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* Nope…
If a “grand bargain” does not come together in the Illinois Senate, Governor Bruce Rauner’s proposed budget will have a $7 billion hole in it.
That’s according to Rauner’s budget director, Scott Harry, who insists the governor’s budget is balanced… if the grand bargain comes together and lawmakers adopt some of the “structural changes” that Rauner has been demanding, and the legislature has been resisting.
There are a bunch of stories out there like that right now, and they’re wrong. They may have been based on this AP headline…
The Latest: Budget numbers show deficit of up to $7 billion
* Finke has the real story…
The gap between spending and revenue in Gov. Bruce Rauner’s budget plan could hit $7 billion if lawmakers don’t approve money-saving ideas sought by the governor, Rauner’s budget director told Illinois senators Thursday.
Budget director Scott Harry told members of the Senate’s two appropriations committees that there are about $3 billion in savings proposals contained in the spending plan Rauner submitted to the General Assembly Wednesday. Those proposals include such things as changing state employee health insurance, creating a new pension plan for newly hired workers and selling the James R. Thompson Center in Chicago.
Those savings proposals, though, are contingent on action by the General Assembly. If they are enacted, the gap between spending and revenues would be about $4.5 billion which the budget proposal said would be covered by components in the Senate’s “grand bargain” that is still being negotiated.
“The maintenance, auto-pilot budget if there were no changes in law would have a deficit of $7.2 billion,” Harry said. “But the governor has requested authority …; to balance the budget. If the governor is given that authority to make spending reductions, the state will be in much better spot than letting the status quo continue and having courts and consent decrees dictate spending.”
The governor’s budget takes that $7.2 billion hole down to a still very large $4.6 billion hole. There are plenty of legit questions about whether he can pass legislation to do that, and the Senate’s “grand bargain” starts addressing the current fiscal year’s problems, so that would help, too.
In other words, $7.2 billion is what happens if nothing is done this fiscal year and nothing is done next fiscal year. And that number doesn’t include leftover unpaid bills from this fiscal year. That’s just FY18 expenditures compared to revenues.
posted by Rich Miller
Friday, Feb 17, 17 @ 9:12 am
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Bruce Rauner…
“Continuing ‘decades’ of unbalanced budgets”
Saying that Rauner will raise taxes “if” doesn’t wash. Revenue is required. Otherwise, Rauner’s shaking up and bringing back is just proposing and promoting a wildly out of whack budget.
That Rauner… lol.
Comment by Oswego Willy Friday, Feb 17, 17 @ 9:19 am
There’s no way to give the Governor authority to cut spending on consent decrees–that will have to continue until they expire. He doesn’t need legislative approval to go back to court on them though.
Comment by Earnest Friday, Feb 17, 17 @ 9:23 am
“Nothing” is a reasonable bet.
Where’s the backup on the “savings?” $340M for procurement “reform,” for example?
The state isn’t paying bills as it is. How do you save $340M on procurement when you’re already a world-class deadbeat?
Comment by wordslinger Friday, Feb 17, 17 @ 9:24 am
I am so glad that has been cleared up. A $4.5B hole is so much better than a $7.2B hole. /s
Pretty soon, we will be playing with real money.
Comment by Huh? Friday, Feb 17, 17 @ 9:24 am
We have spent so much time trying to get a budget that we have had little discussion of what the State should be doing.That should be part of the budget discussion. It seems as if much of the State is on autopilot.
Comment by Last Bull Moose Friday, Feb 17, 17 @ 9:28 am
So you are saying that there will still be a $3 billion hole even with the Rauner tax increase, unless also the GA approves a tier three which will only apply to new hires and they manage to sell the white elephant.
Comment by A Jack Friday, Feb 17, 17 @ 9:32 am
===“The maintenance, auto-pilot budget if there were no changes in law would have a deficit of $7.2 billion,” Harry said.===
From the Illinois Constitution, Article VIII, Section 2, Finance:
“Proposed expenditures shall not exceed funds
estimated to be available for the fiscal year as shown in the budget.”
