Capitol Fax

Rich Miller's commentary on State Government

The chickens are coming home to roost.

In fact, more chickens are on their way than we've ever seen before.

And they're mad.

Gov. Rod Blagojevich spent years ignoring and exacerbating the state's structural budget deficit, What that means is he did a lot of one-time budget fixes with one-time revenue sources to stem the tide of red ink, while at the same time expanding state spending exponentially.

You can get away with that as long as other revenues are growing enough to help patch the rest of the budget holes, but state revenues have tanked along with the national economy, and we're in big trouble. Hence, that ginormous flock of angry chickens heading our way.

Comptroller Dan Hynes predicted last week that next fiscal year's budget deficit could be as high as $9 billion. Considering that the budget is about $60 billion, and the money the state actually controls in the budget is about half that amount, we're looking at a problem unseen since the Great Depression. The fiscal year, by the way, begins July 1st.

Hynes' estimate is based on a $4.3 billion deficit in the current fiscal year and a relatively flat growth in state revenues in the coming fiscal year.

Flat revenue growth may be overly optimistic. The legislature's Commission on Government Forecasting & Accountability's latest report, headlined, "The patient has taken a turn for the worse," suggests that expected state revenues could be $1.6 billion lower in the current fiscal year than they were last fiscal year. And things aren't exactly looking up for next year, either.

Comptroller Hynes' deficit projection also relies on no spending growth for the rest of state government. Every dollar of growth adds to the deficit. But expecting flat growth is probably not realistic, as recessions traditionally provoke and even require more government spending, not less.

There are two areas of hope.

First, the federal stimulus plan could bring $3 billion into state coffers next fiscal year, lowering Hynes' projected deficit to $6 billion. But as I write this, the stimulus package has hit rough waters in the US Senate. While a deal still looks likely, nobody really knows yet what the states will get out of the final package.

Hynes also reported that if state revenues for July and August match last year's take from the same period, then the current year's deficit would be lowered to around $2 billion. Still, Hynes reported last week, "Without a major infusion of cash from borrowing or another source, the state will be virtually insolvent."

There are some very difficult choices ahead.

One option, albeit distasteful, would be to leave the Medicaid payment cycle where it is, which would be hotly opposed by not-for-profit service providers of all stripes. They're already struggling mightily to make ends meet, and some are actually going out of business while they wait for state checks that never seem to come. The deficit could be lopped further, perhaps about $1 billion, if the political heat could be sustained, which it probably can't.

The state's mandated pension payment will rise by $1.2 billion next fiscal year, which may get a closer look by legislators. $500 million of that payment will be required to make up for investment shortfalls by the pension funds, according to Hynes. The rest is a mandated increase in order to eventually reach "full funding" of the systems.

So, if the General Assembly decides to shaft Medicaid providers and short the pension funds, and if revenues bounce back in late summer and the stimulus passes Congress intact and legislators completely rein in spending for next fiscal year, the budget deficit could be pared to a bit over $2 billion. It might be possible to bond future proceeds from the recent sale of the 10th state casino license, which would lower the deficit a bit more. Huge state employee layoffs, giant cuts to schools and universities, significantly reduced services for the poor and everyone else would be required to balance the rest of the budget without a tax increase, if the General Assembly could somehow defy logic and muster up the insane courage required to do all that.

That's a whole lot of "ifs."

Cue the chickens.

Rich Miller also publishes Capitol Fax, a daily political newsletter, and thecapitolfaxblog.com.

Senate Week In Review

February 2-6, 2009, A view from the Illinois Senate Republican Press Office

SPRINGFIELD ­ Lawmakers returned to Springfield for the first time following Rod Blagojevich's impeachment trial, and began to focus on more routine legislative matters such as introducing new legislation. More than 1,000 proposals for new legislation had been filed by week's end.

Top legislative leaders also had their first meeting with new Gov. Pat Quinn. State Sen. Tim Bivins (R-Dixon) said lawmakers are eager to work together, in a spirit of cooperation. He said that bipartisanship will be imperative to address the state's worsening budget crisis.

According to a report released this week by Comptroller Daniel Hynes, the state could be facing an unprecedented $9 billion budget deficitdouble the budget hole that Blagojevich faced when he took office in 2003. Although some questioned the accuracy of Hynes' estimate, most officials acknowledge that Illinois faces severe financial problems.

