Jim Dey | Plenty of sleight of hand in this 'balanced' budget

Jim Dey | Plenty of sleight of hand in this 'balanced' budget

They say — and the machinations of the General Assembly over the past three years demonstrate — that it's difficult to pass a balanced budget for the state of Illinois.

But it's no problem that a little hocus-pocus can't easily resolve, as shown by the $38.5 billion budget passed overwhelmingly by members of the Illinois House and Senate and signed into law this week by Gov. Bruce Rauner.

"This was a great team effort. A great bipartisan effort," Rauner said.

This year's kumbaya budget moment stands in stark contract to the bitter budget wars that marked the 2-year-plus standoff between Rauner, a Republican, and House Speaker Michael Madigan, a Democrat.

It's unclear exactly why the Ds and the Rs decided to play ball this time. But it seems obvious they decided to get along so they could avoid the risk that a budget backlash would blow up in either party's face in November.

So they passed a budget that they say is balanced but really isn't. Since most people don't pay any attention, it's easy to pull the wool over voters' eyes.

Illinois will continue to spend more money than it takes in, continue not to pay its bills on time and continue to expend disproportionate amounts of its revenues on pensions at the expense of core services.

Observing the budget sleight of hand from a distance, the Standard & Poor's bond-rating agency re-affirmed the state's credit rating as one notch above junk status at "BBB-."

That, the agency said, is the "lowest possible rating within the investment grade categories."

"Among the state's leading credits risks are its fiscal structure, which in our view, remains out of balance, a still-elevated unpaid bill backlog, absence of a budget reserve, and distressed pension funding levels. While the emergence of a more collaborative budget process has potentially constructive credit implications, the substance of the package largely represents an extension of the status quo," according to Standard & Poor's.

In other words, Illinois is just doing more of what created its unprecedented budget woes.

Although required by the Illinois Constitution to pass a balanced budget, it's been roughly 20 years since the General Assembly has done so.

That raises the question, how does the legislature evade a constitutional mandate?

That's where the hocus-pocus comes in.

Approving a state budget, which is most certainly a complicated business, requires making assumptions about revenue and expenditures. So the Legislature makes assumptions about receiving revenue that, in reality, the state will not receive.

The most glaring example of that ploy is the Thompson Center in Chicago. The state wants to rid itself of this albatross, but Rauner and the Democrats haven't been able to work out the terms.

What they have been able to do for three straight years is include in the budget $300 million they might get if the state actually sells the Thompson Center.

Over the past three years, the state has budgeted $900 million in revenue for the so-far non-sale of the building.

That's what is known as active hocus-pocus.

There's also passive hocus-pocus — actions that legislators specifically do not take because it would immensely complicate the budget-making process.

That's why Democrats refused to approve a revenue estimate to guide their spending decisions.

Revenue estimates matter because it's difficult to decide how much to spend without knowing how much is available to spend.

The state's Commission on Government Forecasting and Accountability estimated the state will receive $37.8 billion in revenue. The governor's budget office estimated about $100 million more — almost $38 billion.

Legislative Democrats rejected Republican suggestions that they, too, make a revenue estimate. But the Democrats repeatedly refused so they would not have to live within the constraints a revenue estimate would impose.

Then they all approved a $38.5 billion spending plan that exceeded both revenue estimates and was balanced by means of budget gimmickry.

That includes $800 million in fund sweeps, borrowing from special state funds that probably will not be repaid, and estimated savings of $444 million in pension costs generated by "pension buyouts" that are almost certainly exaggerated.

The budgeteers also ignored a liability of up to $400 million in back pay owed to state workers as a consequence of a court decision.

Exaggerate on the credit side. Ignore on the debit side. Throw in a little hocus-pocus, plus a dollop of flim-flam.

Presto chango — the budget is balanced on paper, certainly not in reality. Then, all the cooks who spoiled the broth congratulate themselves on pulling another fast one on the public and hit the campaign trail for re-election.

Jim Dey, a member of The News-Gazette staff, can be reached by email at jdey@news-gazette.com or by phone at 217-351-5369.

Sections (2):Columns, Opinion