In 2020 Illinois will likely experience changes that will profoundly alter how the state operates for years to come. When Gov. J.B. Pritzker came into office, he inherited a $2.8 billion budget deficit. That deficit is expected to rise to $3.4 billion in just a few short months. Additionally, there is about $8 billion in unpaid bills the state owes its vendors! Illinois faces some truly daunting financial challenges. Gov. Pritzker’s five-year budget plan aims to pay off debt, cut taxes “for most” and raise taxes, significantly, on others, and seek to stimulate economic growth. The plan — given the prevailing circumstances — makes big promises for growth to better the state’s fiscal footing. Color me skeptical of these lofty goals. That said, we will see soon enough if this budget plan is successful in accomplishing its goals.
Pension Reform
In Gov. Pritzker’s five-year budget plan, he plans on saving Illinois $12.2 billion through amending the state’s constitution to protect earned benefits while also allowing changes in future benefit accruals. Similar reforms to those passed through the Democratic supermajority-controlled General Assembly in 2013 will then be reintroduced. This is a nice way of saying the Governor wants to short the pensions now and during his foreseeable term and make others pay more down the line. This is sometimes called “reamortizing” but it means the goal of achieving full funding under the system will take many more years, thus allowing immediate savings for other government spending. This tactic has been deployed before and has only caused the pensions hole to go deeper still. Gov. Pritzker is also planning on aligning responsibility for setting benefits with accountability for paying benefits in the education system.
Classrooms Over Bureaucracy
It was no secret that Gov. Pritzker planned on putting most of his focus on education. Over the next five years, he plans to increase investments in classrooms, students, and teachers by reducing administrative bloat through school district consolidation. His plan is projected to save the state $2.9 billion over five years. By investing more money into K-12 education, more students will be enabled to better their education and become more prepared for their college careers. Given that Illinois has more school districts than any other state — meaning more administrative expensive and arguably redundant costs — this is a laudable goal; one that has been tried in the past and fallen short. Perhaps with full Democratic party alignment, this example of governmental consolidation can become a reality.
Government Unions
The final breakdown of Gov. Pritzker’s five-year budget plan is getting a better handle over government unions and their attendant expense. When it comes to the bargaining table, government unions tend to be ruthless and in Illinois, typically fully aligned with the Democrats. So, perhaps Gov. Pritzker may be able to gain financial concessions of some sort. I will say, however, Gov. Quinn, thought to be a friendly Democrat, tried and failed, so his successor, a Republican, Gov. Rauner basically went to war with the public sector unions … only to get voted out of office. So Gov. Pritzker’s approach here will be interesting. His goal is to hopefully save Illinois $4.2 billion over the next five years. That entails plans to limit automatic pay raises for Illinois’ highest paid state workers and cut back on health insurance costs while maintaining the quality of care– that would be no small trick! These changes in the union contracts, if they come to fruition, would potentially be much more affordable in the long run.
Gov. Pritzker’s five-year budget plan is presented as if to completely turn around and better Illinois’ fiscal situation. The plan says it will save the state $12.6 billion over the next five years through structural reforms and take Illinois out of debt. I think these are unlikely outcomes; highly unlikely in fact. That said, I wish the Governor and members of the General Assembly all the best because Illinois is in a fiscal crisis and Illinoisans are leaving the state. A successful state turnaround is a must.