Gov. Pat Quinn on Tuesday issued an outline of his likely budget for the next fiscal year. It won’t be pretty.
Most state operations should expect a 9 percent reduction in the next budget, Quinn warned, and “further and larger reductions are needed to stabilize Medicaid costs.”
The governor also said he still wants the General Assembly to approve his plan to pay off old state bills by borrowing up to $7 billion.
The information is contained in an economic and fiscal policy report that must be filed annually by Quinn’s budget office under recently enacted laws designed to improve the state’s budgeting process.
The report is not the detailed budget proposal that Quinn will present to lawmakers in March. However, it does give an outline of what to expect when Quinn makes his budget presentation.
“We’re in a squeeze,” said David Vaught, Quinn’s budget director. “The pension costs and the Medicaid costs are going up more than the rate of inflation and more than the revenue growth. That squeezes everything else out.”
Consequently, Vaught said, other areas of government have to look at 9 percent reductions to compensate.
“Most likely (employee headcount) will go down,” Vaught said. “I don’t see a lot of prospect in the collective bargaining that’s going to be under way for a lot of good news for the employees.”
Vaught said programs also are likely to be cut. The administration is required to file a three-year budget projection as part of the report. It shows a $350 million reduction next year in human service programs, listed on the report as “protecting the most vulnerable among us.”
“These will be painful cuts,” Vaught said. “You don’t cut 9 percent out of budgets that have already been cut just by finding a little extra here and there. It’s going to be real cuts that affect real people.”
The General Assembly last year approved some Medicaid reforms that are supposed to save $700 million over five years. Quinn also proposed a 6 percent reduction in Medicaid reimbursement rates last year, but that was rejected by lawmakers.
Still, Medicaid costs continue to increase, and Vaught said something must be done to further control those increases.
“We have to have real cost reductions, however they are arrived at, that begin to get this under control,” he said. “If we can get the rate of growth down, it will be a great victory.”
Quinn is also working to convene a work group to discuss ways of controlling soaring pension costs. The state’s pension costs are expected to increase by $1 billion in the next budget.
There is heated disagreement about whether benefits for current employees can be reduced. But, Vaught said, many attorneys believe that annual cost-of-living increases for pensioners could be reduced without violating the state constitution.
He also said more money could be put into the system from someplace other than the state. That could include higher employee contributions or “more from the real employers of our K-12 educators.”
“Three quarters of pension payment is for employees that are not state employees,” Vaught said. “You have a different employer negotiating pay and benefits, but then the state picks up the pension.”
Still, Vaught said things are better than they were.
“I think we are doing better. We have plenty of challenges in Illinois, but I think we are going better,” Vaught said.
Doug Finke can be reached at 788-1527.