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March 4, 2013

Closer Look: Many challenges as Quinn inks budget

(Continued)

Quinn had set a January deadline for lawmakers to fix the problem in hopes of seeing some budget relief. But the options — from raising the retirement age to freezing cost-of-living adjustments and shifting the cost of teacher pensions to local districts — have been politically challenging for lawmakers, who've opted instead to let the problem fester.

That means the Democratic governor's Wednesday budget proposal will account for the full amount the state will owe the pension funds next year. What that does to other areas of the budget, from state parks to prisons or financial aid for college students, could be a powerful motivator for legislators to act — or not.

Deficits and "gimmicks."

For years leading up to the recession, Illinois lawmakers balanced the state's books through "budget gimmicks" that allowed them to spend money they didn't have, a task force led by former Federal Reserve Chairman Paul Volcker concluded last year. Officials anticipated higher-than-realistic revenues and didn't account for unpaid bills from current or previous years when approving a new budget.

Under Gov. Rod Blagojevich the state also took more than $1 billion from special funds — accounts created for specific purposes, often with their own revenue stream — and used the cash elsewhere, a practice commonly known as a "sweep." As those practices continued, Illinois accumulated multibillion-dollar deficits and a backlog of unpaid bills.

The state has been unable to get caught up, much less get ahead, on what it owes vendors such as social service agencies and health care providers. When the bills are paid, they cost more due to late penalties.

So far this fiscal year Illinois has spent $5 billion to pay down bills from prior years, according to Comptroller Judy Baar Topinka. The current backlog is more than $9 billion, and growing.

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