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* Bruce Rauner earlier this week…
“Our problems have not been created by the tax hike expiring,” he said. “That’s not what is creating our problems. What’s creating our problems is years and years of financial mismanagement.”
* So far, as we’ve already discussed, Rauner has said he’s found $1.4 billion in the budget which is “fundamentally dishonest” spending. It’s essentially money being moved around to keep things afloat, while creating problems down the road.
And as we’ve also discussed before, Voices for Illinois Children estimates revenue lost from the partial income tax rollback in January will blow a $2.3 billion hole in this year’s budget and $5.4 billion in next fiscal year’s budget.
And, as we’ve also discussed before, just about every dollar of the 2011 income tax hike has gone to pension payments, which had been skipped or skimped in years previous.
In other words, despite what Rauner is saying, the expiration of the tax hike is gonna cause severe problems. Fix all the mismanagement you want, but it ain’t gonna total $7-8 billion a year for pension payments.
…Adding… That’s not to say there weren’t “years and years of mismanagement,” but good management now won’t make that hole suddenly disappear.
…Adding More… From YDD…
Every time he says this, another Democrat steps off the roll call for phasing the tax increase back in and back out again.
And two Republicans.
According to him, all he has to do is manage the state’s current budget better.
posted by Rich Miller
Friday, Dec 5, 14 @ 10:57 am
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Rich: Idefinitely agree with what you are saying other than one minor point the estimated shortfall that you cited would be for the total of the last half of this fiscal year as well as for the next fiscal year. Still, it is an obscene unacceptable shortfall that will need to be addressed very very soon.
Comment by Capitol Fax Follower Friday, Dec 5, 14 @ 11:04 am
===Fix all the mismanagement you want, but it ain’t gonna total $7-8 billion a year for pension payments.===
In a $35 Billion budget, about $14-18 Billion is cutable/flexable and $7-8 Billion is in the discussion that is measured as “debt”.
Rauner can mislead all he wants, numbers don’t lie.
Comment by Oswego Willy Friday, Dec 5, 14 @ 11:04 am
Every time he says this, another Democrat steps off the roll call for phasing the tax increase back in and back out again.
And two Republicans.
According to him, all he has to do is manage the state’s current budget better.
Comment by Yellow Dog Democrat Friday, Dec 5, 14 @ 11:04 am
Rauner also falsely claims state spending is “high”.
In reality, as Rich reported just this week, Illinois spending as a percentage of state GDP is the 10th lowest in the country (https://capitolfax.com/2014/12/01/indiana-booster-resorts-to-red-baiting/).
Also, state spending declined 28.9% from 2000 to date, adjusted for inflation and population growth (http://www.ctbaonline.org/sites/default/files/reports/ctbaonline.org/node/add/repository-report/1390515899/IB_2014.01.23_State%20Spending.pdf).
And Illinois has the nation’s second fewest state employees per resident.
Comment by Reality Check Friday, Dec 5, 14 @ 11:05 am
Trying again on those links:
10th lowest state spending per GDP
https://capitolfax.com/2014/12/01/indiana-booster-resorts-to-red-baiting/
State spending down 28.9% since 2000
http://www.ctbaonline.org/sites/default/files/reports/ctbaonline.org/node/add/repository-report/1390515899/IB_2014.01.23_State%20Spending.pdf
Comment by Reality Check Friday, Dec 5, 14 @ 11:07 am
He layed down a marker with that statement. Sounds like he can right the ship with best practices. I’m all for It. Can’t wait, but I guess we’ll have to.
Comment by Wordslinger Friday, Dec 5, 14 @ 11:10 am
I think YDD is spot on. Every time he goes on record saying that we don’t have a revenue problem, the legislature is less inclined to help him out. If he is not going to come forward with a pragmatic plan for dealing with this mess, there is no middle ground for folks to meet at. I can think of several moderate Republicans who are shaking their heads when he makes statements like this.
Comment by Montrose Friday, Dec 5, 14 @ 11:11 am
Reality Check,
The “fewest employees” thing may be technically accurate, but also seems to reflect that Illinois tends to contract things out.
Look at the big uproar over cuts to charitable groups if they are forced to pay a higher minimum wage.
That would not be a factor in other states because those people would already be on the state payroll.
It is odd that IL, considered so liberal, does the purported conservative move of allowing private companies/private charities to provide many of those services.
Comment by Gooner Friday, Dec 5, 14 @ 11:14 am
Governor-elect Rauner is going to find out real quick, if he hasn’t already, it ain’t gonna be so easy without support from both D’s and his own R’s. I, for one, would like to see the R’s do something instead of just saying NO.
