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Dubious Cost-Savings Highlight State’s Woes PDF Print E-mail
Commentary/Politics - Illinois Politics
Written by Rich Miller   
Sunday, 07 June 2009 06:36

Almost every reporter who covered the unveiling of new budget-cutting recommendations by the governor's Taxpayer Action Board last week claimed the "TAB" had found a half-billion dollars in reductions for the coming fiscal year. It was reported that way because that's what the board's chair, Illinois Taxpayers Federation President Tom Johnson, said.

Johnson's comment demonstrate how amorphous, politically difficult, and fiscally suspect many of these proposals really are. If you do the math, the board's report actually claims budgetary savings this coming year could be as high as $1 billion if all its recommendations are implemented.

There was, apparently, a major internal push-back from some of the more experienced budget experts on the board. Former George Ryan budget director Steve Schnorf - who also served under Jim Edgar and is one of the smartest budget gurus I've ever met - and the highly regarded former Democratic state Representative Woods Bowman were two of four signatories to a harshly critical "Minority Report" letter drafted by Schnorf.

"You can, and I believe you will, get some savings from the suggestions in this report," Schnorf wrote to Governor Pat Quinn in his dissent. "It probably won't equal billions and it certainly won't all happen over 12 to 18 months. Good luck."

Indeed. Look closer and you'll see that half of the touted billion-dollar savings in the next fiscal year comes from two items that are already being done, and then some. The board suggested a 2- to 3-percent across-the-board cut of almost all state spending. But the governor ordered agencies last week to begin preparations for a whopping 25-percent across-the-board cut. The board's proposal looks tiny and almost harmless in comparison.

The board also wants a freeze in the state's operating budget. But the General Assembly approved a budget last month that funds state programs at an average of 50 percent of the current fiscal year's appropriations. That's much more than a freeze.

The rest of the savings comes from things such as Medicaid managed care, which supposedly would save $95 million in the first year - a far cry from the $3 billion in savings that the Senate Republicans have been claiming and the Chicago Tribune has been touting.

Other savings, such as reducing the prison population by freeing inmates charged with nonviolent drug and property crimes ($30 million to $65 million) carry huge political risk for the governor.

"My best personal estimate is that you will be able to save very little, if any, money" next fiscal year, Schnorf wrote, claiming he'd be "thrilled" to find $200 million in "actual, achievable" savings in the coming fiscal year, which begins July 1. Other than across-the-board cuts and freezes, he's likely correct.

However, this report is a good thing in that it shows without a doubt that there is just no way for Illinois to fully cut itself out of this awful budget mess.

After the federal stimulus cash is factored in, Illinois still faces a $7-billion budget hole in the coming fiscal year. Yet after two months of work and a horde of consultants, the governor's commission only came up with $1 billion in "cuts."

The obvious problem is that if all the board's recommendations were followed and they all worked as advertised, the state would still be left with a $6-billion hole to fill.

And then there's the very real problem of what happens after the billions in federal stimulus dollars are spent. The state put that cash right into its spending base. When the stimulus money is gone, the state will have yet another horrific hole to fill.

And what about the out years? The report's claimed savings in future years rely heavily on reopening the state's collective-bargaining agreement with AFSCME and other unions. However, the four-year union contract is just a year old. "Based on my personal experiences," Schnorf wrote, "your largest union will not agree" to reopen negotiations on that contract. He ought to know.

"Take everything we say to you with some grain of salt," Schnorf wrote, adding: "Our suggestions aren't the ordained word, handed down from on high." Let's hope everyone keeps that sound advice in mind as the process moves forward. There are more cuts to be made that the board missed, but even those won't completely solve the problem.

Rich Miller also publishes Capitol Fax (a daily political newsletter) and TheCapitolFaxBlog.com.


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