Budget dilemma looms for Illinois Democrats

Facing one of the nation's worst budget crises, the Democrats who run Illinois insist they're serious about overhauling the state's expensive health programs and employee pensions. Gov. Pat Quinn underscored his determination by declaring he was "put on earth" to solve the multi-billion-dollar pension problem.

But can the Democrats actually do it?

The effort will test whether a state infamous for emphasizing politics over policy and for finding budget shortcuts rather than long-term solutions can change its ways. It will require Democrats, in the middle of an election year, to deflect longtime union allies and to cut state money flowing to many of the urban wards that put them in office.

"I don't think my constituents realized the truly horrible choices we're going to have to make," said Rep. Greg Harris, a Democrat from Chicago.

State Medicaid and pension problems exploded nationwide when recession hit in 2008. The number of people eligible for government health care assistance jumped by 5.6 million and state retirement systems lost more than one-quarter of their total value, by some estimates.

Many states, particularly those led by Republicans, have taken drastic steps to fix their budgets, including cutting spending and requiring public employees to contribute more to their benefits. In some cases, the cutbacks triggered huge protests last year at state capitols by public employees and advocates for the poor.

But Illinois, where Democrats control the governor's office and both houses of the Legislature, flinched, taking only limited steps. Now, with the state staggering under a backlog of $9 billion in unpaid bills, leaders again face the awkward task of inflicting pain on their friends.

Quinn proposes cutting $2 billion from a Medicaid program that totals about $14 billion, throwing more than 35,000 people off the rolls entirely and eliminating services like dental care for others. He wants public employees to give up roughly 3 percent of their pay to beef up retirement funds and work years longer before they could collect full pensions. And House Speaker Michael Madigan is talking about ending free health insurance for government retirees.

There is little precedent for that approach in President Barack Obama's home state.

Union leaders reacted angrily. Michael Carrigan, head of the Illinois AFL-CIO, called Quinn's proposals "insensitive and irresponsible." He said it would hurt hundreds of thousands of state residents and violate the Illinois Constitution's ban on reducing pension benefits.

"It is a clearly illegal attempt to solve the problem caused by past governors and the legislature solely on the backs of teachers, caregivers and other public worker," Carrigan said on behalf of a coalition of unions.

Illinois labor organizations like the AFL-CIO, the American Federation of State, County and Municipal Employees and teachers' unions have donated more than $10.7 million to Democratic candidates over the past three election cycles. That's three times more than they gave to Republicans, according the Illinois Campaign for Political Reform.

Despite similar sensitivities, other states with Democratic governors have been making cuts to address pension and revenue problems. Both New York and California cut Medicaid last year. New York approved significant pension restrictions last month.

Illinois' Republicans, outnumbered 99-78 in the General Assembly, have been demanding action for years. Even after the Legislature raised income taxes last year and trimmed some costs, expenses were still rising faster than revenue. By some estimates Illinois faces a deficit of more than $3 billion on top of $9 billion in old bills owed to vendors and social service providers.

"We're glad the (Quinn) administration and the Democrats have finally gotten religion," said Senate Minority Leader Christine Radogno.

Quinn publicly acknowledged that over the years, Democrats and Republicans alike failed to set aside enough money to keep up with obligations. And they sometimes sweetened benefits without worrying about how to pay for them.

"If we don't deal with this problem right now, it will just get worse," Quinn said.

Quinn insisted he won't let legislators end this spring's session, meaning they can't go home and campaign, if they haven't resolved both the pension and Medicaid issues.

But the fate of his initiatives depends on his fellow Democrats. Madigan, from southwest Chicago, has run the Illinois House for virtually all of the past three decades. He has made an art of finessing sensitive issues to protect Democratic candidates and, as usual, is staying vague on what should be done.

Some Democrats and their allies question whether targeting pensions and health care would deal a serious blow to the state's shaky economy.

Sen. Kwame Raoul of Chicago said Democrats over the past few years should have been honest with their constituents about Illinois' financial realities.

"Yes, certainly we should have done that," Raoul said. "Simultaneously, we should have made the tough decision of saying, 'This is what the services cost and we need a tax increase.'"