Last week, Gov. Bruce Rauner signed a stopgap budget hours before Illinois’ second fiscal year in a row started without a spending plan. The bipartisan compromise allocates funds for most state operations through the start of January and funds schools for a full fiscal year.
On a visit to Peoria on Wednesday morning, Rauner sat down with Journal Star political reporter Chris Kaergard to talk about that budget and what comes next.
An edited transcript:
Q: A significant part of the budget deal — Chicago school pension funding parity — relies on the Legislature passing meaningful pension reform. How does that “only if” part of the agreement help guarantee that in six months we aren’t going to be right back where we started? And what else helps prevent that?
A: This stopgap agreement, this compromise, was a really important step in the right direction. It doesn’t solve our problems. We need a truly balanced budget for the long term, we need more econ growth, we need to protect our taxpayers. But this agreement gets us a step towards that. It did three really important things.
First, it prevented passage of Speaker Madigan’s supermajority budget plan that was $7 billion out of balance. If that budget had passed it would’ve been a disaster. Spending would’ve been way beyond what we could afford, and it would’ve necessitated a massive tax hike without reform.
Number two, this agreement got our schools funded with an affordable amount more money so schools could open on time, we could properly support our teachers, our students and our low-income neighborhoods that really need more support from the state. I feel very good about that. It was a great victory for our school system — without bailing out the city of Chicago. Speaker Madigan’s supermajority wanted to bail out Chicago at the expense of state taxpayers. They were demanding half a billion dollars more from the state into the city of Chicago. That was wrong. We stood up against it and we defeated that effort on their part. Chicago did get a little bit more money, but they deserved to get it. They got some more money as part of a poverty grant program that I support, but all districts around the state got some more money, and that’s a good thing for the people of Illinois. So that’s a great victory
And the other critical thing that you referenced, we got agreement for the first time on a bipartisan basis that reforms — significant reforms, especially pension reform — are necessary and are on the table, and we’re going to vote on those this January. We had never had that full agreement before, we got that done. That’s a huge step in the right direction. We passed a pension parity bill with bipartisan support, but that will only come to my desk in conjunction with broad-based reforms for pensions and other pro-growth, pro-taxpayer initiatives that are essential for our long-term balanced budgets and prosperity.
Q: Let’s talk about some of those other reforms. What are some of your other “must haves” or things that you anticipate having a vote on in January? What other issues do you expect before you agree to a full-year budget in January?
A: That’s really the key issue. As you know, we’ve been going down a pretty treacherous road in Illinois for a long time. We’ve been losing jobs, we’ve got the highest property taxes in America, we’ve had unbalanced budgets going back 25 years, our family incomes are lower than they were 17 years ago, we’ve still got a lot of corruption and cronyism and patronage.
We’ve been going down a long, bad road for a while. We’ve got to reform. We need three types of reform. We need economic reform to grow more jobs, we need government reform to protect taxpayers and get more value for taxpayers, and we need political reform so our democracy actually works for all of us on a two-party basis. So, we’re advocating a few initiatives that we think are essential to get IL back on a positive track of growth and prosperity.
First, we need economic reform. Right here in Peoria — where I come very often up from Springfield — one of the best employers in America is Caterpillar. They’re struggling, they’ve got some economic headwinds. But they want to grow in Illinois, they’d like to expand their good, high paying jobs here. But worker’s comp costs five times as much, they told me, as in the states where they build their equipment all around America. They can’t compete in Illinois. They want to grow here, but they can’t. So, we need economic reform through worker’s comp changes so we can protect our injured workers who are hurt on the job but make sure that the system doesn’t have any more fraud or abuse or outside interests in it and we can have a worker’s comp system that works for everybody and is affordable. Critical priority one.
Second priority, we need to deal with our property taxes. They’re too high; they’re the highest in America. They’re unaffordable. It’s hurting our working families, it’s hurting our small business owners, and to do that, we need to get the unfunded mandates off from Springfield and get more local control of the cost of government and the cost in our school districts and let each community and their own citizens, their own residents, decide how their government and the schools should be run without the mandates from Springfield. That’s the second big reform.
Third big reform we’ve got to have is pension reform. And the good news is, we’ve got broad-based agreement that pension reform is on the table and going to get voted on in January. If we do it the right way, the way President Cullerton and I have agreed, we can save billions of dollars for Illinois taxpayers in the future while protecting existing pension holders — don’t take away any benefits that have been accrued so far — but give more affordable choices for workers going forward for future work that can save taxpayers money.
The final issue we’ve got to get done is political reform. You know, our democracy really isn’t working. We’ve been a one-party state for a long time. Speaker Madigan has had the supermajority, he’s controlled the Legislature for more than 30 years, and his spending has always been out of balance, the regulations have pushed employers away, and that’s caused us to be in decline. Unfortunately for us, we also have had two governors from his same political party who almost were competing with him to see who could spend more, who could have bigger, out-of-balance budgets. That was a disaster for 12 years. We’ve got to right that ship.