The Comptroller said the state will have $23 billion on hand when the fiscal year begins in July, but Illinois' obligations are approximately $32 billion. Even if the federal government provides as much as $3 billion in the form of possible stimulus funding, that could leave a $6 billion deficit that lawmakers and the governor must address.

It's unknown how the new Governor will fill the gap, but he has requested an additional month to pull together his Fiscal Year 2010 budget proposal. Gov. Quinn now has until March 18 to deliver his first budget address. Many lawmakers are stressing the need to scale back programs and halt any expansions, while others speculate that a tax increase of some type is in the works.

Though the state is looking for ways to cut corners, a recent study shows that closing the beleaguered Pontiac Correctional Center will not result in substantial savings. The Blagojevich Administration had advanced the closure of the facility as a way to save an estimated $4 million. However, Bivins said that the Illinois Institute for Rural Affairs at Western Illinois University found closing the facility may result in $16 million to $26 million in lost revenue, jobs and economic opportunity.

The project manager for the study said that he wants the new Governor to be aware of these updated numbers before Gov. Quinn makes a decision on the fate of PCC. Quinn has said he will review the closure.

Another report was released by the Illinois Historic Preservation Agency this week, which shows that attendance at Illinois' historic sites fell by almost 13 percent in 2008. Fewer than 2 million people visited historic sites last year, as opposed to nearly 2.3 million in 2007.

Twelve historic sites were closed by former Gov. Blagojevich in late 2008 in an attempt to free up the revenue to fill an estimated $2.5 billion budget hole. The closures were highly criticized, particularly closures associated with President Abraham Lincoln as the state prepares to celebrate the 200th anniversary of his birth.

Also this week, Gov. Quinn signed two bills into law. Senate Bill 1132 restores funding to the offices of the Attorney General, Secretary of State and Treasurer. Blagojevich had cut those budgets last fall and each of the offices was forced to lay off employees, institute hiring freezes and furlough days, and identity other ways of saving money to compensate for the lost revenue.

The measure also restores $9 million to the Department of Natural Resources' budget for wildlife and conservation programs. It was important that this money was restored in order to guarantee a $16 million federal match.

Quinn also signed Senate Bill 2757, which exempts health-related research facilities from the smoking ban, as well as common smoking rooms in veterans' long-term care homes and workplaces in retail tobacco stores. It also requires the Department of Public Health and law enforcement agencies to issue citations to enforce the smoking ban.

PA Reunites Families

A while back, you did an article in The Prairie Advocate about the Illowa Thrift Store in downtown Fulton. I told you my grandparents were from Lanark and buried at Cherry Grove.

To make a long story short, my Grandma Zola's relatives came down and found me! Grandma died in the '30's, long before I was born. They read the article and decided to check me out. Lorna Applegate and Marliss Bonnell and my family are all together again.

It's so much fun to have this great, wonderful connection after all these years. And all this happened because of you, Tom. You can imagine the stories we tell to fill in all the lost areas, on both sides of the family, and the pictures, and just plain talking and talking 'til you feel you've really known them all your life.

So thanks, Tom, for giving me the best thing ever, my Lorna and Marli.

Happy 2009, Tom.

Sincerely,

Diana Van Zuiden

(Still at Illowa Thrift in Fulton, all volunteer run, for 12-1/2 years. Right now, we have $3 bag sale, and free winter coats!)

Controlled Chaos

According to a recent editorial in the Chicago Tribune, Israel's invasion and subsequent occupation of Gaza provided "only marginal improvement in its security at a significant cost." The cost, claim the Trib editors, was the invigoration of Hamas, who apparently suffered only "limited damage" as a result of the Israeli attacks. This assumed cost may have indeed been factored in by the Israelis, however, as but a minor and short-lived political expense for the sake of obtaining goals that were ultimately achieved.

The last thing the Israelis need or desire in the region is stability. For with stability comes the possible re-assessment of U.S. policy in the Middle East; and of particular concern to Israeli elites, the potential for the re-examination of the "special relationship" shared with the United States.

The much-preferred alternative to stability for Israel, and by extension the United States (witness current strategy in Iraq), is a variant of "controlled chaos," whereby pressure is applied or action is taken to either abet or hinder the promulgation of "insurgent activity," depending on whatever geo-political or regio-political requisites are deemed worthy of meeting at any given time.

