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Monday, July 31, 2006

Blagojevich's budget of smoke and mirrors

By Dennis Byrne
Chicago Tribune

It takes a huge helping of gall for Illinois Gov. Rod Blagojevich to blame his Republican gubernatorial opponent, Judy Baar Topinka, for a $5 billion state budget deficit that he says was amassed during the administration of former Gov. George Ryan.

Especially when Blagojevich himself has made such a botch of state finances. Especially when Blagojevich, the charade meister, falsely claimed in 2003: "We will balance the budget and we will end the budget games. It took years of mismanagement and waste to create the mess we now face--and it will take tough times and tough choices to fix it."

But under Blagojevich, the budget games have swelled to Olympic-size proportions. Massive short-term borrowing to pay for everyday bills. Raiding the state pension fund to make his budget appear balanced. Loony proposals to sell state assets such as buildings and the lottery. All kinds of unaffordable new spending on programs that look good in a campaign brochure, but whose effectiveness is suspect. These are signs of fiscal desperation. And still the deficit grows.

Blagojevich is counting on voters to be stupid or bored enough to blame Topinka for Ryan's mess. But as state treasurer, Topinka doesn't propose or enact the budget. She has no control over how much or where money is spent.

True, she could have been more critical of the fiscal irresponsibility of Ryan and the Democratic-controlled legislature. But as for Blagojevich blaming her for Ryan's mess, she's no more responsible for Ryan's mess than she is for Blagojevich's.

The numbers from Controller Dan Hynes, a member of the governor's own party, tell the story. For example, Blagojevich's recently released comprehensive financial statements for fiscal year 2005, ending June 30 of last year, show that the general fund deficit was about 22 percent larger than the deficit at the end of the previous year, a $569 million increase. And the updated quarterly report shows that the fiscal year 2006 deficit, on this June 30, was $3.064 billion.

Incredibly, Blagojevich brags that he has "eliminated" the deficit, but that's only if he ignores--which he does--about $7.5 billion of unpaid bills that are left for someone in the future to pay. That includes almost $3 billion in unpaid medical costs.

Then there is the incredible amount of borrowing to pull off the deception of a "balanced" budget. Illinois has the nation's third-highest bond debt and the sixth-highest per-capita debt, according to Moody's Investors Service. To simplify: This is like going to the bank for a loan to buy groceries.

Cook County taxpayers can be doubly thankful for the governor's legerdemain. Partly because the state is way behind in reimbursing the county for certain medical costs, the Cook County Board recently was forced to take out a line of credit of as much as $200 million to keep up with its bills. As if the county's budget weren't confused and ugly enough already.

None of this seems to bother the Blagojevich administration. State budget director John Filan recently told the Rockford Register Star, "In terms of day-to-day running the joint, so to speak, we've taken in more money than we've spent in terms of expenditures."

The reality, however, is: Despite a surprisingly large increase in state revenue from an improving economy, the budget still is in the red.

Think of it in terms of a household budget. Say you're making more money this year than last. But you're spending more and you've added to your credit card debt so that you can say that you've balanced your budget. At the same time, you push off current bills until next year, acting as if they aren't past due. If you include everything that describes your financial health, you're in the fast lane to bankruptcy. But if you want to be a jerk about it, you pretend everything is fine.

Just like Blagojevich.

Copyright © 2006, Chicago Tribune


Anonymous said...

I am a dentist and have received my license renewal from the Ill Dept Fin & Prof Reg. The license fee is $315. License fees are supposed to help enforce the Dental Practice Act, that is, check offices for valid licenses, check for unlicensed basement dentists, and so on. According to the Ill State Dental Society, all license fees since Blago got in went into the general revenue fund, to be paid back "when times get better". Apparently since the money is gone, there are no longer any inspectors, and we haven't seen one for years. If you go to the IDFPR website, and realize how many professions it regulates, and if Blago has looted all their funds like the Dental Fund, that is a lot of cash. That is how he says he didn't raise taxes, but all these professions have raised their fees to afford the license increases. So, anyone who wants to practice working on teeth on their own, feel free, the state has no way to check.

Stephen Schade said...

Mr. Byrne:

I believe some of your comments warrant further scrutiny.

Selling the lottery is not loony. It is done in Europe.

The legislature under Ryan was not Democratic-controlled. Republicans had the majority in the Senate. And yes, Topinka should have been more critical of Ryan's fiscal mess, just as Congressional Republicans should speak out against Bush's huge deficits.

Spending has increased for reasons outside the state's control. Like most states, Illinois has seen a hike in costs for health care, for its own employees as well as Medicaid recipients, and energy. Not even the Fed can prevent this type of inflation.