As the need
for government restructuring grows increasingly critical, Republican
legislative leaders and the Governor continue to offer reform proposals
intended to help right the state’s fiscal course.
Such reform is particularly
important, according to a recent Chicagoland Small Business Economic Outlook
Survey that indicates while most employers are planning to grow their business
this year, they continue to lose confidence in local, state, and national
Governor Bruce Rauner is expected to
once again stress the need for economic recovery and comprehensive government
reform during his second State of the State address on January 27.
Pension reform proposal could save taxpayers $1 billion
Facing an unprecedented unfunded
pension liability of $111 billion, the highest in the country, Governor Rauner,
Senate Republican Leader Christine Radogno and House Republican Leader Jim
Durkin are calling for passage of a pension reform plan that they say would
save taxpayers $1 billion each year.
The Republican leaders are
supporting a pension reform plan first proposed by Democrat Senate President
John Cullerton, founded in a “consideration model” that gives government
employees a choice in future benefits. The plan is a refined version of pension
reform legislation embraced in 2013 by many Republicans, Democrats and union
leaders—specifically written to comply with Illinois’ Constitution.
Under the proposal, employees
could choose to keep compounded yearly cost-of-living adjustments, but their
future pay raises would not be calculated into their retirement benefits. Or
they could choose reduced cost-of-living adjustments, but their pay raises
would be calculated into their retirement benefits.
Governor Rauner said he believes with
the proper wording, this pension reform legislation will be constitutional.
Last year, the Illinois Supreme Court ruled that a more comprehensive pension
reform law was unconstitutional.
The Republican leaders stressed
that if implemented, the bipartisan plan could free up funding for human
services, education, and other programs. At this time, nearly 25 percent of the
state’s General Funds budget is dedicated to pension payments—almost $8
Leader Durkin said that if
President Cullerton introduces the plan in the Senate, he will introduce the
proposal in the House of Representatives.
Survey shows most small
businesses planning to grow
The annual Chicagoland Small Business Economic Survey has good
news for job seekers and local economies, with 76 percent of respondents
stating that they plan on growing their business in 2016. In addition, 38
percent expect to hire more workers, and 52 percent plan on expanding within
Illinois, up from 45 percent last year.
However, business owners report
that they are also losing confidence in local, state, and national economies.
Just 28 percent of business owners think Chicagoland’s economy will strengthen
over the next year, down from 42 percent the year before. Also, nearly half of
respondents feel negatively impacted by local taxation.
The survey shows the need for structural reforms to state
government, reforms that bring confidence to the state’s economy, create jobs,
and allow Illinois to be more competitive.
State of the State address
On January 27, Governor Rauner will
deliver his second State of the State address. Like 2015, the Governor’s
address is expected to focus on job creation, making Illinois more competitive,
boosting the state’s economy, and stressing the need for a balanced budget and
structural reforms to state government.
Governor Rauner’s speech comes as the
state is operating without a budget and is on pace to spend $4.6 billion more
than it’s expected to take in for the fiscal year, which began July 1, 2015.
Much of state government has remained operational due to spending authorized by
court orders and consent decrees.
Republicans have joined the
Governor in calling for structural reforms to state government and passing a
balanced budget as soon as possible. Democrats, however, have refused to
compromise on reforms, instead focusing on another tax increase as a way to
fill the budget hole.
During the State of the State
address, the Governor generally reports on the condition of the state and
outlines his top priorities. It differs from the Budget Address, which is
scheduled for February 17.
Overhauling Chicago Public
Another proposal introduced
during the week would give the Chicago Public Schools (CPS) system the tools to
fix its serious fiscal crisis—without bailing out the system at the expense of
taxpayers in suburban and downstate communities.
CPS are facing a $480 million
budget shortfall, a fiscal crisis that the state’s leading Republicans say
demands an overhaul of the current system. Republican legislative leaders
introduced a proposal on Jan. 20 that allows for the creation of an independent
authority to assume control over the school district.
The proposal offered by
Republican leaders is consistent with current state law governing all other
school districts in Illinois, which allows the State Board of Education to
remove the current CPS Board of Education and establish an independent
authority to run the district. The independent authority would run the district
until the State Board of Education determines that CPS is no longer in
financial difficulty. The legislation makes it clear the state is not liable
for the school district’s debt.
Despite a substantial financial
advantage of about $600 million dollars in state funding, CPS and its
leadership—buoyed by years of support from the state’s Democrat legislative
majority—have dug a financial hole for the district that isn’t easily overcome.
In response, CPS hopes to rely on long-term bonds to pay for hundreds of
millions of dollars in short-term operating expenses, a response Republican
leaders say is no solution to the district’s fiscal woes.