Inaction only makes budget pain worse
Monday, July 12, 2010
The financial and human cost to Illinois’ fiscal meltdown was prominent on this newspaper’s front pages at the end of this past week, and yet our leaders refuse to take even the most minimal steps to lessen the pain.
On Wednesday, Comptroller Dan Hynes released his end-of-year financial report for the state’s 2010 fiscal year, which ended June 30. It was filled with statistics showing how Illinois had broken records for fiscal irresponsibility, including $4.7 billion in unpaid bills as of June 30.
On Friday, staff writer Dean Olsen reported that Senior Services of Central Illinois would cut one day a week of noontime meals to seniors in Sangamon and Menard counties, two-thirds of which would have gone to seniors who are too frail to leave their homes to eat.
The reason? The state owes the agency $400,000, nearly 20 percent of its annual budget.
“Some of these seniors will go hungry,” said Amy White, director of the agency’s Daily Bread program.
Seniors will starve a day a week because our state’s leadership refuses to start solving Illinois’ financial problems. There are many other social service agencies statewide with the same kind of story.
The pain could get much worse.
Gov. Pat Quinn announced last week that he did not expect the state Senate to take up a bill that would allow the state to borrow $3.7 billion to make its pension payment until after the November election. Even then, there is no guarantee the Senate will pass the measure.
We’ve talked about this, but it’s worth repeating: Skipping the pension payment could cripple the state’s five pension systems. The state also would owe the pensions the money at an 8.5 percent interest rate. The interest cost to borrow the money is much less.
There is no will by the Democratic-led legislature to cut $3.7 billion in order to make the payment out of the state’s general fund. Borrowing the money remains the best potential solution from a menu of unappetizing options.
As of now, it’s unclear what would happen if the legislature takes no action and the state has to make the $3.7 billion payment out of its general fund.
“The timing of when the (pension) payment has to be made is still being looked at,” said Carol Knowles, a spokeswoman for Hynes.
We suspect that if the state is forced to make that payment without borrowing, even more social services agencies and other state vendors will be left without the cash they need to keep going as the state’s already-dismal 153-working-day payment cycle becomes longer.
In the Senate, despite the Democrats having the supermajority necessary to approve borrowing, Senate President John Cullerton cannot muster the votes to pass the pension-borrowing bill.
This is not just a Democratic-created problem. The seeds of this problem were planted over decades as both parties underfunded the pension systems.
So far, Sen. Larry Bomke, R-Springfield, has told Quinn he won’t vote for the borrowing. But Bomke is a bit more of a realist than other members of his party. He was OK with the idea of a temporary, 1.5 percent increase in the income tax proposed by Quinn in 2009 and described himself as “warm” to the governor’s proposal this year to increase the tax from 3 percent to 4 percent. Bomke acknowledged Friday that there isn’t $3.7 billion to cut.
“I’m hearing from those who have developmentally disabled clients. I’m hearing from seniors who are not receiving services,” Bomke said.
Bomke wants to see plans on how the borrowed money will be paid back and a more solid road map out of the crisis.
“That plan must include reducing and eliminating our deficit,” he said.
Bomke said Senate Minority Leader Christine Radogno, R-Lemont, has not made voting against the borrowing a caucus position but that Republican leadership prefers he votes “no.”
Quinn should continue to try to persuade Bomke. Like Bomke, we’d like the state’s leadership to offer a detailed plan out of this mess. We hope Bomke eventually decides that his constituents, who face the most harm if the pension payment is not made, must come first instead of his party’s opposition and electoral ambitions.
One thing is clear: Regardless of whatever happens the rest of the year, it’s clear that simple outrage hasn’t done any good. Voters must take action at the ballot box in November.