Monday, May 24, 2010

Group of House Democrats unveils proposed cuts

By Jamey Dunn

A group of House Democrats rolled out a plan today to trim the state budget by an estimated $1.3 billion while agreeing that the state cannot cut its way out of the estimated $13 billion deficit. The group proposed reductions in education and Medicaid spending, as well as requiring retired employees to pay health care premiums.

Rep. Elaine Nekritz, a Northbrook Democrat, says the group came forward with its own plan to show that “legislators can make tough decisions in tough times.”

She added: “I didn’t come to Springfield to say no. I came to say yes. But this is what’s necessary in this time.”

The plan includes:

  • A 5 percent reduction to the operating budgets of state agencies, saving about $300 million, and the General Assembly, saving about $2.5 million.
  • $300 million in cuts to K-12 education.
  • $100 million in cuts to higher education.
  • $200 million in Medicaid cuts.
  • Renegotiating contracts and putting some up for new bids, which legislators say could save up to $300 million.
  • $4 million in cuts to local subsidies for assessors, supervisors and coroners.
  • Cutting the reimbursement rate for car travel from to 50 cents a mile to 39 cents a mile, which legislators say could save $6 million.
  • Eliminating salaries for members of part time boards and commissions, which would save an estimated $2.5 million.
  • State Retirees would pay health care premiums according to a sliding scale based on their income, saving the state an estimated $100 million in fiscal year 2011.
Reducing retiree health care benefits may not be a popular choice during an election year, considering that retirement-age voters tend to consistently show at the polls on Election Day.

“As much as we love out retirees, this is a tough love exercise. We don’t love them any less, but they need to feel the pain,” said Rep. Karen May, a Highland Park Democrat.

Nekritz said all the outlined cuts are necessary to make any kind of substantial dent in the deficit.

She said she was particularly dismayed by cuts to higher education. But she added that the amount the state promises may not matter if it can’t give the schools the money they are owed. “I venture to say that if we don’t come up with a realistic budget and we don’t pay our bills, then what good is the appropriation?”

The back burner

A plan to put off paying the required $3.7 billion pension payment for next fiscal year advanced through a House committee today.

House Bill 543 would essentially let Gov. Pat Quinn skip the payment until he deems that there is enough money to make it.

Barbara Flynn Currie said that borrowing to make the payment would be the better option. However, a short-term borrowing plan failed to gain the needed support in the House earlier this month. Currie said the bill could come up for another vote. “The prudent approach will be to borrow, and I think that we’ll have an opportunity to test that proposition with the members before we finish out our work this week.”

Nick Yelverton, a legislative director for the Illinois Federation of Teachers, said the deferment plan is essentially borrowing, too. But, the money would eventually have to be paid back at an 8.5 percent interest rate instead of the projected 4.5 percent Illinois could get on a short-term loan.

“[Skipping the payment] will multiply the already precarious position of pension systems with regards to investment decisions, asset sales and cash flow. They’ll have no idea when this money comes in.”

Curry told legislators that they “had a chance to borrow at 4.5 percent instead of deferring at 8.5 percent.”

She added: “You’ll have another chance this week, and I would advise you to take me up on that offer. But in the meantime, if it doesn’t happen, I think it’s important for us to have on the back burner a something that will get us out of this bind without $3.7 billion in cuts to elementary and secondary schooling.”

Curry said the bill to skip the pension payment would not come up for a vote in the House “unless and until the borrowing program fails.”


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