Ralph Martire | Rauner's budget proposal fails students

Ralph Martire | Rauner's budget proposal fails students

By RALPH MARTIRE

In a rare moment of candor, the governor, in the Executive Summary to his FY2019 budget proposal, admits it "does not include a plan to reduce the current bill backlog, which as of today totals $8.8 billion." Of course, that backlog is "only" $8.8 billion because the state just borrowed $6 billion to pay a portion of its late bills. Otherwise the backlog would stand at $14.8 billion. But at least he admits he has no plan for dealing with Illinois' accumulated deficit.

Now if the governor really wanted to score points for candor, he'd also admit that his FY2019 budget proposal doesn't include either a plan to balance current revenues with current expenditures or to provide any additional resources to public schools. The reason for both of these failings is the questionable approach he takes to generating $1.5 billion in savings from FY2018 spending levels.

For starters, he proposes to save the state money by shifting the obligation to pay the "normal costs" — that is, the amount the employer has to pay to cover future benefits being earned by current workers — of the pension systems for teachers from the state to local schools.

Specifically, the governor proposes shifting 25 percent of the normal costs of the Teachers Retirement System, which covers every school district except CPS, to local schools, saving the state $262 million.

He then suggests Chicago residents assume 100 percent of the normal cost for the Chicago Teachers Pension Fund, saving the state another $228 million. Both proposals require legislative action, which won't happen.

It won't happen, because lawmakers don't want to be blamed for forcing an increase in local property taxes on their constituents, which is the inescapable consequence of the governor's cost-shift proposal.

See, while shifting this obligation saves $490 million in state revenue, it doesn't save taxpayers a nickel. It just compels their local property tax bills to cover the tab.

Given that Illinois already is more reliant on property taxes as a revenue source than most other states generally, and is currently the most reliant state in America on property taxes to fund schools specifically, the governor's proposal to shift these costs to property taxes is both poor policy and poor politics. It won't — and shouldn't — happen.

Similarly, there are both political and policy shortcomings with other "savings" the governor proposes for FY2019.

His desire to save $129 million by eliminating health care benefits for retired teachers is worthless, because it's unconstitutional under the recent Illinois Supreme Court decision in Kanerva v. Weems.

Then there's his proposal to reduce health insurance for state employees by $470 million, something the governor's tried — and failed — to accomplish in negotiations with state workers every year he's been in office. So these "savings" are politically unlikely at best.

Something the governor has consistently supported, however, has been enhancing education funding.

At first blush, it appears that his FY2019 proposal calls for a $98.1 million year-to-year increase in school funding. However, that doesn't account for inflation. After adjusting FY2018 appropriations for K-12 by inflation, FY2019 funding levels would have to be $155.2 million more than last year, just to stay even in real terms. Hence the governor's FY2019 proposal actually reduces state funding for K-12 by $57.1 million, after inflation. And things get worse from there.

Recall that the governor wants to shift $490 million in pension costs from the state to local schools.

If that happens, it forces local schools to divert property taxes that were used to educate students in FY2018, to instead cover these new pension costs in FY2019.

Meaning that after inflation and the cost shift, schools statewide could end up having some $547.1 million less to spend on educating students in FY2019 than last year.

Bottom line: the governor's FY2019 budget proposal not only fails to deal with the accumulated deficit, but also fails to balance in any meaningful way, and fails our schoolchildren.

Ralph Martire is executive director of the Center for Tax and Budget Accountability, a bipartisan fiscal policy think tank. Email hime at rmartire@ctbaonline.org.

Sections (2):Columns, Opinion