POLITICS
The outgoing governor wants
to leave the slate in the black
by Charles N. Wheeler III
When Gov. Richard B. Ogilvie left
office in 1973, he left a significant
bequest for Dan Walker, the Democrat
who defeated him: a state budget that
was in the black.
Now, retiring Gov. Jim Edgar hopes
to become the first chief executive
since then to do the same favor for
whoever wins the November election.
To achieve that goal, however, Edgar
will have to convince election-minded
lawmakers to forego tax cuts they have
proposed in light of what appears to
be an extraordinary surfeit of tax
dollars. Thanks to the robust economy,
Illinois ended last fiscal year on June
30 with $806 million in the bank, the
highest balance ever. General funds
revenues are expected to increase by
almost $1 billion this fiscal year and
slightly more in fiscal year 1999, which
begins on July 1.
With the state apparently rolling in
dough, it's no surprise various tax
relief proposals have surfaced. House
Republicans and two GOP senators
seeking higher office — U.S. Senate
candidate Peter Fitzgerald and state
comptroller hopeful Chris Lauzen —
want to double the income tax credit
for residential property taxes. Senate
Democrats and lieutenant governor
candidate Pat Quinn want to increase
the personal exemption from the
income tax.
To achieve his goal, Jim
Edgar will have to convince
election-minded lawmakers
to forego the tax cuts
they have proposed.
But the $37.4 billion budget Edgar is
proposing for next fiscal year has no
room for any of the tax relief plans
now floating about the legislature.
Instead, Edgar earmarked the $1
billion in expected new money for
program spending. Most — $614
million — would go to education, from
kindergarten through college. Cost-of-
living increases for medical and
community service providers would
cost $189 million, while $129 million is
targeted to add more than 3,000 prison
beds and hire 132 new state troopers.
Edgar also proposed a $94 million
boost for health insurance coverage for
children of the working poor.
Lawmakers are likely to deem all
these causes worthy and be reluctant to
trim the proposed funding levels. So
the most tempting target for would-be
tax-cutters may well be the $750
million that Edgar wants to have in
the bank at year's end, six months
into his successor's term.
Keenly aware of the legislative
mood, Edgar acknowledged in his
budget address to lawmakers that the
amount "seems like a lot of money."
"And tapping into that balance
could be tempting for some who want
to curry favor with voters in this
election year." But $750 million is only
about 3.6 percent of general funds
revenues, the governor noted, enough
to cover just nine days of bills. Moreover, $750 million in state coffers is
equivalent to a cushion of less than
$2,000 for the average working family
in Illinois, he said.
In fact, the $750 million is exactly
what the budget projects will be
needed to pay outstanding fiscal year
'99 bills through the lapse period,
which ends on August 31. "In other
words," Edgar said, "we will be able to
pay all the bills that normally arrive
over the following two months. We
will not be dipping into next year's
revenues to pay this year's bills."
Should that happen, the books will
come out even — the first time since
1975 that the state has avoided red ink
three years in a row. The current fiscal
year is expected to show a $75 million
budgetary balance, following a modest
$45 million surplus in fiscal year '97,
after lapse period spending of $761
million out of the $806 million in the
bank on June 30.
The state's current fiscal well-being
is a far cry from the "real mess" he
inherited after state government in the
1980s "spent down its so-called
surplus and then some," including
"money it didn't have," Edgar said.
The fiscal crisis that bedeviled his first
term had its roots in the 1989 spring
session when the legislature and Gov.
James R. Thompson enacted $1.2
billion in new taxes, but approved $2.6
billion in additional expenditures, for
fiscal 1990. To cover spending more
from general funds than the new taxes
produced, the lawmakers and the
governor tapped a modest budget
surplus from the previous year, drew
down the state's available balance and
relied on natural revenue growth.
38 / March 1998 Illinois Issues
Still, the budgetary balance dipped
to a $191 million deficit in fiscal year
1990 from a $148 million surplus in
fiscal year 1989.
When Edgar took office in 1991, his
financial advisers warned spending
needed to be cut hundreds of millions
of dollars to keep the ship of state
afloat as the national recession stunted
revenue growth. In his first full day in
office, the new governor sliced his
office budget by almost $1 million and
ordered his department heads to make
similar cuts. Ultimately, tax receipts in
fiscal year '91 came in more than $500
million below the estimates used in
putting the budget together, a major
factor in the $666 million budget
deficit posted for fiscal year '91.
When Edgar took office
in 1991, his advisers warned
spending needed to be
cut hundreds of millions
of dollars to keep the
ship of state afloat.
To cope with a looming $1 billion
shortfall for fiscal year '92, Edgar's
first budget called for deep cuts in
welfare and other programs and some
1,400 layoffs; after 19 days of legislative overtime, he settled for about $400
million in program cuts and $600 million in cash-management devices, most
of them one-time revenue boosts. But
revenue projections once again proved
too optimistic, so the governor and the
legislature were forced to cut another
$350 million in midyear. Despite the
herculean effort, the state racked up its
largest budget deficit ever in fiscal
1992, an $887 million ocean of red ink
that took five years to overcome.
Edgar has not forgotten the
mountains of unpaid bills, the credit
rating downgrades, the short-term
borrowing, the embarrassing image of
Illinois, the deadbeat state. "I don't
want that happening again to the next
governor," he said. "There will be no
spending binge. We will not sacrifice
fiscal integrity on the altar of election-
year expediency."
While Edgar's caution is clearly correct, legislators seeking new terms may
not be willing to be as prudent and
principled as a lame duck governor.
Charles N. Wheeler III is director of the
Public Affairs Reporting program at the
University of Illinois at Springfield.
Illinois Issues March 1998 / 39