Fail.
Comment by 47th Ward Friday, Feb 17, 17 @ 9:41 am
Alternative facts save the day, stellar craftsmanship
Comment by Rabid Friday, Feb 17, 17 @ 9:56 am
Boy, these facts sure do show what a phoney baloney “budget” the Guv presented. If only there was a way, someone could get that message out to the masses (and not just the pointdexters).
I mean you could just cut and paste from the Guv’s campaign ad from earlier today. What he said, and then what the facts actually are.
And for good measure you could even sprinkle in some of Trump’s best lines from yesterday. Trunp has a fine tuned administration, and Rauner submitted a balanced budget. Just ask them.
Comment by Henry Francis Friday, Feb 17, 17 @ 9:56 am
Our gov spent a weekend with the Koch Brothers and the one tenth of 1%ers, and came back to Illinois returning to his original position of doing nothing for the working man or education or human services. Keep him away from his peers!
Comment by Capitol View Friday, Feb 17, 17 @ 10:12 am
I was under the assumption that Tier 2 retirement benefits are cost neutral to the state. How is placing everyone in a new Tier a cost saving to the state?
Comment by No Longer a Lurker Friday, Feb 17, 17 @ 10:16 am
–But the governor has requested authority …; to balance the budget. If the governor is given that authority to make spending reductions, the state will be in much better spot than letting the status quo continue and having courts and consent decrees dictate spending.”–
How delusional do you have to be, to think the GA would abdicate their authority, and allow the gov unlimited authority to slash and burn? His proposed cuts and changes are repugnant enough. I shudder at what he would do w that
authority. Thats why spending and cuts (w some exceptions) require appropriations. Actual enacted bills. Numbers on paper.
Comment by Langhorne Friday, Feb 17, 17 @ 10:22 am
Tier 2 ain’t free, or cost-neutral. The contributions will at some point exceed the normal cost, or current accrual of the benefits. Tier 3 is an IPI creation that doesn’t save money, it shifts costs, and is designed to hasten the end of pensions for State and Uni employees, as well as teachers.
Comment by Arthur Andersen Friday, Feb 17, 17 @ 10:31 am
Yes, Finke is correct. It’s exactly what The Associated Press reported a day earlier.
Comment by John O'Connor Friday, Feb 17, 17 @ 10:44 am
Think about how bad the state’s finances were during the great recession, and remember, we are living in pretty good economic times as a country. What if there is a recession this year or next…? How will our situation look then…?
Comment by Ducky LaMoore Friday, Feb 17, 17 @ 10:52 am
>What if there is a recession this year or next…? How will our situation look then…?
Pending in particular are the end of the ACA Medicaid expansion and the potential for Medicaid to become block grants. You’re very right–we’re not ready for anything to go wrong.
Comment by Earnest Friday, Feb 17, 17 @ 10:58 am
Well this refutes the false narrative about the Governor being all powerful and able to enact a budget reducing spending without the acquiescence of the legislature.
Hence the failure to enact a balanced budget is shared between the coequal branches of government.
Comment by Lucky Pierre Friday, Feb 17, 17 @ 11:00 am
@Lucky P
Step 1 is for the governor to produce a balanced budget proposal. Now if he had done so, and we were in the situation we are now, then you would be absolutely correct. But he didn’t.
Comment by Ducky LaMoore Friday, Feb 17, 17 @ 11:03 am
===Well this refutes the false narrative about the Governor being all powerful and able to enact a budget reducing spending without the acquiescence of the legislature===
Nope.
Rauner has failed.
Rauner’s own budget “mirrors”… “Decades of unbalance spending in budgets”
You have no point with Rauner’s grossly unbalanced budget.
Sorry.
Comment by Oswego Willy Friday, Feb 17, 17 @ 11:05 am
The Tier Three savings would also have to assume that the new hire is replacing a retiring or leaving Tier One or Two employee. If you are just expanding the work force you are eating those savings with increased payroll and health insurance payments.
