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Uproar Over Illinois Governor's Budget

Illinois Governor Bruce Rauner ran successfully for office against an incumbent Democrat, Pat Quinn, whom he accused of not being serious about addressing the state's huge deficit.

Rauner is nothing if not serious about eliminating Illinois' structural deficit.

He proved that by proposing a budget that, if nothing else, will wake up citizens and politicians alike that the time for kicking the deficit can down the road is over. The state has run out of time and the only option is pain...and more pain.

Chicago Sun Times:

To accept Rauner’s spending plan at face value is to say that state government has few responsibilities beyond promoting public safety and providing for the education of children — and damn near little of that.

The governor would cut funding to higher education by 31 percent. He would cut money to special education. He would cut Medicaid reimbursement rates, though Illinois already has one of the lowest rates in the country. He would cut funeral and burial services for the poor. He would cut homeless youth services. He would cut heroin treatment services. He would cut the budget of the Department of Children and Family Services, which — as we wrote in an editorial just this week — is struggling as it is to come to the aid of thousands of abused and neglected children.

Two proposed cuts in particular show just how damaging Rauner’s budget would be to people — and governments — that already are hurting.

Rauner would cut state services for former foster care children who have passed the age of 18. Anybody who works in the field of child welfare will tell you that is nuts.

It’s “just plain cruel,” Benjamin Wolf associate legal director of the ACLU of Illinois, told the Sun-Times. “If you want to increase homelessness and suffering, abandoning them at age 18 is a good place to start.”

And Rauner would cut by half the share of the state’s income tax that is forked over to local governments. For Chicago, a city already swimming in red ink, that would mean a loss in revenue of $135 million a year.

Rauner is goring every ox, every special interest, every entrenched bureaucracy in the state. Illinois is running a $6 billion deficit and already has the 5th highest tax rate in the country. How in the world can the state get out of this crisis without massive spending cuts?

Most of the $6.2 billion in cuts would come from the $32 billion general fund. Another $2.2 billion would come from transferring public employees into a less generous pension plan. The state set up a different pension system for employees hired after January 1, 2011 and Rauner wants current union employees to switch from their overly generous defined benefit plan, to a defined contribution plan. Rauner also wants to offer those workers the option of taking a lump sum payment and a defined contribution plan in return for a voluntary reduction in cost-of-living adjustments. The measure is expected to save the state more than $100 billion over the next 30 years -- not enough to completely fix the pension system but certainly better than the weak tea passed by the legislature 3 years ago.

The $1.5 billion proposed cut in Medicaid has everyone screaming. Illinois already has one of the lowest reimbursement rates in the nation to doctors and hospitals and just added several million residents to the Medicaid rolls thanks to the Obamacare Medicaid expansion. Doctors are fleeing the Medicaid system, and lowering those rates further will probably make the exodus even worse.

The suburbs are howling about the massive cut in payments.

Gov. Bruce Rauner Wednesday proposed suburbs and downstate communities give up about half the money towns receive each year from state income taxes.

The proposal immediately sparked a chorus of local officials calling the idea a "non-starter" and saying municipalities have been "pickpocketed for years by Springfield."

Rauner's proposal came as part of his sweeping plans for budget cuts across state government intended to rescue the state's troubled finances. He argues that many local governments are sitting on reserves that can be used and get a lot of state money from other sources, so taking away some of their income tax money is a sacrifice that has to be made.

His office says the proposed cut would be about 10 percent of the total money the state shares with local governments and that his budget doesn't include, for example, cutting the local shares of sales taxes.

"Saying no is not popular," Rauner said.

The University of Illinois system would lose fully 1/3 of its funding. Chicago's mass transit system would lose $127 million. Orphans, widows, and the poor would all have special programs slashed. Rauner is also calling for a two year freeze on property taxes and no new income taxes.

Observers from both parties are declaring the budget DOA. The governor probably doesn't expect many of his budget cuts to pass either. So, what's the point?

From the Sun Times editorial:

But the governor’s fiscal year 2016 budget has zero chance of being passed into law by the Illinois General Assembly, as he well knows. Its real value then, which we’d like to believe is by design, is to sound the alarm like never before that Illinois is sliding fast toward becoming an economic backwater, a failed state among the 50 states. Time is running out. Hard and painful measures must be taken now.

If Rauner’s draconian plan has achieved that much, we’d say it’s about time.

The Illinois General Assembly — or at least the Democrats who run the joint — hate this budget, and so should we all. Even a half-broke state does not turn its back on its most basic moral responsibilities. But now it is the Legislature’s turn to respond with a budget plan of its own, one that we hope will strike a more balanced approach to spending and taxation.

The Democrats are proposing a "surcharge" on incomes over $1 million that is supposed to raise a billion dollars "for the kids." They've got $5.2 billion to go and have no fresh ideas on cutting a budget that is almost as large as the Texas budget, despite Texas having a population more than twice that of Illinois.

Rauner is keeping his powder dry in his battle with the unions. The pension reform proposals aren't going anywhere but are a very loud shot across the bow telling unions a new sheriff is in town and things are going to change.

Rauner is coming across as very tough and very confident. How much of that is real and how much is for effect remains to be seen.