Quinn to propose education cuts and employee pension changes

By Jamey Dunn with Meredith Colias contributing

In his budget proposal tomorrow, Gov. Pat Quinn is expected to lay out substantial cuts to education and press lawmakers for changes to public employee pensions.

“This is a difficult budget. It holds the line on spending and reflects the state’s fiscal challenges. This budget doesn’t propose any new taxes fees or programs. It’s an honest budget that’s based on actual costs, and continues to eliminate gimmicks. This budget is a direct result of the inaction on stabilizing the pensions,” Jack Lavin, Quinn’s chief of staff, said at a briefing for reporters this evening. Quinn plans to propose a nearly $400 million cut to K-12 education. General State Aid to schools would be reduced by $150 million. Quinn also plans to call for cuts to transportation funding. Funding for higher education would be reduced by almost 5 percent. Early childhood education and Monetary Awards Program (MAP) grants for low-income college students would be safe from cuts. “Here we have a series of reductions that the governor does not want to do. These are outside of his vision of where we ought to be as a society. These reductions are a direct result of no action on pension reform,” said Jerry Stermer, director of Quinn’s budget office.

Quinn’s general revenue estimate of $35.6 billion comes in higher than the $35.08 billion that the House approved today. The House's number is based on analysis from the bipartisan legislative Commission on Government Forecasting and Accountability. Quinn's budget calls for a total of $62.4 billion, including federal revenue and spending from other funds, but the bulk of the appropriation process focuses on general revenue. Quinn’s budget is predicated on the idea that lawmakers would get on board with taking some money that is typically automatically transferred out of the General Revenue Fund (GRF) before the budget battle each year and instead toss it into the appropriations process. Quinn’s representatives at a budget briefing this evening said he does not intend to make specific suggestions about which transfers to tap into but will instead call upon lawmakers to assess all of the transfers out on an annual basis. “It is an autopilot kind of an appropriation. It just goes by itself without an annual review by the General Assembly. … It just goes out the door,” Stermer said. “All of those dollars in FY 13 are on autopilot, according to existing statutes. The only way you can make a change is to change the statute.”

The largest transfer, more than $1 billion, is of income tax revenues that are funneled to local governments based on their populations. In 2011, Quinn proposed delaying payments to local governments as part of a plan to cut some of the backlog of unpaid bills. That plan was met with vocal opposition and lobbying from local mayors and was quickly dropped. A budget plan that Senate Republicans proposed that same year called for a $300 million cut to revenues shared with local governments.

 Stermer said one fund at the Department of Revenue has a surplus that will be automatically dumped into the GRF at the start of the next fiscal year. “So that’s $150 million that COGFA did not account for.”

The budget calls for reducing the backlog by $2 billion over the current fiscal year and Fiscal Year 2014. The governor’s budget projection estimates the backlog, which is now more than $8 billion, will be $6.8 billion by the end of FY 14.
Quinn spokeswoman Brooke Anderson said the governor does not plan to propose billions in borrowing to pay down the backlog, an idea he has advocated in the past. However, she said, “He will propose a way to pay down the bills faster,” although she declined to share details. “We’ll leave that” for tomorrow’s budget address, she said.