Comment by Union Leader Friday, Dec 5, 14 @ 11:15 am
Hoooooly guacamole!!! Rich, have mercy!
Comment by William j Kelly Friday, Dec 5, 14 @ 11:19 am
Rauner’s tenure as governor is going to be an excellent rohrscach test. Obviously the problems weren’t “created” by the tax hike expiring. Exacerbated? Sure. But created? No way, no how.
Comment by Johnny Q Suburban Friday, Dec 5, 14 @ 11:20 am
No one likes to pay debt, least of all taxpayers and politicians.
Comment by University Annuitant Friday, Dec 5, 14 @ 11:21 am
It’s like the straw that broke the camel’s back. Did the last straw create the problem or the bales of straw previously there?
Comment by Johnny Q Suburban Friday, Dec 5, 14 @ 11:22 am
The state elected a financial wizard. Let’s let him deliver on his promises to cut income taxes, keep property taxes the same and increase education funding and create a significant number of new private sector jobs. Since he is, by far the primary funder for the Illinois Republican Party (and, in essence, Rauner is the Republican Party in Illinois) he should have no problem finding Republican legislators to sponsor his Bills and line up votes to deliver on these promises in 2015.
Comment by Halftime Friday, Dec 5, 14 @ 11:22 am
“What’s creating our problems is years and years of financial mismanagement.”
If you had told me Pat Quinn said this, I would believe you. For all Quinn’s faults, it was the first time in years that Illinois actually was somewhat realistic and responsible with its budget and financial management. If Quinn’s smart, he’d get in front of this as much as possible. “Hey don’t look at me. I tried to come up with solutions and told everyone what a mess this was. Sure the FY15 Budget is a mess, but that wasn’t my doing, the General Assembly had as much, if not more, to do with it.”
Anyway, Rauner’s gotta be careful. He’s had a pretty good month, but he’s walking a really fine line that might blow up in his face.
Comment by From the 'Dale to HP Friday, Dec 5, 14 @ 11:22 am
Mr. Rauner is descending into self-parody at an even faster rate than anticipated…
– MrJM
Comment by MrJM Friday, Dec 5, 14 @ 11:24 am
You have to use me, entire agencies and programs can’t be reduced, they have to be completely eliminated.
And, well, then come the class action law suits.
Comment by MeatCleaver Friday, Dec 5, 14 @ 11:26 am
If he’s talking about ….
Never mind.
All that matters is what he proposes to do about it.
My hope is that legislators are generally immune to this sort of political positioning on what was previously passed, by this point. They’ll deal fairly with his proposals.
My fear is that he’s still listening to IPI and the like with their skewed analyses.
Comment by walker Friday, Dec 5, 14 @ 11:27 am
Another great illustration of a state executive who doesn’t know when to stop campaigning and when to start governing. For more on the subject, see: Blagojevich, R.
Comment by Linus Friday, Dec 5, 14 @ 11:31 am
Letting tax hike expire is not the original cause of our states fiscal problem…. Letting tax hike expire is merely diminishing one of the methods used to address the problem created by years of mismanagement. Now one can argue that letting tax hike expire is not prudent, but that is a different issue than associating tax hike with causality. Much more significant structural changes will need to occur to fix this problem, including but by no means limited to revenue.
Saying tax hike expiration is the cause of the problem is like saying that someone who dies of cancer died because of the chemotherapy, rather than the underlying disease.
Comment by Realist Friday, Dec 5, 14 @ 11:32 am
Years from now, we will remember the “good old days” when the income tax rate was ONLY 5%
Comment by Spidad60 Friday, Dec 5, 14 @ 11:33 am
We’ll start to see his best management practice when he makes his cabinet appointments.
Comment by Norseman Friday, Dec 5, 14 @ 11:40 am
“Our problems have not been created by the tax hike expiring . . .
This is correct. The following also is correct.
“Our problems were created by not passing the tax hike years earlier . . .
Comment by Bill White Friday, Dec 5, 14 @ 11:41 am
==Saying tax hike expiration is the cause of the problem is like saying that someone who dies of cancer died because of the chemotherapy, rather than the underlying disease==
The tax hike was the chemo and Rauner wants to take the patient off of treatment.
Comment by Abe the Babe Friday, Dec 5, 14 @ 11:42 am
Come on people,Governor R has a plan.. he will do to Illinois what he did to the other entities with his private equities firm. He will sell off the pieces that are profitable, and BK the rest.. and he will find a way to walk away with 2 or 3 Billion for himself..
