Thaw in Springfield Stalemate Welcome, but Illinois Remains in State of Financial Crisis

by Shawn P. Healy, PhD, Democracy Program Director

Illinois’ long-simmering budget impasse ended rather abruptly last week when both bodies of the Illinois General Assembly overrode Governor Rauner’s veto. The compromise agreement contained a mix of painful medicine in the form of budget cuts and tax increases.

These doses were delivered by a bi-partisan supermajority, where one Republican Senator and ten Representatives (originally fifteen) broke with the Governor and “voted their district.” It was no coincidence that many of these individuals hail from districts that house state universities, institutions that have suffered alongside social service agencies for too long.

The human carnage of the past two years is real, and last week’s mutiny triggered changes at the top of the Republican Party, beginning with the resignation of respected Senate Minority Leader Christine Radogno, followed by a request for House Republican Floor Leader Steve Andersson to step aside in light of his “yea” vote, and culminating with a major shake-up of Governor Rauner’s staff.

While state operations may soon resume some sense of normality, major issues remain unresolved, including whether public schools will be funded for the fall. The budget agreement authorized appropriations to K-12 schools contingent on companion legislation creating an evidence-based funding model. It exists in the form of Senate Bill 1, but the Governor has vowed to veto it upon arrival given what he deems as overly generous funding for Chicago Public Schools.

The Governor has the option of a line-item veto, but Speaker Madigan considers this tactic constitutionally dubious, leading to a likely dead end. Rauner may instead use this school funding bill as a final point of political leverage to exact business-friendly reforms from his Turnaround Agenda, including changes to the state’s worker’s compensation system and property tax relief.

Also looming is the state’s underfunded pension system that’s at least $130 billion in arrears. Previous changes were deemed unconstitutional by the Illinois Supreme Court, but legislation that would produce “consideration,” where a retiree could choose whether or not to count future pay raises in exchange for lower or higher pensions, respectively, has gained bi-partisan traction and may withstand judicial scrutiny.

In the short-term, while the state has resumed its required contributions to the pension system after an inexcusable hiatus, the recent budget agreement altered assumptions and actually cut back contributions. This has real consequences for looming payments poised to consume an ever larger percentage of the state budget.

Taken together, last week’s progress is a Pyrrhic victory in the long-term battle to restore Illinois’ fiscal health. A balanced budget provides necessary life support, but our sick state remains in intensive care.