And indeed, you may have to offer the new hire even more pay to make up for the reduced pension benefit. If you are trying to lure quality people away from the private sector at a lower pay than what the private sector generally offers, especially with most of the country heading toward full employment, then good luck.
You need look no further than Rauner’s own staff to see examples of this increase in pay in exchange for a lower pension benefit.
You may also see an increase of what we used to have happen. New employees would come into the state, get the training they need, but then go find a job with better pay and benefits.
Comment by A Jack Friday, Feb 17, 17 @ 11:05 am
And it is up to the legislature to only appropriate what the estimated revenues are. How has that been working out?
If the legislature refuses to budge on changing the 60% of the budget locked in statute how is the Governor supposed to balance the budget all by himself?
Comment by Lucky Pierre Friday, Feb 17, 17 @ 11:06 am
===If the legislature refuses to budge on changing the 60% of the budget locked in statute how is the Governor supposed to balance the budget all by himself?===
Article VIII, Section 2, (a)
Why aren’t you angry? Rauner is “no better” than Quinn, Blagojevich, Ryan, Edgar, Thompson…
LOL!
Until you recognize Rauner has proposed a grossly unbalanced budget, a “status quo” budget, you have no point.
You have nothing.
Comment by Oswego Willy Friday, Feb 17, 17 @ 11:21 am
Why are you selective in your outrage?
Ignoring the co equal branch of governments decades of failure and just constantly directing your ire on the executive branch’s failure to co opt them?
Comment by Lucky Pierre Friday, Feb 17, 17 @ 11:25 am
2018 can’t get here soon enough.
Comment by Peoria Citizen Friday, Feb 17, 17 @ 11:26 am
John, much respect. But the Governor’s savings aren’t actually savings. They’re more kicking the can down the road, borrowing from the future, pick any other platitude that the Governor has accused his predecessors of being involved but that he has consistently engaged in himself in his three introduced budgets.
The largest chunk of his savings comes from his proposed pension savings. That comes is two pieces, one which are changes to funding, which is largely built on calculating the contribution on total payroll instead of pensionable payroll. The other big piece is smoothing over changes made to actuarial assumptions, something no other pension fund in the country does. As Senator Biss outlined a year ago, the impact of both of these changes is to reduce today’s contributions by $750 million today by back-loading the payments so we are on the hook for billions more in the future.
The other piece is the new tier three for a savings of $500 million. Yesterday, Director Harry testified that it won’t matter which choices new employees make to get the savings because it is based on the employers paying for the pensions for new employees. But after five years, the total cost (normal cost plus amount to cover unfunded liability) for Tier II is around $700 million for TRS and SURS. (Leaving out SERS since the State is still going to be paying for new employees). So I don’t see how the administration can possibly get to $500 million based on the cost shift in year one based on employers picking up the tab. (Any even in that case, it seems that local employers would be on the hook for the total cost, not just the normal cost)
Comment by Juice Friday, Feb 17, 17 @ 11:26 am
===If the legislature refuses to budge on changing the 60% of the budget locked in statute how is the Governor supposed to balance the budget all by himself?===
Before this whole “impasse” thingy happened, I seem to remember a budget hitting the governor’s desk. Am I living in some sort of alternate universe where Illinois governors don’t have line-item veto authority???
Comment by Ducky LaMoore Friday, Feb 17, 17 @ 11:29 am
===Why are you selective in your outrage?
Ignoring the co equal branch of governments decades of failure and just constantly directing your ire on the executive branch’s failure to co opt them?===
Rauner ran to end the “Status Quo”
I’m confused. Rauner is now embracing the “Status Quo”?
How can you not be outraged? Rauner is a “Status Quo”.
Rauner can’t fulfill Article VIII, Section 2, (a).
That doesn’t bother you?
If it doesn’t, Rauner’s whole campaign and the past 2 years of being Governor IS a sham.
Comment by Oswego Willy Friday, Feb 17, 17 @ 11:30 am
That said about 2018, to say Madigan and House Democrats have not caused much of the calamity and pain in Illinois is a lie.