Comment by Not Rich Friday, Dec 5, 14 @ 11:46 am
For now Rauner is sticking to the GOP mantra about the state not having a revenue problem, just a spending problem. Once he moves into problem-solving mode, he will discard the mantra.
Comment by anon Friday, Dec 5, 14 @ 11:50 am
How many votes did GOP provide to pass the temporary tax increase?
Comment by Carl Nyberg Friday, Dec 5, 14 @ 11:51 am
To be clear, I want Rauner to have all the revenue he needs, and he probably needs more than he realizes.
This is not helping Jim Durkin put together 30 votes to explained the sales tax to include services, nor is it helping him find 30 votes to close corporate tax loopholes.
It also is not helping Cullerton convince his caucus members we might need to cut back their favorite programs in order to preserve funding for core services.
Comment by Yellow Dog Democrat Friday, Dec 5, 14 @ 11:58 am
It is correct that mismanagement of employees is not going to fix the debt. When you look at 100k per, the number of employees to get to 1 billion is not feasible.
I don’t think he is saying all you have to do is fix the budget to fix the problem. But he is saying what all private business owners know. You are not serious about reducing debt as long as you continue to deficit spend.
You can’t talk about filling the hole you are still digging. Balance one budget, then go from there.
The good news for Rauner is the billions go to wasteful spending and pork projects that do nothing to elect him. He has to make the drastic archaic changes that only a guy who doesn’t need the job could make. He can do it the question is does he really have the guts.
The real problem I see is that if he can’t do it, and despite being a top ten state in resources we will stay a bottom 5 state for most of my lifetime.
Comment by the Patriot Friday, Dec 5, 14 @ 11:58 am
Anon -
You cannot spend December and January telling voters we have a management problem or a spending problem and then propose a tax increase in February.
Even if Rauner wants it, lawmakers won’t be able to deliver the votes.
Wittingly or unwittingly, he is sabotaging hope for any additional revenue.
Comment by Yellow Dog Democrat Friday, Dec 5, 14 @ 12:01 pm
Part of the problem here may be that commenters who are blasting Rauner are so steeped in the culture of incompetence that is state government that they cannot see structural issues that are readily apparent to outsiders. The budget is a joke, so filled with smoke and mirrors that you can’t read it and figure how much money is, or will be, coming in and where that money will go. This is not true of other states that produce budgets that a person with average intelligence can read and understand.
Rauner is right in that the tax hike and its approaching sunset isn’t the problem. It’s a symptom of the problem. And so many people refuse to recognize that. This talk about appealing the ruling on pensions? Ridiculous. That’s a massive waste of time and effort, and anyone who supports trying to overturn the ruling is, by definition, part of the problem. They’re looking to blame judges instead of looking in the mirror.
Rauner may be many things, but I think that he does understand money and how money works. Legislators have demonstrated, amply, that they do not understand money and how money works, or, if they do, they have demonstrated through their actions that they do not care. This sort of thing can go on for only so long.
Rauner keeps using the term “fundamental change,” but no one seems to be listening. Except, perhaps, Madigan and Cullerton, who spent more than two hours talking with the governor-elect about fiscal matters. Neither of these legislative leaders is stupid. They surely understand that we can’t keep doing the same things we’ve been doing and expect different results. If they’re smart, they’re looking now for exit strategies from flawed policies and practices that will spell ruin for the state, and for them, if this continues.
It’s too soon to say whether Rauner will be successful in a massive reform of this state’s finances, but I wouldn’t bet too much against him. He’s a smart guy, he’s got smart people working for him and we’ve reached a crisis point. Lots of people sold him short during the campaign. They may be making that exact same mistake all over again.
Comment by Anonymous Friday, Dec 5, 14 @ 12:01 pm
Oswego Willy’s comment that “Rauner can mislead all he wants, numbers don’t lie” brings to mind an observation on democracy whose source is unclear: “Democracy can only exist until the majority discovers it can vote itself largess out of the public treasury.” Maybe the tipping point is approaching for Illinois and many other states.
It will be interesting to watch a state’s chief executive in a severe budgetary crisis who supposedly is not driven by the need to gain and retain power as his or her main goal and the conflicts that will arise as to the reach of the executive, legislative and judicial powers in Illinois.
Comment by Cook County Commoner Friday, Dec 5, 14 @ 12:02 pm
Anyone know if Rauner identified specifically the $1.4 billion dishonesty? I didn’t see it in the story or in his twitter feed.
