Though he promised not to raise income or sales taxes, Gov. Rod Blagojevich is considering unspecified fee hikes as part of a wide-ranging package of revenue increases and spending cuts to bail the state out from its current fiscal crisis, legislative sources said Thursday.
Other key elements of the plan that Blagojevich is crafting include more revenue from new gambling initiatives, sizable cuts in administrative overhead, reduced spending on prisons and universities as well as receipts from a controversial bond sale, the sources said.
Blagojevich achieved his first major legislative victory as governor Thursday when the House approved his plan to sell $10 billion in bonds to finance state pension obligations. To help win support of reluctant House Republicans, the Democratic governor released his most detailed analysis yet of how to get the state out of the $4.8 billion budget gap he says it faces through mid-2004.
The governor is scheduled to unveil his budget plans for the next fiscal year on April 9, but lawmakers from both parties had chafed over his refusal up to now to include them in the budget-setting process. The outline shared with Republicans is a work in progress and does not detail Blagojevich’s spending priorities.
It does, however, show the governor’s desire to raise additional revenue without hiking taxes by increasing some state fees and by seeking a quick sale of the currently unused license held by investors in the bankrupt Emerald Casino or by allowing existing casinos to expand operations.
Without taking action, Blagojevich estimates the state’s main checking account will face a $1.2 billion deficit between now and the end of June and another $3.6 billion deficit for the fiscal year that begins July 1.
To address the more immediate budget hole, Blagojevich would make administrative cuts of $500 million at a variety of state agencies under his control and would seek to wring another $160 million in savings from the state’s prison agency and public universities, sources said. Another $300 million in bond proceeds from the pension refinance plan would also be used to offset the deficit.
The budget hole next year would be closed in part by tapping $1.8 billion in proceeds from the bond sale, the sources said. The administration expects another $1 billion of the deficit can be shaved through new gaming revenue, fee increases and continued cuts in spending at state agencies, while the remainder would be covered through restructuring state debt to take advantage of lower interest rates and by transferring cash surpluses from other state funds, the sources said.
Officials for Blagojevich’s Bureau of the Budget said they would not comment on specific numbers prior to the governor’s budget address.
“We don’t want to lock ourselves into any numbers today while we’re still in the process of fighting to cut every penny that we can out of this budget so we can erase the deficit, provide a balanced budget and protect our essential programs without having to raise the sales or income tax,” said bureau spokeswoman Becky Carroll.
Blagojevich’s decision to provide House Republicans with his personal framework to handle the deficit was a crucial factor in helping to line up support for his bonding of pension payments. Although Democrats control the House and Senate, the votes of some Republicans in each chamber are necessary since legislation that increases the state’s bonded indebtedness requires an extraordinary majority for approval.
The pension measure was approved by the House on a 79-18 vote, eight votes more than the minimum required to send it to the Senate. Blagojevich lavished praise upon House Republican leader Tom Cross of Oswego, saying the administration was successful because “the Republican leadership was willing to put partisanship aside.”
Blagojevich, however, still faces a formidable obstacle among Senate Republicans, who have shown little inclination to support the proposal.
“We are not Chicago City Councilmen,” said Sen. Steven Rauschenberger (R-Elgin). “We are not going to be intimidated or roll over. I think they’re going to . . . send it over here and they’re going to try to beat up the Senate Republicans and see if they can force us to split our caucus.”
Senate Republican Leader Frank Watson of Greenville said he wanted more information before his caucus would be ready to consider the package. Watson also indicated he believed any bond sale should be stretched out over a longer time frame.
“We want to work with the governor,” Watson said. “We think it is important that we solve this [budget] problem. Personally, I think, in a normal year, we would reject this outright. But this is not a normal time right now with the budget situation and the crisis we are in. I think we have to look for different means to solve it, and this may be one of them.”
Watson said his Senate Republicans want to know how the funds freed up by the pension maneuver would be used.
“I think it’s the responsible thing to do,” Watson said. “I wouldn’t write a check to my son or daughter for $10,000 without me knowing how they’re going to spend it, and that’s what we’re asking.”
