Bruce Rauner was initially low-key following his big re-election loss last month, but the outgoing Republican governor changed course recently as he fired a bitter parting shot at Democrats who will soon control every level of state government.
“I am very scared for the people of Illinois,” Rauner said at a state capitol press conference. “I believe that the folks who put Illinois into a financial quagmire are now back in complete control of the government. The policies that have created the financial mess for Illinois are now the policies that will be dominating completely without any resistance whatsoever in the state going forward.”
Rauner had sharp differences throughout his term with Democrats who controlled the state legislature, and those disputes were at the center of a record two-year budget standoff over state spending and other priorities. So his disdain is well documented, but also selectively self-serving.
The governor’s assessment is woefully lacking in the historical context that explains a financial crisis decades in the making and one for which Democrats and Republicans alike share blame.
With Illinois trending ever more blue, it’s easy to forget — as Rauner may have — that Republicans held unbroken control of the governor’s mansion from 1977 to 2003, during which time experts began sounding warnings about the state’s fiscal health.
Rauner’s blame game also gives us an opportunity to address the fiscal elephant in the room: decades of chronic underfunding of state pensions by political leaders of both parties.
The struggle to repair the damage from that bipartisan shortsightedness is now severely straining state finances, with pension costs consuming nearly one quarter of general spending and crowding out resources available for schools, social services, public health and crime-fighting.
A shared legacy
Illinois has a long track record of structural budget deficits, meaning spending growth that outpaces revenue growth.
A 1996 study by economists at the University of Illinois’ Institute of Government & Public Affairs flashed clear danger warnings for state policymakers. The study found that state policies and programs already in place were on pace to increase long-term expenditures at twice the rate of revenue growth — a recipe for lasting budget problems.
At the time of its publication, Republicans controlled not just the governor’s office but both chambers of the legislature (though GOP dominance of the House at that time was short-lived).
There was no rush for a course correction, although then-Republican Gov. Jim Edgar tried one in 1997 that was shot down by his own GOP colleagues in the state Senate. Edgar had sought to raise revenue by hiking the state income tax while also using some of the proceeds to increase school spending and give a break to beleaguered property taxpayers.
And the historical record makes clear that fingerprints of both Republicans and Democrats can be found on the shovel used to dig Illinois into the deep fiscal hole it now faces.
Examples from the Republican side date back to at least the 1980s, when a top budget aide to then-Gov. Jim Thompson told the Chicago Tribune that funding the pension system “doesn’t make sense” because earnings on assets would more than cover any shortfall in government contributions.
Fiscal short sightedness compounded in 1989 when Thompson agreed to give pensioners an expensive annual cost of living adjustment of 3 percent, a decision that has greatly added to the cost of pensions and that the state Supreme Court says cannot be reversed.
In 1994, Edgar oversaw implementation of a 50-year timeline to restore ailing state pension systems to fiscal health. In doing so, however, the Edgar plan included a lengthy phase-in period that allowed the state’s pension debt to grow by tens of billions of dollars, pushing the problem of how to pay it down on to future governors.
Edgar’s immediate successor, Republican George Ryan, further weakened pension health with a poorly designed early retirement program for state workers. Financial incentives dangled by Ryan were so generous thousands of workers left the state payroll, stopped paying pension premiums and instead began drawing retirement benefits.
Democrats took control of all state government in 2003, but newly elected Gov. Rod Blagojevich skipped required payments to pension systems while borrowing billions of dollars to shore them up which then had to be repaid.
Blagojevich’s Democratic successor, Pat Quinn, finally made efforts to reverse course by establishing a menu of reduced retirement benefits for workers hired after 2010. Three years later, Quinn signed landmark legislation to save money by cutting pension benefits for veteran employees as well, but the Illinois Supreme Court ruled it unconstitutional.
Rauner, meanwhile, engaged in a record two-year budget standoff with Democrats that hobbled state services, grew a mountain of unpaid bills and sunk the state further into debt.
“This blame game I don’t think is really very constructive,” said David Merriman, director of the Fiscal Futures Project at the Institute of Government & Public Affairs, which makes comprehensive assessments of the state’s fiscal health. “Right now we have to think about how to move forward.”