In his 1817 autobiography, British poet Samuel Coleridge wrote of a "willing suspension of disbelief" that enables a reader to become caught up in a work of fiction.
Gov. Rod Blagojevich must have been hoping for a similar state of mind among legislators and other Illinois citizens last month when he presented his proposed budget for the fiscal year that starts July 1.
The cornerstone of his financial plan — a purported $800 million in savings next year from cutting future pension benefits — is as illusory as Coleridge's Ancient Mariner, while his scheme to boost school funding with dollars skimmed from other accounts appears so much wishful thinking.
Indeed, some Republicans pronounced the $53 billion request near dead on arrival, while many Democrats would only term it a good starting point.
And Blagojevich's key legislative ally in last year's overtime budget struggle, Senate President Emil Jones, took umbrage at the governor's cavalier dismissal of any effort to revamp the state's system of school finance.
"I don't appreciate him taking a shot at reforming education," said Jones, for whom the issue is a top priority.
For Blagojevich, though, the main obstacle in crafting the budget was closing an estimated $1 billion-plus gap between resources and commitments — including a legal requirement to boost funding by some $600 million for pension systems covering state workers, university employees, suburban and downstate teachers, judges and legislators — without increasing income or sales tax rates.
The pension increase is mandated under a 1995 law calling for higher annual contributions to put the systems on a sound financial footing by 2045. Now, the systems' assets are some $35 billion less than the benefits accrued by current and retired workers.
Besides money from the state, the systems are funded with contributions from employees and by interest earned from investing those dollars. In theory, each year the state should set aside enough money so that, combined with employee contributions and expected interest, there will be enough in the kitty later on to cover the cost of benefits earned that year. In practice, the state rarely has met that burden, while legislators and governors regularly have sweetened benefits. As a result, Illinois now has the largest unfunded liability of any state and a system Blagojevich contends is no longer affordable.
The governor's proposed solution calls for cutting benefit costs by such moves as tying automatic increases to the inflation rate, rather than a flat 3 percent a year; increasing the minimum age workers can retire with full benefits; restricting more generous benefit provisions to police only, not highway workers, prison guards and others in jobs deemed unusually hazardous; and requiring school districts to fund increased benefits due to end-of-career pay raises.
In all, Blagojevich said the changes would save the state some $55 billion by 2045. But the Illinois Constitution bars the state from reneging on its pension commitments to current and retired workers. Thus, the governor's plan would cover only employees hired after its enactment.
Decrying a two-tier benefit system, public employee unions promised to fight the plan tooth-and-nail. Still, whether the state currently is too generous is a legitimate topic for debate.
What should be patently clear, however, is that whatever changes are adopted in future benefits, the savings in fiscal year 2006 will be miniscule at best, and nowhere near the almost $800 million the governor claims — roughly 30 percent of the amount the state is required to pay next year to cover benefits already earned — and constitutionally untouchable — by the roughly 650,000 folks now covered by the five systems.
Indeed, some Republicans pronounced the $53 billion request near dead on arrival, while many Democrats would only term it a good starting point.
In fact, the governor's main budget document estimates that the systems' aggregate unfunded liability will increase by 6 percent — more than $2 billion — under the proposal. But trying to take credit today for savings that might occur decades in the future allows the governor to pretend the dollars are there to meet other demands.
While not as egregious a scam, the governor's plan for boosting school funding is also suspect, relying as it does on money siphoned off a host of special funds. Only "surplus" cash would be drained, the governor argues, to bankroll a school endowment pot out of which $140 million would go to local schools in 2006.
But some of the target funds have excess cash only because the fees that sustain them were raised two years ago beyond the amount needed to cover related regulatory programs, a practice that a Cook County circuit judge has ruled unconstitutional. Should the Illinois Supreme Court agree, much of any anticipated windfall could well evaporate.
Moreover, should the scheme withstand court scrutiny, the $140 million falls far short of what's needed to boost minimum per-pupil spending guarantees to the level experts recommend. The sum — not even a third of the increase in income tax collections the administration is forecasting — also is far below the 51 percent of new revenue Blagojevich said in 2002 that he wanted to give schools.
Though less problematic, some of the governor's other proposals also may find the going difficult. Jones says he opposes the 75-cent-per-pack increase in cigarette taxes Blagojevich wants to underwrite borrowing for a host of construction projects, although other legislators were pleased to see the governor finally agreeing to propose a revenue source — any revenue source — to cover bond costs.
Prospects hardly seem brighter for the sales tax on canned computer software Blagojevich is pushing to bring extra dollars to the CTA and other mass transit operations, a retread of a proposal that got nowhere last year.
But as several lawmakers observed, the governor's plan is the starting point. In coming months, Illinoisans will learn just how far the "willing suspension of disbelief" can carry it.
Charles N. Wheeler III is director of the Public Affairs Reporting program at the University of Illinois at Springfield.
Illinois Issues, March 2005