Cordially,

John Jankowski

Stockton, IL

Making a Laptop for Every Student (or Family) a Reality

Frontier Communications hopes to place thousands of new mini laptops in the hands of information-thirsty school kids this winter. At Frontier, we live and work in the communities we serve, and we want to help our customers, many of whom are our neighbors and friends. We at Frontier want to provide more services, for less money. We want our customers to feel good about choosing us as their phone, Internet and entertainment provider.

When we're out in our communities, many people tell us they do not have personal computers at home and wish they did. They want to connect with family and friends and surf the 'Net. We get it, and to help, we're including a mini laptop ideal for e-mail and searching the Internet with certain bundled packages of phone and High-Speed Internet service.

For new customers, we have significantly reduced the price ­ by nearly 85 percent ­ through year-end on our all-digital satellite TV package with the most channels, including local stations. As we manage through tougher economic times, our homes really become our havens. If we have our families and friends around us, an Internet connection and some great television viewing, things just feel better. At Frontier, we understand that people really need and enjoy home entertainment, especially now.

The benefits really start adding up when customers sign with Frontier for phone, Internet and satellite television programming. Or if someone simply wants the Internet, Frontier provides standalone High-Speed Internet service, which also allows you to receive inbound calls and to place outbound 911 emergency calls. We're responsive to whatever you need. We're local, and we're committed to the future of the communities and customers we serve. We're not reducing services; we're giving more, because we care about our neighbors and friends and the people we do business with.

Finally, we are a financially strong Fortune 1,000 company, listed on the New York Stock Exchange and a member of the S&P 500 Index. Frontier has a record of customer commitment and satisfaction and outstanding investment in our robust network infrastructure. We're a solid company, a local company, with your neighbors as our employees, experienced in providing great customer service. We receive strong, consistent rankings from customers and the investment community. In contrast, some service providers may be on the brink of bankruptcy and have bottom-rankings in terms of consumer satisfaction. The question for all consumers residential and business, and for our communities is, do you really want a service provider that is not financially stable, open and committed to you?

Make the choice that you can feel good about ­ Come home to the best in telecom services and customer commitment ­ Come home to Frontier. Please contact me @ (815) 772-7623 or Email kent.klima@frontiercorp.com for more information on any of Frontier's services. I can help you!

Kent Klima

Frontier Communications

Capitol Report

By Jim Sacia, State Representative, 89th District

So, what is the meaning of money? Most of you who read my columns work for a living, like I do. Most of you make between $20,000 and $70,000 per year. We pay our taxes. We live within the boundaries of the law. And, we hope someday to retire.

I sometimes think that we as legislators can lose perspective. Our $59 billion state budget, for example, allocates millions of dollars for "this project" and hundreds of thousands of dollars for "that project". Can you remember when being a "millionaire" really was considered to be a big deal? (I still think it is, as I'm sure you do.) Here's the point: our country is in a financial crisis. All of us have become familiar with terms like "bailout" and "stimulus package", and we're all asking "where will the money come from?"

More than $700 billion of our tax dollars have already been allocated to bail out Wall Street and some of our largest banks. Then we read about a bailed out bank purchasing a new $50 million airplane. Wells Fargo Bank just cancelled a planned 14-day junket for their top executives earning 6 and 7-figure bonuses. They cancelled only because the press was riding them hard on the issue. A CEO of another bank receiving a federal bailout just spent more than $1 million remodeling his office, including the purchase of a $1,400 trash can. How out of touch can some people be?

You and I just go on paying our taxes and hoping our jobs are still there and our 401Ks aren't completely depleted before it's all over.

The now-famous federal stimulus package totaling more than $800 billion is absolutely frightening. Do you realize how much money that really is? If you spent $1 million a day since the day Jesus was born about 2009 years ago you still would not have spent a total of $800 billion! You need to read that again. That information is factual.

I'm all for economic stimulus, but for my money, I want to see job creation. Do you realize that of the $800-plus billion in the federal stimulus package, only about $30 billion is earmarked for highway and bridge construction for all 50 states?

China is also in a financial crisis and is instituting a $500 billion stimulus package to improve their roads and bridges. Maybe it's not a fair comparison, but we must remember it's called "economic stimulus" because it's supposed to stimulate the economy and help create real jobs for real people. I'm still trying to figure out how a $246 million tax break for Hollywood movie producers to buy film included in our federal stimulus package is going to help create real jobs for our families.

As always, you can reach me, Sally or Barb at 815/232-0774 or e-mail us at jimsacia@aeroinc.net. You can also visit my website at www.jimsacia.com. It's always a pleasure to hear from you.

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