SEGMENT.

AND NOW TO CAROL MARIN AND

DISSECTING THE $40 BILLION STATE

BUDGET.

>> THANK YOU, PARIS.

A BALANCED BUDGET AND A PATH TO

FULLY FUND PENSIONS OVER TIME.

THAT IS WHAT GOVERNOR J.B.

PRITZKER AND LAWMAKERS FROM BOTH

SIDES OF THE AISLE CLAIMED AFTER

PASSING AND SIGNING INTO LAW A

NEW STATE BUDGET EARLIER THIS

MONTH.

WITH ILLINOIS FACING $134

BILLION IN UNFUNDED PENSION

LIABILITIES IN MORE THAN $7

BILLION IN OUTSTANDING BILLS

SHOULD ILLINOIS TAXPAYERS BE

RELIEVED?

OR SHOULD THEY BE WARY?

JOINING US TO SHARE THEIR TAKES,

JEFF SCHOENBERG PRINCIPAL AT

VICE SCHOENBERG IMPACT ADVISORS

AND A DEMOCRAT WHO SERVED AS

ASSISTANT MAJORITY LEADER DURING

HIS TIME IN THE SENATE.

AND ADAM SCHUSTER DIRECTOR OF

BUDGET AND TAX RESEARCH AT THE

ILLINOIS POLICY INSTITUTE.

THANKS BOTH OF YOU FOR COMING

BACK TO "CHICAGO TONIGHT."

SO, JEFF SCHOENBERG LET ME START

WITH YOU.

YOU HEARD THAT BIPARTISAN

RESOUNDING CELEBRATION WE GOT

ALONG WE GOT SOMETHING DONE.

YOU HAVE BEEN A STATE SENATOR

AND REP UNDER FIVE GOVERNORS

THREE AND REPUBLICANS, TWO

DEMOCRATS YOU'VE HEARD THIS

DECLARED BEFORE.

IS THIS A BALANCED BUDGET

REALLY?

>> I THINK THAT IT'S PREMATURE

TO ROLL OUT THE MISSION

ACCOMPLISHED BANNER ON THE

AIRCRAFT CARRIER.

THAT SAID, THE LEVEL OF CONFLICT

AND INACTIVITY WAS SO GREAT THAT

MANY VULNERABLE PEOPLE ACROSS

THE STATE WERE BEING HARMED.

MANY PROVIDERS WERE BARELY

SOLVENT.

MANY INSTITUTIONS IN OUR

COMMUNITIES HAD ALL THEY COULD

DO TO HOLD ON.

SO COMPARATIVELY SPEAKING, I

THINK THERE IS A GREAT SENSE OF

ACCOMPLISHMENT AND JUSTIFIABLY

SO AND I GIVE A LOT OF CREDIT TO

GOVERNOR J.B. PRITZKER FOR

HAVING INVESTED HIS TIME AND

ESTABLISHING THE PERSONAL

RELATIONSHIPS ON BOTH SIDES OF

THE AISLE IN A RELATIVELY SHORT

PERIOD OF TIME IN ORDER TO

ARRIVE AT A CONSENSUS.

>> ADAM, $134 BILLION IN

UNFUNDED PENSION LIABILITIES.

CRITICS ARE CALLING INTO

QUESTION THAT $9 BILLION PAYMENT

FOR NEXT YEAR SHOULD BE $13

BILLION.

AND THERE IN LIES SOME OF THE

PROBLEMS AND SOME OF THE HOLES

IN THE BALANCED BUDGET.

DO YOU AGREE OR DISAGREE?

>> YES, THIS IS NOT A TRULY

BALANCED BUDGET.

THE LAST TIME WE HAD A TRULY

BALANCED BUDGET REVENUE CAME IN

AT OR BELOW EXPENSES WAS 2001.

EVERY YEAR ALMOST 19 YEARS NOW

WE HAVE BEEN SAYING WE'VE PASSED

BALANCED BUDGETS AND AT THE END

OF THE YEAR THE TOTALS DO NOT

MATCH.

THE PENSION IS ONE OF THE BIG

ISSUES LEFT UNADDRESSED.

JUST YESTERDAY MOODY'S AND

ANALYSTS CREDIT RATINGS AGENCY

SAID ILLINOIS IS NOT GOING TO

RECEIVE AN UPGRADE AND WORSE IN

THE NATION CREDIT UNTIL WE HAVE

MEANINGFUL ACTION ON PENSIONS

AND THAT DID NOT HAPPEN.

>> THERE WAS A LOT OF DISCUSSION

HOW MARIJUANA IS GOING TO BRING

A HUGE AMOUNT OF MONEY TO THE

STATE.

AND HOW LICENSING OF GAMBLING IS

GOING TO BRING THAT TO THE

STATE.

ARE THOSE ESTIMATES

OVERESTIMATES?

>> I ACTUALLY THINK THAT THE

ESTIMATES FOR SPORTS GAMING ARE

LOW.

