January 14, 2011
Dear Neighbor:

For decades, Illinois has been spending far beyond its means by borrowing, selling assets, and using other financial gimmicks to balance its budget.  Illinois has a $13 billion budget deficit with over $8 billion in unpaid bills.  That’s irresponsible and unsustainable.  According to both state officials and independent bond experts, Illinois was close to financial collapse and insolvency.

The immediacy of our potential financial collapse and the longer-term implications to our children, jobs, and communities told me we had to act.

I supported temporarily increasing our income tax as one component of a three part strategy that will allow Illinois to return to fiscal responsibility and grow jobs as quickly as possible: significant spending cuts, additional revenue, and a reformed budget process that ensures we will not get into this situation again.

In the last two years, we have cut $2.1 billion out of Illinois’ $26 billion annual general revenue fund budget.   Illinois has also made pension reforms to significantly reduce benefits for new employees and prevent “double dipping” and other abuses.  More recently, I personally led an effort that will reduce health care costs by $800 million to $1.4 billion in Illinois’ Medicaid program over the next 4 years.  While these cuts are significant, they are not adequate to address our current budget gap.

The tax increase we just passed will provide about $7 billion to address our budget deficit (for details read here).  If we did not authorize this additional revenue, cuts to education, health care, and all other core services would have exceeded 35%.  Cuts of this magnitude would create class sizes throughout Illinois that exceeded 40 students per classroom, necessitated property tax increases that would lead to even more mortgage foreclosures, and drive tens of thousands of people out of work during our slow recovery.

The bill we passed caps future budget growth, but we must do more to cut spending in other key areas such as employee/retiree healthcare, Worker’s Compensation and governmental overhead – we have far too many local units of government in Illinois.  The biggest issue is whether or not we can reduce pension benefits for current state employees due to questions of constitutionality.  These are tough choices but we need to make aggressive reforms in order to cut these taxes once we get our budget on a sound footing.

I continue to reject borrowing as a non-solution to this problem and voted against the pension borrowing proposal this week.  The legislature also rejected the proposal to borrow an additional $8.75 billion.

The General Assembly also took several actions to ensure we achieve gimmick-free balanced budgets moving forward, by:

1.       Providing power to the independent Auditor General to certify that the State is not exceeding new spending caps established in law.

2.       Requiring the Governor to implement performance based budgeting that allocates only available revenue to achieve measurable objectives (rather than simply start with our current line item budget and make adjustments).

I return to Springfield in two weeks determined to help the Governor and my colleagues in the General Assembly to continue to reform and balance our budget.  Now more than ever, I need your input into my immediate decisions in the next couple of months.  I believe the only way to return financial integrity in Illinois, grow jobs, and provide for a better tomorrow for all of our children is to complete the comprehensive solution by cutting billions of more dollars out of the upcoming budget.   This work will require more difficult decisions, and I welcome your ideas on our path toward fiscal responsibility and growth for all of Illinois.

I will continue to provide updates, and please let me know your thoughts or if you have questions. You can reach me at hsteans@senatedem.ilga.gov or 773-769-1717.  

Best regards,

Heather Steans

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