Jim Thompson found that one of his first jobs as a newly elected governor 13 years ago was to patch together an austere state spending plan, saying he had to contend with the ”fiscal quackery” of a Democratic predecessor who left him with only $48 million in the bank.
By today`s standards, that balance would keep the state of Illinois running for less than one day. In 1977, when the total budget was less than half of the $26.3 billion financial blueprint the governor unveiled last week, it amounted to two days` funding.
”It is no exaggeration to say that Illinois has walked right up to the brink of bankruptcy and looked over the edge,” the freshman governor said then.
Now, as Thompson prepares to leave the Executive Mansion as the nation`s senior governor, not even his harshest budget critics suggest the state is near bankruptcy, but they do question whether the moderate Republican governor has cured the financial ills of Illinois.
”I knew little or nothing about state fiscal affairs when I became the governor of this state,” Thompson said last week. ”But I sure learned in a hurry, because I spent several hundred hours on the first budget. There`s no better way to learn it. We struggled our way out of deficit and depression, and there`s no better way to learn how to make tough budgeting decisions.”
Experience proved to be a valuable teacher.
In 1977, Thompson assailed the spending practices of former Gov. Dan Walker and said that his maiden budget contained ”no artifice, no tricks or gimmicks which suggest that things will be achieved which cannot be achieved.”
Six years later, in a self-billed doomsday budget, he pledged never to include anticipated revenues from politically questionable tax increase proposals in his budget.
Yet since 1987 Thompson has predicated his spending recommendations on billions of dollars from doubtful tax increases and a host of other cash-flow policies that cloud a true picture of the state`s fiscal health.
For example, in his final budget recommendation issued for the 1991 fiscal year that begins July 1, Thompson would use $260 million in proposed hikes in state taxes and at least $400 million from one-time ”savings” by delaying bill payments, underfunding pensions and, despite vows to the contrary, offering a second amnesty program to delinquent taxpayers.
”Every budget that has been written in the last 13 years has had some one-time revenues,” Thompson said last week. ”This is not some shocking, new concept I`m introducing for the first time.”
But the effects of budget sleight-of-hand in Thompson`s last budget would not be felt until six months after he leaves office next January, presenting the possibility that Illinois` new governor will inherit problems no less serious than those Thompson originally faced.
In addition to filling the potential revenue holes in the budget, that governor will play a leading role in deciding the fate of the 20 percent income tax surcharge-providing hundreds of millions of dollars in funding to schools and local government-that is to expire June 30, 1991.
”Irrespective of who`s in the governor`s office . . . if we pass this budget as is, a year from now the state will be virtually bankrupt,” said Senate President Philip Rock (D-Oak Park) who, along with nearly all other lawmakers, called for a complete rewriting of Thompson`s financial plan.
And, pointing to the hundreds of millions of dollars in bonds the state has sold, Thompson`s critics, including some of the state`s financial experts, are concerned about the fiscal legacy Thompson will leave for Illinois.
The state, they say, has been so heavily charge-carded by a ”bricks and mortar” governor that it could take years to rebound from the accumulating debt and its soaring interest costs. Thompson has cut ribbons for a dozen new state prisons, a glass office building in the Loop and bond-financed public works projects throughout the state.
”I think there are some things in here that could truly be a time bomb for the next governor,” said Sen. Howard Carroll (D-Chicago), the chairman of the powerful Senate Appropriations I committee for the 13 years that Thompson has crafted his budgets.
As of Jan. 31, the state had $4.2 billion in outstanding general obligation bonds that eventually will cost the state another $2.8 billion in interest, compared with $1.6 billion in bonds the state had issued when Thompson took office. Debt service costs during the current fiscal year for those bonds amount to $519 million.
”One of the things that is most disturbing is that the governor and the legislature have agreed to divert funds to pay debt service in such a way that the natural growth of the budget is used to pay off existing debt obligations or to try to recover available balances,” said Douglas Whitley, president of the Taxpayers` Federation of Illinois.
But the state also has another $1.5 billion in outstanding bonds for Build Illinois projects, McCormick Place, the new White Sox stadium and other projects secured by state revenues. And, it faces the potential for more debt and taxes to finance a proposed further expansion of McCormick Place and a new domed stadium for the Bears.
”I am absolutely convinced that our long-term debt position is much worse than when he came into office,” said Sen. Dawn Clark Netsch (D-Chicago), chairman of the Senate Revenue Committee and co-chairman of the bipartisan Illinois Economic and Fiscal Commission. ”I think we are really pushing the edge on that. We are mortgaging our kids` future and our grandchildren`s future.”
Thompson, however, repeatedly maintained throughout the critical assault on his final spending plan that he would be leaving Illinois in good fiscal shape, saying state government is providing more services while taking proportionately less money from taxpayers` pockets, despite a dizzying array of tax increases offset by tax repeals.
His bottom line is a $275 million bank balance, enough to pay the state`s bills for about a week.
”We`ve had 13 years of lessons that taxes are not necessarily evil in and of themselves,” said Thompson, who defined himself as a ”fiscal conservative” against the perception that the governor never met a tax he didn`t like.
”We have faced in the past 13 years many more difficult budget challenges than this,” he said. ”There is no comparison between this budget and the budget I inherited in 1977, else I would not have put my name to it.”
