What comes next after the 2-year budget battle?

By Phil Ciciora 
U of I News Bureau 

Christopher Z. Mooney is the former director of the Institute of Government and Public Affairs at the University of Illinois and currently the W. Russell Arrington Professor of State Politics on the Springfield campus. He spoke with News Bureau business and law editor Phil Ciciora about the aftermath of Illinois’ fiscal hangover.

After more than 700 days without a budget, the state of Illinois finally has one. Is this a better-late-than-never situation, or is it more encouraging than that?

It’s better than not having a budget, that’s for sure, but this is certainly not the end of the state’s problems. Is it the beginning of the end or the end of the beginning? We don’t know.

The state has some massive financial problems as well as some major political problems. This wasn’t the kind of resolution that engenders a lot of problem solving going forward. It’s another battle in an ongoing war between Gov. Bruce Rauner and the Legislature.

Several other states have tried the financial brinksmanship strategy of holding state budgets hostage until the last minute or until after the deadline has passed. (New Jersey and Maine immediately come to mind.) Do you see this as a strategy that will be repeated in the future?

It’s not unusual for July 1 to roll around with a few states going over their budget deadline. For a long time, the state of New York would routinely go past their deadline by a week or two or even a month. Policymakers are human beings and, like most human beings, they don’t want to make hard decisions. And budgets entail making hard decisions even when times are good, because there’s never enough money for what everyone wants the state to do.

What is unusual is the state of Illinois going so long without a budget. What typically happens is, after the deadline passes, the governor declares an emergency, shuts the government down, causes pain and then uses the bully pulpit to browbeat the legislature into getting, more or less, what the governor wants. That’s why you had New Jersey Gov. Chris Christie closing down the state parks this month – and most of the Jersey shore is in state parks. That gets people’s attention very quickly.

But since 2015, Gov. Rauner has done the exact opposite of that. He kept the government open, sued in court to ensure that state workers got paid and, in 2015, signed the K-12 education bill that allowed public schools to open. If the public schools don’t open, any sort of budget crisis would last about 20 minutes because you would have every parent in the state screaming about getting their kid back in school.

Rauner has done a very skillful job of keeping the government up and running on chewing gum and baling wire. But to what end? To avoid an inevitable tax increase? To effect really dramatic changes in state government?

He’s definitely taken a very different approach than other governors have. But going two fiscal years without a budget is something for the record books. I think you chalk it up as another “Only in Illinois” moment.

In Illinois’ current political climate, how difficult will it be to address the school funding issue, which is a separate issue from the budget?

The school funding formula in Illinois has forever been a contentious issue and it’s likely to remain so unless we fundamentally change our approach to funding our schools. So it’s never an easy lift.

The Legislature has passed SB 1, the school funding reform bill, but the governor has indicated that he doesn’t want to sign it due to provisions that he feels unduly help Chicago Public Schools. If he doesn’t sign it, the state can’t send the money to the schools, which means that many, most or all public schools in Illinois won’t open in August. It depends on the individual district’s finances, but even the wealthiest school district wouldn’t be able to stay open long without state money.

So does the governor refuse to sign the bill and create this intense pressure of closed public schools to get what he wants, or does he sign it to avoid the blame for schools not opening? Or does he do some sort of parliamentary maneuver that puts the onus back on the Legislature? It’s an open question.

Is it only a matter of time before we have another bond rating downgrade, this time to “junk” status? What would be likely reaction to that? A shoulder shrug?

I don’t think a downgrade is a foregone conclusion. If the Legislature and the governor decide to move forward to improve the state’s financial issues, maybe we can avoid it. But neither side seems to be in a conciliatory mood today.

Another notch down to junk – I don’t think anyone wants to be responsible for that, and it would have an immediate negative effect. Not only would it cost more to borrow, but the pool of borrowers would be smaller because a lot of big retirement funds and other institutional investors can’t invest in junk bonds or other speculative financial instruments. So, it would be more expensive to borrow, but from a political angle, it would be very embarrassing for the state and for any politicians who would get blamed for it.

The bottom line is that fixing the major problems that Illinois has – both in policy and in finances – is going to require the governor to work in cooperation with rather than in opposition to the majorities in the General Assembly, and vice versa.

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