Gov. Rod Blagojevich's budget plan would make things worse, report says

For a state facing "colossal financial issues," Gov. Rod Blagojevich's proposed 2009 budget fails to address key funding weaknesses and likely would worsen the state's precarious fiscal condition, a prominent watchdog group concludes in a report to be released Monday.

The Civic Federation of Chicago, a non-partisan research group, criticized Blagojevich's budget blueprint as relying too heavily on raising business taxes and for taking on billions more in debt. The group also opposed the governor's idea of selling at least a portion of the Illinois State Lottery to help pay for a proposed $25 billion capital infrastructure program.

In a 62-page analysis, the group urges the governor and state lawmakers to address systemic problems, most specifically $44 billion in unfunded pension liabilities and $24 billion in retiree health-care liabilities.

"We see so little attention here to any kind of reform, and we just can't keep going down this road," said Laurence Msall, president of the federation. "The state needs to get serious about addressing its structural problems."

The annual report comes as Blagojevich and the General Assembly face a May 31 deadline to pass a budget. Much like last year, which featured a record overtime, the various battling Democratic factions who control state government do not appear to be anywhere near a deal.

Blagojevich's budget speech, delivered in February, was panned by many lawmakers who noted it contained several repeat ideas that have failed to gain traction.

Since then, Blagojevich has lobbied lawmakers and editorial boards on his plan to sell a portion of the lottery, but the civic group said it could not support the idea because it's unclear what capital projects the revenue would fund. The federation said lawmakers "should demand a detailed capital improvement plan" before approving such a dramatic move as a lottery sale.

Blagojevich's proposal to issue $16 billion in pension-obligation bonds is ill-advised in the face of weakening revenues and massive liabilities, the group said. The money would go back into the pension system to help shore it up.

The federation did applaud a couple of the governor's proposals: 3 percent spending cuts in some areas and corporate tax relief.

"We're encouraged that the governor has come forward with areas to cut," Msall said. "But they're not big enough to make up for the spending increases."

A spokeswoman for the governor's budget office said the Civic Federation failed to take into account that state government provides important services. And the report offered no ideas on keeping those services in place during a bad economic cycle, the spokeswoman said.

What the "report fails to recognize is that there is a huge human aspect to what government does," Blagojevich spokeswoman Katherine Ridgway said. "We would like to hear the federation's ideas on how the state can really help people during the national economic downturn."

dmendell@tribune.com

Related topic galleries: Casino and Gambling Industry, Government, Laws, Tourism and Leisure, Regional Authority, Interior Policy, Rod Blagojevich

• DRIVER

• AAACTIVISM JOBS W/ ENVIRONMENT MD

• DRIVER

• ADMINISTRATIVE ASSISTANT

• INVENTORY CONTROL CLERK

• View all Top Jobs