I wouldn’t be surprised if he’s right on that part, but didn’t see the breakdown.
Comment by Robert the Bruce Friday, Dec 5, 14 @ 12:03 pm
Anonymous,
History is full of outsider candidates who say that they can fix government problems by changing how the government does business. I can’t think of one who got in office and actually made any changes that resulted in massive savings.
Comment by Pelon Friday, Dec 5, 14 @ 12:06 pm
“What’s creating our problems is years and years of financial mismanagement.”
This “mismanagement” *INCLUDES* not making full pension payments–a failure to allocate sufficient resources to cover future liabilities is the very definition of “financial mismanagement”.
If y’all don’t get used to Rauner talking like that (”depends what your definition of is is”), it’s gonna be a long 4 years.
Comment by Chris Friday, Dec 5, 14 @ 12:06 pm
===identified specifically the $1.4 billion===
I posted it this week.
Comment by Rich Miller Friday, Dec 5, 14 @ 12:12 pm
Anon 12:01, I think you might have missed a few meaningless buzz words. How’s about “zero-based budgeting?”
Comment by Wordslinger Friday, Dec 5, 14 @ 12:12 pm
Basically anon is correct, there is nothing in the comments by Governor elect Rauner that indicate he does not understand that dropping the tax rate will not create an even larger budget hole. Right now he is doing what his game plan calls for, laying out a massive budget crisis which we all knew existed.
The strategy will be for very significant budget cuts and I have little doubt they will be on the order of the numbers that Dr. Joseph from Voices for Illinois Children. But unlike the report Voices put out where the cuts were spread out among the agencies based on their overall percentage of the appropriations, preK-12 might be insulated from these cuts on the first draft of a proposal. So the cuts to the other agencies could be much deeper than depicted in the Voices report.
These cuts will not be agreed to by the General Assembly, then the deal making for a balancing between budget cuts and a proposed phased out income tax reduction along with a services tax will be worked out or not as the case may be. I think Rich knows from his experience in the legislature that this is the likely scenario. Why are people acting shocked?
Comment by Rod Friday, Dec 5, 14 @ 12:18 pm
The paranoid in me sees “mismanagement” as, in part, a code word for state workers’ contracts. The paranoid thinks he is setting us up for a Wisconsin style “Budget Repair Bill” were he will try to end collective bargaining.
Comment by G'Kar Friday, Dec 5, 14 @ 12:30 pm
“Why are people acting shocked?”
Because you don’t prepare people for a revenue hike by proclaiming that lack of revenue isn’t the problem, you just need “better management”.
Comment by Arsenal Friday, Dec 5, 14 @ 12:35 pm
Madigan should know the problems and solutions. After all, he has watched it since being elected in 1971.
Can’t wait to hear an intelligent analysis and discussion of these issues and what he would do about them.
I really don’t care much for Rauner but he has not been in office one day let alone 43 years.
Comment by Federalist Friday, Dec 5, 14 @ 12:41 pm
Federalist,
Don’t hold your breath. Not his job, it’s Governor-Elect Rauner’s.
Comment by LizPhairTax Friday, Dec 5, 14 @ 12:46 pm
== billions go to wasteful spending and pork projects==
Please identify those “billions”
Comment by Demoralized Friday, Dec 5, 14 @ 12:47 pm
@anon 12:10-
You may be right. But Bruce is in politics now, and he needs votes to get things done. Republic and Democratic votes. We’ll find out if he can cut a deal whereby everybody wins and loses because they all have to give. Huge difference from managing the sub shop that he and Dolores were running.
Comment by Del Clinkton Friday, Dec 5, 14 @ 12:52 pm
Good question Demoralized.
How much of the money appropriated for member projects has been released and how much is still available? A freeze on remaining member projects may be in the offing.
Comment by John Parnell Friday, Dec 5, 14 @ 1:00 pm
To say that it is not Madigan’s job is a convenient excuse for him but that is all it is - an excuse.
He has been there too long for that.
Comment by Federalist Friday, Dec 5, 14 @ 1:06 pm
@Federalist,
You do know of course that the GOV develops the budget, the legislature votes for the funding right? It’s not Madigans job to do the Gov’s job. It’s not an ‘excuse’ it’s the law.
Get a clue, then come back and try again. Rauner is now wearing the jacket. If you wanted the solution to be Madigan’s solution, then you should have elected Madigan to be Gov.
