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Government State

Analysis: Quinn faces big questions on state budget

In this Feb. 1 file photo, Pat Quinn greets lawmakers before delivering his State of the State address at the Illinois State Capitol in Springfield. On Wednesday, Feb. 22, 2012, Quinn will deliver his fourth and perhaps most anticipated budget proposal.
In this Feb. 1 file photo, Pat Quinn greets lawmakers before delivering his State of the State address at the Illinois State Capitol in Springfield. On Wednesday, Feb. 22, 2012, Quinn will deliver his fourth and perhaps most anticipated budget proposal.

SPRINGFIELD – Gov. Pat Quinn is about to deliver his fourth and perhaps most anticipated budget proposal. He already has cut spending and raised taxes, yet Illinois remains in dire financial shape, in large part because of ballooning health and pension costs. When Quinn delivers his budget speech Wednesday, he’ll face big questions about where to go next – questions that could affect local schools, towns scattered across Illinois, retirement security for tens of thousands of people and health care for millions.

In recent days, he or his office have spoken about cuts to Medicaid and constitutional officers’ budgets and closing state facilities.

“Some of the news is not going to be happy news, but necessary news,” Quinn said Sunday. “You’ll hear some people gnashing their teeth on Wednesday afternoon that have been kind of used to the budget the way it is.”

Here are the key questions he’ll face:

How many state facilities could be closed?

Quinn told The Associated Press last week that his budget will call for closing “quite a few” state facilities. He told WBEZ radio that those facilities will include youth prisons. Illinois has eight, scattered from Chicago to deep southern Illinois.

“You have to make some sound decisions. I have,” Quinn told the station. “I have the courage to back ‘em up, and this budget year we’ll go forward with facility closures in a variety of places.”

Two facilities, one in Jacksonville and one in Tinley Park, already face closure as part of an effort to get people with mental disabilities and illnesses out of large institutions and into community care. The other institutions that could be targeted remain a mystery. Five places that have reason to worry are Chester, Dixon, Lincoln, Murphysboro and Rockford.

How deep will the Medicaid cuts be?

Quinn says the $14 billion Medicaid program should be chopped by $2 billion. It’s not clear what that will mean for the 2.7 million Illinois residents who depend on the program for some or all of their health care. The governor could propose cutting rates paid to doctors and hospitals for providing care to the poor. That’s what he tried last year, unsuccessfully. It’s easier to call for cutting doctors’ pay than cutting benefits directly, but that doesn’t mean it’s painless. Some struggling hospitals could reduce services or even close. More doctors might refuse to see Medicaid patients.

Other options would hit patients more directly. Quinn could propose tightening eligibility so that fewer people qualify for care. Or he could try to eliminate optional services, such as long-term nursing home care or help with some prescriptions.

How will Quinn pay for new spending?

In his State of the State address, Quinn offered a handful of proposals that would add to the state’s budget difficulties by increasing costs or reducing revenue. He said little about how he would fill the new hole, promising that details would come in his budget. So now Quinn has to explain how he plans to replace the $160 million Illinois would lose under his proposal to eliminate a tax on natural gas. He also has to spell out his ideas for $140 million worth of tax breaks to families with children and to businesses that hire unemployed veterans.  Other proposals, such as spending more on early childhood education, boost the cost of his ideas to perhaps $500 million.

In his speech nearly three weeks ago, Quinn said, “To create jobs and grow our economy, we must continue to invest in Illinois and help everyday people.”

Now the pressure’s on him to explain how to do that while also digging out of the state’s deep budget hole.

What does he want to do about pension costs?

The retirement systems for teachers, university staff and state employees make up a huge — and growing — chunk of the Illinois budget. Next year, the state must contribute $5.3 billion to the pension systems, eating up roughly $1 of every $6 the state takes in.

The numbers are so big partly because officials have promised generous retirement benefits to government employees. But it’s also because the state has sometimes failed to make its scheduled payments over the years and because that payment schedule ramps up dramatically.

Quinn has hinted that he’d like to make downstate and suburban Chicago schools share the retirement costs for their employees, as Chicago schools do. If he goes that route, Quinn can expect a hurricane of opposition. Local school officials will line up with predictions of property tax increases, classroom cuts and layoffs.

Another option is cutting retirement benefits. Quinn and the Legislature already have reduced benefits for state employees hired now and in the future. They haven’t done the same for people already on the payroll, partly because of the influence of the workers’ union and partly because the Illinois Constitution says pension benefits “shall not be diminished or impaired.”

There may be ways to finesse the issue, however. Perhaps employees could be required to contribute more money toward their pensions or to retire later to collect them.

He could also propose scrapping the current, somewhat arbitrary payment schedule, which requires bigger and bigger contributions every year until 2045. Quinn seems cold to this possibility, however.

What will he do about unpaid bills?

At any given time, state government is billions of dollars behind in paying its bills to the people and organizations that provide services. Businesses, schools, hospitals and charities all go months without being paid for work they’ve done on behalf of the state. Does Quinn have a plan for fixing the problem?

In the past, he proposed borrowing money to pay the bills. State government would still owe money, but that debt wouldn’t fall on the shoulders of struggling organizations across Illinois. But he proposed borrowing more than was needed, fueling fears that he was interested in spending even more money, not just paying overdue bills.

If Quinn wants to take another shot at his “debt restructuring” idea, he’s keeping quiet about it.

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