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Balancing act

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Illinois

Today’s State Journal-Register picks up on my Capitol Fax story from yesterday about how the governor wants to use cuts to future pension benefits to trim $800 million off of next fiscal year’s budget.

When Blagojevich gives his third budget speech Wednesday, one of his focal points will be the five state-funded pension systems and their $2.6 billion price tag for the fiscal year that starts July 1, according to an administration official who asked not to be identified.

The governor is expected to ask lawmakers to adopt cost-saving recommendations made by his Commission on State Pensions that include reducing pension benefits for new state employees.

If the General Assembly goes along, Blagojevich could pick up $400 million to $800 million in savings for use on other state programs.

The actual savings won’t occur for a couple of decades, but the governor will propose capturing those savings right away.

As I intimated yesterday, this is mostly just a PR device to balance the budget on paper, because it’s doubtful that the Legislature will go along with steep cuts in pension benefits that are so hotly opposed by the unions.

The SJ-R article also includes these little tidbits:

[House Speaker Michael] Madigan’s staff believes the latest AFSCME contract will cost the state an additional $28 million in fiscal 2006. Worse, skyrocketing costs for prescription drugs and health care in general will force a $1 billion increase in Medicaid spending just to keep the program at current levels. About half of that expense will be reimbursed by the federal government.

And despite the state’s financial problems, spending under Blagojevich has continued to grow. The state budget in place when he took office called for $22.3 billion in spending from the general fund that pays for most state services. In the current budget, that spending is up to $23.6 billion.

When Blagojevich took office, the state planned to spend $5.1 billion on Medicaid. In the current budget, Medicaid spending is just over $6 billion.

Bottom line: we’re screwed.

posted by Rich Miller
Friday, Feb 11, 05 @ 12:49 pm

Comments

I seem to think he’s really trying to bolster the economy by portraying Illinois as a more business-friendly state and not a solely union-friendly state anymore. At least, that’s what I hope he’s thinking becuase on the surface level it just looks like he’s trying to twist the knife into the back of unions.

It just makes me wonder, if he has this mentality that he has a populist mandate to the people of Illinois, why do these things against the people of Illinois that elected him? Roddy B. was the union candidate - Jim Ryan was not. Therefore, part of that supposed mandate is from unions. Pushing for decreases in workman’s comp costs and pensions certainly isn’t helping that along.

Applause to the General Assembly if they decide to not go along with this. It’s just not worth the trouble.

Comment by Drew Hibbard Friday, Feb 11, 05 @ 1:50 pm
Moving younger workers to defined contribution pensions — where they own their fund and govt. can’t screw them out of it — is the way out of that mess.

Super waivers from the federal government are applied for by SC and FL that would bring in private health insurance to manage the program. Vouchers for long term care and acute care, Medicaid Health Accounts for temporary assistance are all being addressed.

If we get screwed, it’s because we are being poorly served.

Comment by Greg Friday, Feb 11, 05 @ 2:13 pm
I would like to know what the difference is between the head count savings from the early retirement program and the penison cost are. I think there is a large savings from payroll, but instead of paying for the pension contributions that the savings were for, they were spent on increasing the budget, by what, 2 billion dollars. The money is there for the pension, but as usual, the penison doesn’t get funded, and it is the worker’s fault.

Comment by Anonymous Friday, Feb 11, 05 @ 5:02 pm
Interestingly enough, the many of the lawmakers will be affected by pension changes also, as quite a few are covered under the state’s retirement system that covers teachers. They are looking at all the pensions, not just the ones that hit the “union” members. It also seems to me a lot of people forget that our children are going to be affected by the changes that might be done. Will my son be better off with a 2% COLA rather than a 3%? It’ll probably change several times before then, but I’d like to think I’m gonna fight like heck for my future and his during my lifetime so that I can actually retire and so can he…at an age and at a level of income where we can actually live.

Comment by Anonymous Friday, Feb 11, 05 @ 6:24 pm
“I would like to know what the difference is between the head count savings from the early retirement program and the penison cost are.”

If you believe Blago’s budget director John Filan, the ERI was a colossal hit on the state budget. If you believe the GA’s ERI audit, the cost of the ERI was more than balanced by the thousands of salaries that were saved.

Comment by Anonymous Friday, Feb 11, 05 @ 9:08 pm