Comment by How Ironic Friday, Dec 5, 14 @ 1:10 pm
===And Illinois has the nation’s second fewest state employees per resident.===
I fully agree with this. However, Illinois has more units of local government than any other state. Some of the work done by state employees done in other states is done by units of local government in Illinois. This ’shifting’ of the work, and thus the jobs, is a partial explanation for the low number of State of Illinois employees.
Comment by Hit or Miss Friday, Dec 5, 14 @ 1:15 pm
Demoralized - Here’s a start. Identify all payments to consultants for the last 10 -20 years, then examine the products of their labors. If the product didn’t meet the preliminary system design’s expected results, bar them from future bidding. If the PSD is vague and doesn’t deliver a measurable improvement. Do the same.
Comment by Weltschmerz Friday, Dec 5, 14 @ 1:23 pm
i think we all (including the rest of the country) look forward to how a gov. rauner fixes the “budget” (or, more aptly, the revenue) problem simply by managing the state’s finances “properly.” rauner set the bar pretty high — no new taxes needed, no deep cuts required, merely good financial governance. should be fun to watch…
Comment by bored now Friday, Dec 5, 14 @ 1:33 pm
=== Basically anon is correct, there is nothing in the comments by Governor elect Rauner that indicate he does not understand that dropping the tax rate will not create an even larger budget hole. ===
Yeah, except for this part:
“Our problems have not been created by the tax hike expiring,” he [Rauner] said. “That’s not what is creating our problems. What’s creating our problems is years and years of financial mismanagement.”
And bored now reiterates a key point. The way Rauner is framing the issue not only precludes the need for a tax hike, it precludes the need for spending cuts too.
Comment by Yellow Dog Democrat Friday, Dec 5, 14 @ 1:47 pm
“Rauner keeps using the term “fundamental change,” but no one seems to be listening.” No one is listening because Rauner isn’t actually saying anything.
Comment by Skeptic Friday, Dec 5, 14 @ 2:11 pm
@ Anon 12:01 “Rauner may be many things, but I think that he does understand money and how money works.”
Rauner ain’t in Kansas any more. Money is no longer black and white; it’s the entire color spectrum.
Comment by From the 'Dale to HP Friday, Dec 5, 14 @ 2:12 pm
@Federalist and all the other Madigan bashers… blaming Madigan for this mess is like only blaming Cutler for the Bears mess. If you wanna ignore the coaching staff, defense, offensive line play, play calling, and special teams, and blame Jay for everything…
Comment by From the 'Dale to HP Friday, Dec 5, 14 @ 2:15 pm
Rauner should be given every opportunity to “manage” his way out of Illinois’ debt problem. When he inevitably calls for more revenue, it will be because of his failure to manage. The only way for Rauner to avoid this is to make the case that Illinois is simply unmanageable in its current financial state…
Comment by Halftime Friday, Dec 5, 14 @ 2:18 pm
Rauner can’t propose raising taxes. As his acolyte John Kass informed the world today, taxes kill. They killed Eric Garner.
Special kind of crazy, that Tribbie poster child.
Comment by Wordslinger Friday, Dec 5, 14 @ 2:22 pm
@Word:
In all fairness to Kass, Rand Paul said that taxes killed Eric Garner first. Kass just joined the crazy train that had already left the station.
Comment by Demoralized Friday, Dec 5, 14 @ 2:29 pm
Anonymous 12:01
Dan Rutherford, WBBM, April 23, 2012:
“He says the problem is so bad that the recent 66 percent income tax increase only covers the money needed for pensions and does nothing for the state’s backlog of unpaid bills.”
http://chicago.cbslocal.com/2012/04/23/rutherford-tough-road-ahead-for-quinns-pension-plan/
The pension ramp goes back to the 1995 law that was signed by Jim Edgar. So “reform” is to go back to the Dan Walker / Jim Thompson / Jim Edgar practice of underfunding pensions?
Comment by Anyone Remember Friday, Dec 5, 14 @ 2:34 pm
Rauner will say cut, cut ,cut and the GA will say no, no, no.There you have- it 4 years of nonsense coming your way. How are those Bears doing btw?
Comment by PollVaulter Friday, Dec 5, 14 @ 3:04 pm
G’Kar: “The paranoid in me sees “mismanagement” as, in part, a code word for state workers’ contracts. ”
That’s not paranoia; that’s a reasonable parsing of his phrasing. “Mismanagement” is, in part, the future obligations for contracts + pensions that wasn’t funded when granted.
Comment by Chris Friday, Dec 5, 14 @ 3:18 pm