The State of Illinois is in the middle of its typical election-year budget stalemate, but the matter is made worse this year by a financial situation that begs for major budget cuts or a tax increase but will probably get neither.

Last week, legislative leaders and Governor George Ryan exchanged ideas for balancing the budget for fiscal year 2003, which begins July 1. But they couldn't agree on anything, leading Ryan to say, "Nobody is willing to step up and solve our problems. I can tell you right now, we're no place."

That situation probably won't change until after this fall's gubernatorial and legislative elections. "The budget probably will not be truly resolved until after November," state Senator Denny Jacobs (D-Moline) told the River Cities' Reader. "We're going to use a lot of smoke and mirrors [to balance the budget before the end of the session]. ... Still, we have to pay the piper." But don't expect that to happen until after voters have had their say.

Representative Mike Boland (D-Moline) didn't offer as grim a prediction as Jacobs. The budget, he said, "will be technically balanced," but the state will likely push off some expenses or do some short-term borrowing to make up for a cash shortfall that could be as high as $1.5 billion.

In February, Ryan proposed a $52.8 billion budget for fiscal year 2003 that included a 3-percent across-the-board cut for state agencies, the closure of two correctional and one mental-health facility, and a delay in the opening of the maximum-security Thomson correctional center. The budget would cut the state payroll by 3,800 positions, mostly through attrition and early retirement.

Since then, the state's financial condition has worsened, necessitating further cuts or revenue-boosters for next year's budget. For the first time since 1955, Jacobs said, in the current fiscal year the state is bringing in less money than it did the previous year. "That just shows the immenseness of the problem," he said.

Ryan has suggested the state might need to close the East Moline prison to balance its budget, in addition to the closures he suggested in his budget plan.

The General Assembly is supposed to finish its spring legislative session by May 17, but most observers expect that legislators will drag their work into late May or June. Even so, it's unlikely the budget battle will be fully resolved then. With the governor's office, the entire House of Representatives, and a third of the Senate up for election in November, neither party wants its candidates to be cast as slash-and-burn budget-gutters or tax-and-spend liberals. "We don't have the guts to cut, we don't have the guts to pass a temporary revenue enhancement," Jacobs said.

One thing that's not being talked about is an increase in the state's income- or sales-tax rates, even though that would be the easiest way to bring the budget into balance.

Instead, legislators are tossing around a variety of "revenue enhancement" measures, according to Boland, including:

• Raising the tax on riverboat-gambling revenues from a range of 15 to 35 percent to 25 to 45 percent, which could generate between $180 million and $300 million.

• Raising the cigarette tax, which could bring in up to $750 million. Democrats are hesitant to do this, Boland said, because the party's gubernatorial nominee, Rod Blagojevich, wants to increase cigarette taxes to pay for a prescription-drug program.

• Opening up six more riverboat-gambling licenses, which could generate $600 million.

• Creating a state-owned, not-for-profit gaming boat.

These options are appealing because while they might not solve the state's financial woes, they would at least eat into them, and they're relatively pain-free revenue-generators in terms of political fallout. Jacobs called these responses "Mickey Mouse" solutions.

Another possibility is for the state to simply borrow itself out of its budget crisis.

Last week, Ryan proposed borrowing money from some of the state's other funds to pay bills that normally are taken care of through the General Fund. That measure was quickly shot down by the state's treasurer and comptroller, who must sign off on that type of short-term borrowing. (Boland still thinks it a real possibility, and the legislature can override the wishes of the two constitutional officers.)

Short-term borrowing looks good because it allows the state to gauge how well the economy is recovering instead of making drastic cuts that might not be necessary if state revenues pick up more than expected.

But no matter what, Boland said, there will also probably be cuts. "They could be anywhere, even our sacred cow of primary and secondary education," he said.

"Originally, [cutting] education was taboo," Jacobs agreed.

Boland said that House Democrats had four pages of possible budget cuts to consider when they returned to Springfield April 23.

Key budget negotiators last week offered a package of $1 billion in cuts to Ryan's proposed budget that would allow the legislature to pass a balanced budget with no tax increases. Ryan quickly rejected it, and Jacobs called the proposal "a tactic to make people aware of the seriousness of the problem." The package included cuts of more than $600 million to education.

Those proposals might help some legislators realize that they can't cut their way out of the deficit.

But Jacobs said a longer-term solution would be for the General Assembly - sometime after the election - to pass an income-tax increase of between a quarter and a half percentage point. "That would probably take care of most of the problems," he said. A person earning $30,000 a year would pay an additional $75 a year in state income taxes with a quarter-percent increase, he said.

Jacobs added that such an increase could have a sunset clause of two years, so the state could get out of its current budget crisis but not increase taxes permanently.

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