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Blagojevich calls Hynes budget warning ‘arbitrary'

Posted August 06, 2007 11:00 pm

Mike Ramsey

Editors: Updated with developments from budget meetings in Springfield

CHICAGO - Gov. Rod Blagojevich on Monday rejected a constitutional officer's warning that a state budget must be in place within a couple of days to prevent financial hardships to state workers and schools, but his administration began offering loans to cash-strapped districts that may be getting skittish.

Illinois Comptroller Dan Hynes says without a temporary or full-year budget by Wednesday, his office cannot process Aug. 15 paychecks for nearly 5,000 public employees nor make payments to school districts, vendors and providers.

Blagojevich called the purported deadline "arbitrary" and said it is "no different from today, it's no different than yesterday, and it's no different from Aug. 9."

Hynes, a fellow Chicago Democrat who appeared at a labor bill-signing the governor attended, disagreed.

"I think he is wrong," he told reporters moments later. "Tell that to the 4,900 state employees who aren't going to get their paycheck. I think they would disagree that (the Wednesday deadline) is artificial."

In Springfield, House Minority Leader Tom Cross, R-Oswego, was skeptical about completing a budget in two days, saying, "It's looking bleak."

Sen. Donne Trotter of Chicago, a top budget negotiator for the Senate Democrats, also downplayed the importance of Wednesday's deadline.

"Contrary to what the comptroller said, the sky will not fall on the ninth," Trotter said. "The various agencies have contingency plans that will be put in place.

People who have contracts with the state are not going to jeopardize their multimillion-dollar contracts just because they might get their check two weeks late."

The last state budget expired June 30. Blagojevich and the lawmakers with whom he has been feuding approved a one-month budget to buy more time for negotiations, but that spending plan expired last week.

Hynes said his office typically pays $100 million in bills each day in August but cannot do so without a new budget. He said the 4,900 state employees (with an estimated payroll of $14.8 million) in jeopardy of not getting paid Aug. 15 would be followed by many thousands more who are paid later in the month.

Also due Friday is state government's first installment of general aid payments to school districts across Illinois, said Matt Vanover, spokesman for the Illinois State Board of Education. He said the average installment payment for the state's nearly 900 districts was $170 million in the last fiscal year; the payments are made twice a month.

To allay concerns among local school officials, State School Superintendent Christopher Koch on Monday notified districts "in financial need" that the Illinois Finance Authority would make up to $175 million in no-interest loans available.

Financing costs would be paid by the next state budget, Koch wrote in a letter.

"I understand that this is an anxious time for many of you and thank you for your patience and understanding," he said. "I hope knowing that a plan is in place will ease the burden on your district as you prepare for the new school year."

Marc Kiehna, president of the Illinois Association of Regional Superintendents of Schools, called the administration's offer welcome news. But he added that school districts negotiating with teachers' unions need to know the total funding picture for the upcoming school year.

"Every day that we go further and don't come to a budget agreement, it simply delays the negotiations for our teachers' contracts," Kiehna said. "Our superintendents get a little nervous when that happens."

Blagojevich is allied with Senate President Emil Jones, D-Chicago, but Jones and the three other legislative leaders have been conducting budget discussions without the governor.

Blagojevich initially proposed a massive health-care plan for uninsured adults and a business tax to pay for it, but the idea was rejected by the House. The governor indicated Monday he still wants a health-care component for the next state budget, as well as increases in education funding and a capital budget for infrastructure.

He has suggested lawmakers send him another interim budget, but legislators have said they prefer to hammer out a full-year spending plan.

House Republicans met privately at the Statehouse Monday to discuss a revenue-generating proposal that would allow existing riverboat casinos to expand operations and put a land-based casino in Chicago. Money from the expanded gambling would be used to finance a capital bill for road, bridge and school construction and allow the state to pump more money into education.

"If it is done right, we are open to looking to add the Chicago facility," Cross said after the meeting. "There was a good bit of interest in there, more than I thought, to go down this road."

Cross declined to say how many Republicans are prepared to vote for a Chicago casino. House Republicans had been adamant against adding new gaming licenses, preferring a plan to allow only existing casinos to expand.

But Senate Minority Leader Frank Watson, R-Greenville, said that "doesn't generate enough revenue to support a bonding bill, let alone support education. That's why a Chicago license is important."

Watson and Jones support adding a Chicago casino and allowing the state's nine others to expand. A more expansive gambling plan passed by the Senate this year stalled in the House.

The revised plan would generate enough money to finance $8 billion to $10 billion in construction. Cross said House Republicans want some of that money for the financially troubled Chicago-area mass transit system. He said that is preferable to the alternative plan that calls for imposing a regional sales tax.

Jones also wants some of the gambling money used to increase education spending. Gaming expansion would allow for a $900 million increase for education. Without the gaming bill, the state could only afford about $600 million more.

Jones' office said that with a $900 million increase, per-pupil spending could rise from $5,334 to $5,888. That's still short of the recommended level of $6,405.

Doug Finke of GateHouse News Service's State Capitol Bureau contributed to this report. Mike Ramsey can be reached at (312) 857-2323 or ghns-ramsey@sbcglobal.net.

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