Feb 20 12:07 PM)

    >> He (Rauner) has kind of already done it to Medicare age retirees by forcing them into a Medicare Advantage program where the State isn’t paying anywhere near as much as they used to.

    Was this really Governor Rauner’s decision? I was under impression that Governor Quinn instituted the Medicare Advantage program for retirees via the TRAIL system in 2013. See this old springfield journal register article and scroll down to Medicare Advantage:
    http://www.sj-r.com/article/20131020/NEWS/310209916

    Here is the specific part of the springfield journal register article that I’m referring to:
    “The state decided to move Medicare-eligible retirees into a Medicare Advantage program in which Medicare coverage is provided by private insurance. The state said it expects to save $100 million from the change”


  38. - RNUG - Wednesday, Feb 21, 18 @ 12:20 am:

    -Joe-

    Yes, Quinn started the process. It was intended for Advantage programs t be one more option for retirees.

    But the specs that went out for the last bid (under Rauner) were very restrictive for the straight to managed care (HMO) coverage, which left only the Advantage options.

    Do you think it was just a coincidence that the specs were so narrow the previously largest and most popular option for retirees, Health Alliance’s HMO program, was disqualified from bidding? As were every other HMO provider for the retiree portion?

    Over the years, I’ve seen plenty of tailored bid specs … and it stunk to high heaven to me.


Sorry, comments for this post are now closed.


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