To do that, we think we need to do two things. One, we need fair maps, we need redistricting reform so we can have competitive general elections, we don’t have these gerrymandered districts any more, we can have true democratic general elections. The other thing I believe we’ve got to have is term limits. The power of incumbency is too strong. People shouldn’t be locked into office for 20, 30, 40 years, making money from special interest groups and accumulating the power. They should leave office after eight years. I’m gonna do that. I will not serve longer than eight years if people want me to serve again. I don’t think anybody should stay in one office any longer than eight years. That’s plenty of time to serve and then to move on and to do something else. So we’re going to be pushing term limits and fair maps very strong the rest of this year.
Q: One of the criticisms of this budget is that it still allows the state to continue to spend more than it’s taking in. A lot of the expectation out there — and you’ve alluded to this several times — is that in addition to spending reductions, in addition to reforms, there’s going to have to be a tax increase. The number that’s been bandied around is 4.85 percent, which at median Illinois household income would mean an additional $600 on the tax bill for Illinois families. Is that what we should expect? What stops it from being more?
A: Well, Speaker Madigan came out last December and publicly said he thinks the income tax should go right back up to 5 percent as a start and maybe higher than there. I strongly disagree with him on that. Raising taxes is not the answer. I’m open to some new revenue, and I’ve said that I’ll compromise on that. But what we’ve got to do is get economic reforms for more jobs, and we’ve got to protect our property tax payers from further hikes. Those are essential for part of a grand compromise, and I’m willing to do that. You know, the reality is you can look at other states around the country — New Jersey is an example, or Connecticut or others — where they’ve got deficits and debt and unfunded pensions and all they do is raise their income tax every few years to cover it, and their employers are leaving. New Jersey’s already put in one of the highest graduated income taxes in America. They can’t fund their pensions. They can’t balance their budgets, because they haven’t taken on the structural reform needed to get really balanced budgets. In Illinois, we need to reform, and the simple fact is that if we don’t grow our economy at least as fast or faster than what government spending has gone up, we’ll never have balanced budgets. Economic growth creating more jobs and higher incomes is the real answer to the long-term prosperity for Illinois.
Q: It’s been a contentious last 18 months — and we’ve touched on this a couple times before on your past visits — but looking back on everything that’s happened, are there things that you can think of that perhaps you would’ve done differently or approached differently in that time to help you do your job better going forward?
A: Well, the one thing I probably, all of us should’ve done a better job of, I think, is communicate with you and others in the media as well as directly to the voters to get people to really understand what’s at stake and what’s going on. It’s hard to message, there’s a lot of complex issues. Your average person in Illinois doesn’t really even know what worker’s comp is. The average person doesn’t know really what’s going on in the pension system. They know their taxes are too high, they know we’ve got a deficit. But getting that message out and helping the people of Illinois really understand what’s going on, that’s hard. We probably should’ve done more of that, and come up with more creative ways to do it. We’ll try to get it better.
I love my job working for the people of Illinois. I’m a volunteer, I’m doing this out of love for the state. We’re doing big things and good things. For example, we’ve already transformed much of state government, but people don’t know it. We’ve cut more than $800 million out of wasteful spending inside state government already. Huge transformation. And we’ve put in innovateive new contracts with our government employee unions that are transforming our various state agencies. We are now not paying salary increases at all based on seniority or longevity. We’er paying them based on productivity improvements and taxpayer savings. We’re giving bonuses to state employees for every dollar they save the taxpayer, we give a certain percentage of that back to employees. Very motivating, very great for morale and productivity. Never been done before in Illinois, and it’s transforming the way government services are being provided. We’re doing great things, changing state government for the better for the taxpayers and for our hardworking families here and we’ve got to get that message out more.
Q: Part of the stopgap involves not paying back $454 million in “interfund borrowing” — what most people know as fund sweeps. During the campaign you came to East Peoria, made a stop where you unveiled your conservation advisory group. While you were there, you said, “We should put the money where it was dedicated to go” and talked about trying to end fund sweeps. Long term, are you still committed to that, and how do we do that so that so the money people pay into these funds ends up being used for its intended purposes.
A: I don’t like what’s called fund sweeps. Money should go where it was originally dedicated to go. All this is a symptom that this is only a stopgap. It is a short-term measure, it’s not the long-term solution. And it just shows how broken our system is. These fund sweeps have been going on for years, and the General Assembly continues to push for fund sweeps. I’d like to end that practice. The key to doing it is balanced budgets — truly balanced budgets — and more economic growth. If we expand our tax base and have more jobs and more employers coming here, we will have the revenue so that we don’t have to have fund sweeps and we can have balanced budgets. Reforms are essential. We need term limits, fair maps, we need regulatory change for workers comp so great companies in Peoria will add more jobs, and we need to protect our taxpayers from high property taxes by bringing down property taxes through local control. If we get these things done, Illinois is going to have a very bright future, and I’m very excited.
Chris Kaergard can be reached at email@example.com or 686-3255. Follow him on Twitter @ChrisKaergard