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Lawmakers punt unbalanced state budget back to Quinn
By John Patterson | Daily Herald Staff

A major tax increase is off the table, and the votes aren't there for deep spending cuts. That leaves officials trying to piece together a state budget from immense debt and financial gimmicks.

 

Associated Press file

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Published: 5/28/2010 12:04 AM

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SPRINGFIELD - Billions worth of required state pension payments were cast into limbo Thursday as Illinois senators balked at borrowing to cover the contributions, and lawmakers instead sent Gov. Pat Quinn an unbalanced budget, told him to manage best he could and left.

"We all recognize that this is an extremely difficult budget situation and the governor is going to be called upon to exercise a lot of discretion in terms of how he spends the money," said House Speaker Michael Madigan, a Chicago Democrat.

The operating budget for the coming fiscal year beginning July 1 is $26 billion and includes $4.6 billion in general state aid for K-12 education, the same as in the current budget. However, state grants to school districts to cover transportation, special education and other programs will drop $300 million to $1.6 billion.

Once federal dollars and construction project funding is added, the total state budget is $56.9 billion.

In an effort to balance spending, the state again will delay paying more than $6 billion to those doing business with Illinois.

There are, however, some cuts in the plan.

Lawmakers and state officials would take a dozen furlough days, lose a cost-of-living raise and have their mileage reimbursements, hotel and meal money cut. Additionally, state government operations would be slashed 5 percent under the plan now advancing to the governor's desk.

Lawmakers also endorsed a back-to-school sales tax holiday that will briefly wipe away the state's sales tax Aug. 6-15 on clothes, school supplies and computer accessories. Also approved was an amnesty program to encourage tax cheats to pay up without penalty.

However, a plan to put electronic gambling at Arlington Park and other horse tracks stalled.

The overall budget is essentially the same as last year, balanced with internal borrowing and delayed payments, plotted out in large, lump sums and who gets and doesn't get money is largely left to the governor.

Lawmakers gave Quinn new powers to withhold nearly $2 billion from state agencies and universities at his discretion to help manage the state's cash flow.

But Itasca Republican state Sen. Carol Pankau said lawmakers were ceding too much authority and essentially anointing Quinn king of Illinois. "This is tremendous power we are giving the governor," Pankau said.

Senate President John Cullerton, a Chicago Democrat, disputed the characterization, saying Quinn was given a "thankless task."

The Democratic-controlled General Assembly continued to be at odds with itself on how to go about eliminating a $13 billion deficit brought on by years of spending increases and exacerbated by dramatic economic decline. Over the past year the Senate approved a tax increase only to have the House vote one down. Subsequent efforts to cut billions were soundly rejected. Then, on Thursday, so was borrowing.

And while the Senate didn't give Quinn the authority to borrow $3.7 billion to make pension contributions, the House declined to pass a law to let him delay the contributions. As a result, Quinn is still legally bound to make the payments, most likely by either delaying other payments further or cutting spending.

But other options may exist. Part of the emergency budget powers granted to Quinn allow him to tap surpluses in special state accounts to cover state spending, though the money must be paid back within 18 months with 1 percent interest.

Quinn already proposed borrowing $1 billion from those accounts, but lawmakers didn't limit how much he could take so long as it doesn't impede the cause or effort for which the account was created. The Senate's budget pointman said upward of $3 billion might be available for the governor's use.

Republicans assailed the overall budget plan as financial sleight of hand.

"All we're doing it taking out another credit card because Governor Quinn maxed out the last one," said state Sen. Matt Murphy, a Palatine Republican.

The governor and lawmakers, however, held out hope that the borrowing plan could be resurrected. It cleared the House earlier this week thanks to two Republicans - including Elmhurst state Rep. Bob Biggins - siding with the majority Democrats to give it the bare minimum needed for approval.

Democrats also control the Senate but a select few members scoffed at the borrowing plan and Senate Republicans united in opposition. Finally, Senate President John Cullerton told reporters the plan couldn't be approved. But both he and Madigan said they stood ready to call lawmakers back to the Capitol if developments warranted.

"If there is evidence of Republican support in the next few weeks, President Cullerton will reconvene the Senate this summer to pass the bill," said spokeswoman Rikeesha Phelon.

Quinn had lobbied heavily for the borrowing deal. He stormed onto the House floor to glare at Republican critics during the debate there. On Thursday his aides solicited help from groups reliant on state funding, asking them to call lawmakers and urge them to support the deal for fear funding and services would otherwise be slashed.

"In meeting with service providers this week, chief of staff (Jerry) Stermer described the state's serious cash flow problems and stated it would get worse without the proposed pension borrowing. This has consistently been part of the administration's budget message," Quinn spokesman Bob Reed told the Daily Herald.

The governor issued lawmakers a warning that their work was not finished.

"Our task is not complete, and there's more that must be accomplished before this session officially ends," Quinn said.