Brady's budget numbers don't add up

Brady's budget numbers don't add up
By Eric Zorn
Copyright © 2010, Chicago Tribune
Tuesday, October 19, 2010
http://blogs.chicagotribune.com/news_columnists_ezorn/2010/10/bradys-budget-numbers-dont-add-up.html


Q. State Sen. Bill Brady, the Republican candidate for governor, says he can close the state's yawning budget gap without raising taxes. A key part of his plan is to reduce spending by 10 percent. His critics say the cuts will have to be far, far deeper than that. Who's right?

A. The critics. But to explain why, let's look at the numbers.

Q. I was told there would be no math!

A. The math is pretty easy, actually, as long as you don't get distracted by jargon and spin. The annual state budget is about $51 billion. But about half of that isn't under the direct control of the governor or the General Assembly.

Q. How can that be?

A. That half represents fixed costs, such as interest we owe to bondholders, or dedicated funds with independent revenue sources — usage taxes, fees and so on — and these costs are mostly out of reach of budget cutters and separate from what's called the general fund. The general fund is the pool of money — about $25 billion for the next fiscal year — that we draw on to pay for education, public safety and health and human services, plus a few minor odds and ends.

Q. And 10 percent of $25 billion is $2.5 billion. That's a healthy cut.

A. It would be. But $25 billion really isn't the starting point for a governor who wants to cut the budget. About $6 billion of that comes directly from the federal government. And somewhere around $9 billion is money we have to spend on education and Medicare in order to get the full amount of the federal funding. That leaves from $10 billion to $13 billion, according to various estimates, at which lawmakers can swing their axes.

Q. Ten percent of that is $1.3 billion, max. How big is that state budget deficit again?

A. The current estimate is $9.5 billion for this fiscal year, according to data supplied by the Center for Tax and Budget Accountability, which plans next week to release a thorough analysis of numerous budget plans, including its own.

Yet in a recent analysis (.pdf), outgoing Democratic Comptroller Dan Hynes wrote that "the structural imbalance in the current budget, combined with higher debt service costs and the loss of federal stimulus revenues, creates the very real possibility that the governor and General Assembly will face a working deficit of $15 billion or more when the fiscal year 2012 budget is crafted."

This staggering burden now includes $6 billion in unpaid bills and nearly $5 billion in other outstanding debt. The total was more than $13 billion — the number you still hear most often — but then lawmakers finagled $3 billion in one-time revenue (planned to take a lump-sum settlement on what were supposed to be long-term proceeds from the lawsuit against the tobacco companies, for example) and Quinn signed off on $1.4 billion in spending cuts in July (.pdf) Overall, general fund spending is now $2.3 billion less than in fiscal 2009, the year Quinn took over.

Q. But Brady says Quinn has increased spending.

A Yes, not because Quinn has added programs or services, but because he's increased pension-related debt service by borrowing to make payments into pension funds. As director Laurence Msall of the nonpartisan Civic Federation said, "It depends on what your definition of 'spending' is."

Q. Well, Brady's spending cuts on top of that might not get the job done, but they'd be a good start, wouldn't they?

A. Not really. See, at the same time he's proposing this "dime on every dollar" spending reduction that would put a hurt on local economies, he's also proposing more than $1 billion in tax cuts — on inheritance, business and gasoline. So we'd be back in the same hole.

Q. Brady says we could save billions with a thorough audit of state finances to root out waste, fraud, abuse and corruption.

A. In Kansas — the example that backers of this "forensic audit" idea always point to — a special probe of state spending in 2003 found less than $200 million in new savings, along with savings based on alterations to the state's 10-year highway building plan. Illinois may well be sleazier than Kansas, but the idea that we're wasting billions on needless programs and goldbricks is a paranoid fantasy.

Q. But Brady still promises we can cut our way out of this mess without raising taxes.

A. Yes, he does. Go figure.