CHAMPAIGN — Calling it "the big alligator," State Treasurer Dan Rutherford said the state's ballooning pension system obligations must be addressed by lawmakers this spring.
Even if pension costs are tackled, Rutherford said other spending also will have to be limited.
And the treasurer, who was a member of the state Senate last year when the Legislature approved a 67 percent income tax increase but did not vote for it, said the tax hike should not be phased out before it is scheduled to be reduced from 5 percent to 3.75 percent in 2015. Some Republicans have said they want the tax increase to be repealed this year.
"It would be disingenuous to the public to have them believe it could be repealed," Rutherford told reporters after speaking to the Champaign-Urbana Kiwanis Club in Champaign. "I believe we need to manage where we are and try to put together the best method to wean off that addiction (to increased spending.)"
He said state spending has to be controlled.
"Don't spend this (tax) increase because you've got it. Figure out how to get us off this addiction, this addiction to debt," he said. "And plan for 2015 because there is going to be a cliff and we'll either be able to scale down safely or we're just going to go free-falling off of it. Everybody knows that day is coming."
Even with all the recent grim state budget news — including a report earlier this week from state Comptroller Judy Baar Topinka that the state has an $8.5 billion backlog of unpaid bills — Rutherford said he was optimistic the state could work its way out of the financial crisis.
"A part of who I am is optimistic. A part of who I am is realistic," he said. "And at this moment the optimism overrides the realistic.
"You have to believe that way. I am the treasurer of the state and I probably see the dark underside of the ugly beast from a perspective better than most. And I believe that Illinois can and will turn itself around."
The key, he said, is pension reforms. That issue dwarfs even Medicaid spending.
"I think the politics of fixing the pensions is much harder than the Medicaid," Rutherford said. "The Medicaid will be a challenge. I don't disagree. But there is a whole political dynamic to the pension issue that does not come to the Medicaid debate."
Rutherford said retirees would be unaffected by pension changes. But current employees would have to either contribute greater premiums or accept reduced benefits.
"Even if we did that it won't fix the (budget) problem. But we can't begin to fix the problem unless you do that," the treasurer said.