Trying to confront the state’s massive budget deficit, Gov. Rod Blagojevich offered up modest spending cuts Monday and set into motion potentially sweeping reductions in state payments to help offset a nearly $5 billion shortfall through the middle of next year.
By the end of March, Blagojevich wants the heads of more than 30 state agencies to present him with possible cuts totaling $1.7 billion. The governor acknowledged that he would probably cut far less than that, but he wants agency directors to justify the need for the spending.
“It’s likely most of the money we’re going to hold … will be released after we review it,” he said. “But we do believe, and we have a very strong sense, that there are tens of millions of dollars, if not hundreds of millions of dollars, that we’ll be able to find and save.”
In announcing his proposals in Chicago and Springfield, the governor also ordered the heads of all departments he controls to slash 10 percent in administrative costs. Those cuts, he said, will result in $30 million in savings during the current fiscal year, which ends June 30, and $125 million in savings next year.
Blagojevich also said he may seek to restructure the state’s $6 million cellphone contract with Verizon Wireless and examine why the Iowa firm of Williams & Co. is paid $600,000 a year to oversee a $1.2 million program involving the cleanup of environmental hazards at dry cleaning businesses.
The governor also made a symbolic cost-cutting gesture by promising to trim the budget of his office, as well as those for the lieutenant governor and the Bureau of the Budget, by 15 percent.
Blagojevich said Monday’s proposals are just part of his overall plan to unravel the state’s fiscal mess, adding that more revelations are to come.
“We have a lot of announcements to sort of unveil as the days and weeks and months unfold, we have certain thoughts and ideas that we’re looking at,” Blagojevich said.
In all, the state’s budget shortfall is estimated at $4.8 billion through summer 2004.
To achieve the $30 million savings in administrative costs, Blagojevich said, those cuts must be put into place by the end of March. The more sweeping, and more tentative, $1.7 billion in potential cuts would be derived by asking state agencies to identify 8 percent of their current operating budgets that could go under the knife, as well as 5 percent of state grants they administer and 10 percent of expected capital improvements.
“While that alone will not solve the budget crisis, [this] is a substantial step in the direction of reducing the expenditure side of the challenge,” said John Filan, budget director. “If it’s an appropriate [expenditure], we’ll put it back in.”
Although the governor is asking every state agency under his control to adopt the cost-cutting measures, he said he will not slash any funding for elementary and high school education, health care or public safety.
“We don’t want to take a meat-ax approach and just arbitrarily go across the board and say cut this by `X’ percent,” Filan said. “Even some good programs may not make it through that because we simply can’t afford them. So this isn’t just about waste, it’s about affordability.”
While Blagojevich was optimistic about finding significant cuts to ease the budget crisis, he conceded it is unlikely he will be able to find enough savings to balance the budget. At the same time, he vowed that he would find ways to raise revenues to make up the gap without breaking his campaign pledge not to increase taxes.
“We’ve been clear all along, this is not something that you can just cut your way out of. There’s got to be creative ways for revenue,” he said. “No increase to the state income tax. No increase to the sales tax, and nothing like taxing anybody’s haircut. We’re not about trying to hurt working people and make them pay for mismanagement and waste.”
