Budget Negotiations are High Stakes Game of Poker

play-593207_1280.jpgThis week brings the governor’s annual budget address. As well, the Illinois Senate is expected to continue negotiating a “grand compromise,” which would tie together spending, reforms, and revenue into one package. Every day at the Capitol, new rumors spread about the contours of possible solutions to the state budget crisis.

Folks are glad that the senators are talking and trying to work together, but the word on the House floor is that Speaker Mike Madigan has made it clear that, no matter what the Senate does, any agreement is dead-on-arrival in Madigan’s House. You see, the big fight is still Governor Bruce Rauner vs. House Speaker Michael Madigan, and the belief in the Madigan camp is that any budget compromise will be seen as a “win” for the governor. On the policy level, Rauner has said he won’t agree to tax increases without major government and business reforms, while Madigan has made it clear he wants tax and spending increases with no preconditions.

The other complicating factor is that the roughly 80 court orders and consent decrees keeping the state government operating are forcing us to spend billions of dollars more than we take in. That overspending is adding to the pile of unpaid bills being racked up every month. And just a few weeks ago, Attorney General Lisa Madigan filed a motion to reverse and eliminate the court order continuing wage payments to Illinois government workers. State workers have been paid under that court order for over a year and a half, but Attorney General Madigan stated she filed the motion just now to give the budget negotiations some “momentum.”

Now, one could applaud an action like this as “fiscally responsible,” and one would also typically believe in the purity of the motives of a state’s chief legal officer. The problem is, instead of filing this motion in each of the 80 courtrooms where these orders are pending—whether to end the orders or at least reduce the required payments to an affordable level—Attorney General Lisa Madigan filed in just 1 courtroom, leaving the other 79 orders and consent decrees in place. It doesn’t make sense as a financial or legal matter.

I’ve not seen any other media sources opine on this issue, but the reasoning seems simple enough to me: most state workers live in downstate districts, now represented by Republicans. Lisa Madigan’s actions make perfect political sense in that they increase pressure solely on Republican legislators, in hopes of weakening Governor Rauner’s ability to obtain reforms, while strengthening Mike Madigan’s ability to force tax and spending increases.

This is a high-stakes game of poker. The Madigan family has millions of dollars in campaign contributions at stake, from special interests and their lobbyists. Every one of those taxes and spending items being pushed by Mike Madigan has lobbyists dedicated to increasing them. However, Illinois taxpayers trying to eke out a living, and small businesses struggling to survive and grow, have only their elected officials to hold taxes and spending in line.

From my end, I’m advocating for two key items. First, we should immediately pay off our $11 billion in unpaid bills. By law, we’re forced to pay 12% interest on those bills—that means we’re flushing roughly $500 million down the toilet in short-term interest every year. There are plenty of ways to generate the necessary funds to pay down those bills, from issuing bonds to selling state assets. Second, we should immediately approve spending for the amount of money we have coming in, so that we stop all, or almost all, of the court orders and consent decrees which are causing our pile of bills to grow. Based on our best estimates, we are bringing in roughly $33 billion per year. By at least approving spending at that level, we can ensure that our social service providers and community colleges get immediate payment, of at least most of the funds they need, instead of continuing to suffer massive cuts and lengthy payment delays.

With a spending backstop in place, the legislature and governor could then take the time they need from now to the end of May to negotiate a full package of appropriate reforms, spending reductions, and revenues to move our state government and economy forward for the longer term. And, we will avoid the kind of gotcha games that are going on now, where state workers or other disfavored groups or programs get targeted in court, while unpaid bills pile up and residents and businesses are harmed even more deeply.

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