Gov. George Ryan Friday all but ruled out a tax increase proposal to bolster the state’s sagging finances, but administration sources said he will outline a new budget next week that slashes the state payroll by up to 3,800 jobs and closes two additional state prisons.
Ryan’s proposed staff reduction would be achieved through layoffs, attrition and possibly an early retirement program, the sources said. Most of the job cuts would come from the Department of Human Services and the Department of Corrections, the sources said.
Although the finishing touches are still to be placed, Ryan’s financial blueprint for the 2003 fiscal year, which starts July 1, called for closing the minimum-security Vienna Correctional Center and the Illinois Youth Center in west suburban Valley View–absorbing many workers who don’t take early retirement into nearby prisons.
Though the budget includes money to finish construction of a new $140 million maximum-security prison in northwestern Illinois, it also seeks to save money in the prison operating budget by not allowing it to open during the next fiscal year, sources said.
“Layoffs are just a terrible thing for me or anybody to have to be a part of,” Ryan said Friday at the Executive Mansion, where he discussed the budget in general terms but declined to give specifics. “But I have an obligation to balance the budget. We can’t spend more money than we’ve taken in, and that’s where I am in this situation.”
At an appearance earlier in Chicago, the governor said asking for a tax increase to ease the state’s budget woes would be a non-starter in an election year. “From a purely political standpoint, a tax increase won’t happen this year,” Ryan said.
Because of their size, the Human Services and Corrections Departments are being targeted for most of the job reductions, sources said. Closing facilities would help reduce human services jobs by about 1,700 and corrections jobs by 1,100. The reduction in prison jobs would include the already announced closure of Joliet Correctional Center.
Even as Ryan talked about layoffs, he reminded union members that there still is time for them to negotiate before he completes the personnel plan.
Worst fiscal crisis in a decade
The administration is facing the state’s worst financial crunch since 1992, when then-Gov. Jim Edgar laid off thousands of workers to help balance the budget. The state’s current fiscal picture is grim partly because of too rosy revenue predictions and an economic tailspin after the Sept. 11 terrorist attacks.
Growth in state revenue won’t provide much relief. When the current $53 billion budget was passed last spring, the administration predicted key revenue sources such as income and sales taxes and fees would bring in $25 billion. Because of the recession, that figure is expected to be off by as much as $1 billion.
Sources said Ryan’s budget anticipates revenues in fiscal 2003 to rise only $300 million to $500 million above the lowered expectations for the current year.
Because Ryan’s budget is not expected to include proposals for a tax increase, he will have to push harsh spending cuts for state agencies to cope with the revenue shortfall. In November, Ryan announced nearly $500 million in spending cuts, but he will announce cuts of roughly the same amount in his budget message Wednesday, sources said.
Though he said a tax increase was unlikely, Ryan hinted he would consider signing one if legislative leaders decided to push for it.
“It’s tough to do when things are good…,” Ryan said of a tax increase. “If they want to put a package on my desk, I’ll be glad to look at it and maybe sign it.”
But Ryan made it clear Friday that he would keep his 1998 campaign pledge to pump 51 percent of all new state revenues into education and workforce training, for the fourth straight year.
“Is it fair to cheat kids out of an education? I don’t think so,” Ryan said. “If you want to talk about what’s good for an economy, it’s an educated workforce. So, during tough times, you don’t cut back on education.”
As the budget shortfall intensified last fall, Ryan cut health-care benefits for up to 100,000 Medicaid recipients, froze hiring at prisons, cut back services to the developmentally disabled and ordered the one-day furlough of most state workers. In some of his most devastating cuts, Ryan also slashed tens of millions of dollars in payments that the state makes to hospitals in exchange for treating poor patients.
Pork money still flowing
Now the governor, who is not seeking re-election, heads into his fourth and final budget with a message far more austere than in earlier years, when the state treasury was flush. Back then, Ryan was all too happy to help bankroll a spending spree.
In those early years, Ryan and legislative leaders authorized $1.5 billion in spending for pork-barrel projects that lawmakers spread around their districts. More than one-third of the money to pay for those projects was siphoned from the state’s main checking account used to pay for day-to-day operations.
Nearly $114 million of that smaller pot of cash was still unspent as of Friday, although it is disappearing fast as checks continue to be cut for pet projects.
Ryan has suggested using the unspent pork money to help plug the budget gap, but that idea has encountered severe resistance from some top lawmakers. It is unclear whether Ryan will try to revive the fund-diversion idea in his new budget.
`People are nervous’
More dire financial news leaking from the administration in recent days has lawmakers bracing for the worst.
“People are nervous about how they’re going to explain in their districts why you can be in economic recovery but still cut millions of dollars,” said state Sen. Steve Rauschenberger (R-Elgin), the Senate appropriations chairman, who thinks the governor’s revenue estimates are optimistic. “This is almost impossible to sell to the Kiwanis Club.”
Lawmakers may be tempted to talk about tax increases, Rauschenberger predicted.
“A lot of the members believe in their hearts that the way to get out of a recession is not to raise taxes,” he said. “But it’s so much easier to support a cigarette tax than to really fight the growth of state government.”