Comment by Peoria Citizen Friday, Feb 17, 17 @ 11:31 am
L.P., you seem to be living in the past. What is Rauner doing now and for tomorrow? That is what counts.
Comment by wondering Friday, Feb 17, 17 @ 11:33 am
== how is the Governor supposed to balance the budget all by himself==
He can’t. But he can produce a budget proposal that is balanced, which he didn’t do this year nor has he ever done. That is the issue at hand. He either needs to lead or get out of the way.
Comment by Demoralized Friday, Feb 17, 17 @ 12:27 pm
The 60% that the Governor doesn’t have control over would include continuing appropriations and court orders.
Rauner just asked for a continuing appropriation for state employee pay and went to court to continue an order for state employee pay.
So……?
Comment by A Jack Friday, Feb 17, 17 @ 12:32 pm
The Tier III proposal is a Trojan horse so to speak. It appears non threatening enough for those now in state service. But lest we not forget the guv wants managed competition without any checks and balances. Low ball current employees that are on Tier I (and II) salary wise regardless if said employees would accept a much lower salary and get rid of them. New hires then come in under that crappy 401 Tier III program.
Comment by Steward As Well.... Friday, Feb 17, 17 @ 12:58 pm
Tier III 401? Hmm, what is in the proposal? We are getting very close to a social security kick in. If the 401 is 3.1 (private employer average 401 contribution) and we know ss is 6.2, we would be at 9.3….an eyelash below the 9.4 the state was suppose to be paying all along. The big dif is the Tier III proposal would be no skeeching aloud, per the feds.
Comment by wondering Friday, Feb 17, 17 @ 1:38 pm
Another big difference between 401k is that taxpayers are not on the hook for investment returns.
Comment by Ron Friday, Feb 17, 17 @ 2:13 pm
==The gap between spending and revenue in Gov. Bruce Rauner’s budget plan could hit $7 billion if lawmakers don’t approve money-saving ideas sought by the governor, Rauner’s budget director told Illinois senators Thursday.==
That’s it. In other words, if a budget isn’t passed, there will still be a big deficit. No kidding. Thanks.
Comment by LessAnon? Friday, Feb 17, 17 @ 2:34 pm
The reality is almost everyone in the private sector has a “crappy tier III 401K”. It is not all bad, you can pass the remaining assets on to your children unlike a pension that just stops.
Private companies even the Fortune 500, figured out long ago the math does not work on a defined benefit pension plan especially one with a 3% cola even when there is zero inflation and 1 % interest rates- see US Auto industry.
A Towers Watson study found that from 1998 to 2013, the number of Fortune 500 companies offering traditional defined benefit plans dropped 86 percent, from 251 to 34. So which employers still offer pensions?
http://money.usnews.com/money/personal-finance/mutual-funds/articles/2015/07/20/pensions-are-taking-the-long-lonely-road-to-retirement
Comment by Lucky Pierre Friday, Feb 17, 17 @ 3:18 pm
Spot on Lucky.
Comment by Ron Friday, Feb 17, 17 @ 3:21 pm
- Ron -, - Lucky Pierre -
That Pesky Constitution… lol
Comment by Oswego Willy Friday, Feb 17, 17 @ 3:37 pm
The pesky constitution does not apply to future hires OW.
A Tier III 401K with the usual match sure sounds a lot better than Tier II, which is a terrible deal.
Stock market is up 10% since election day, Tier II is still flat.
http://www.wirepoints.com/the-tier-2-pension-mess-in-illinois-wp-original/
Comment by Lucky Pierre Friday, Feb 17, 17 @ 3:53 pm
>It is not all bad, you can pass the remaining assets on to your children unlike a pension that just stops
I think where many people struggle is in having remaining assets, much less enough to get by.
Comment by Earnest Friday, Feb 17, 17 @ 4:02 pm
===A Tier III 401K with the usual match sure sounds a lot better than Tier II, which is a terrible deal.===
Where is this Tier III… “Now?”
Comment by Oswego Willy Friday, Feb 17, 17 @ 4:07 pm