BECAUSE ON-LINE GAMING AND

SPORTS GAMING ARE AREAS THAT ARE

VERY DYNAMIC IN THEIR GROWTH.

NOT JUST HERE IN THE U.S. BUT IN

EUROPE AS WELL.

WHERE REVENUES WILL BE STAGNANT

IS WITH THE EXPANSION OF CASINO

GAMING.

WHICH I NEVER SUPPORTED WHEN I

WAS IN THE LEGISLATURE.

BECAUSE WE NEVER SEEM TO TALLY

UP THE HUMAN COST THAT RESULTS

FROM GAMING.

BUT THE MARKET IS SATURATEDDED

FOR CASINOS.

AND THE REAL MONEY THAT THE

STATE COULD MAKE AT ONE TIME WAS

OVER THE LICENSES BUT THE VALUE

OF THE LICENSES HAS DROPPED

PRECIPITOUSLY AND THEREFORE IT

IS REALLY ALL THE STATE CAN DO

TO HOLD ON TO THE CASINO

REVENUES THAT THEY HAVE.

>> ADAM GAMING?

>> THE LAST TIME WE COUNTED ON

MAJOR GAMBLING EXPANSION TO FUND

CAPITAL PROJECTS, REVENUES CAME

IN A BILLION DOLLARS BELOW

EXPECTATIONS OVER THE COURSE OF

10 YEARS.

THEY ARE VOLATILE REVENUE SOURCE

BOTH MARIJUANA AND CIGARETTES

AND GAMBLING OTHER REVENUE

SOURCES HERE THESE ARE VOLATILE

THEY ARE REGRESSIVE AND WE

SHOULD NOT BE COUNTING ON THEM.

A HEALTHY STATE DOES NOT HAVE TO

COUNT ON THESE.

WE SURE MAKE SURE OUR EXPENSES

ARE MATCHING.

>> WE ARE NOT A HEALTHY STATE

AND WHEN YOU ARE DESPERATE,

DESPERATE TIMES REQUIRE

DESPERATE MEASURES.

>> YES, BUT THAT IS THE SAME

FALSE CHOICE THAT IS BEING

PRESENTED WHEN WE APPLAUD

LAWMAKERS FOR DOING THEIR ROLE

OF GETTING A BUDGET PASSED NOT A

BALANCED BUDGET.

IT'S UP TO $1.3 BILLION OUT OF

BALANCE WHEN YOU COUNT FOR

REALISTIC REVENUE AND

EXPENDITURES.

IT IS NOT A TRULY BALANCED

BUDGET.

WE SHOULDN'T BE RELYING ON THE

REVENUE SOURCES WE SHOULD BE

TACKLING THE CORE SPENDING

PROBLEM THAT WE HAVE.

THE PROBLEM IS HERE FOR A DECADE

OR TWO DECADES OUR SPENDING IS

GROWING FASTER THAN THE REVENUES

AND WE HAVE TO DO A

CONSTITUTIONAL AMENDMENT TO

ALLOW US TO BE REASONABLE

PENSION FORM THAT SECURES THE

RETIREMENT SECURITY OF

GOVERNMENT WORKERS AND TAXPAYERS

ARE PROTECTED AS WELL.

>> SPENDING IS ALWAYS

HIGHLIGHTED DOESN'T MATTER WHAT

YEAR OR WHAT CAMPAIGN.

ARE THERE, JEFF, SPENDING CUTS

THAT CAN BE MADE TO SOMEHOW

BRING THIS INTO BALANCE?

>> WELL, ONE OF THE IN ADDITION

TO PENSIONS ONE OF THE LARGEST

GROWTH AREAS OF SPENDING IN THE

STATE IS MEDICAID.

AND REMEMBER, JUST BECAUSE

THERE'S A PARTICULAR DOLLAR

FIXED FOR THE AMOUNT OF STATE

AUTHORIZATION FOR MEDICAID

SPENDING, ONLY ONE OF EVERY $2

COMES FROM STATE EITHER

MARIJUANA TAXES OR SOME OTHER

FORM OF TAXES.

AND THAT IN TURN GIVES US THE

OPPORTUNITY TO CAPTURE A

MATCHING DOLLAR FROM WASHINGTON

TO PAY FOR MEDICAID.

TWO-THIRDS OF MEDICAID IS FOR

MENTAL HEALTH AND DEVELOPMENTAL

DISABILITIES AND LONG-TERM CARE.

>> IS THE ANSWER WE HAVE

SPENDING CUTS TO MAKE OR NOT?

>> I THINK THAT THE ANSWER IS

SPENDING CUTS WILL BE AT THE

MARGINS.

PARTICULARLY IF THERE IS A

STRONG WILL TO INCREASE THE

INVESTMENT IN EDUCATION.

NOT JUST HIGHER EDUCATION, WHICH

REGRESSED FOR A LONGTIME AND

K-12 WHICH ROSE, BUT EARLY

CHILDHOOD EDUCATION WHICH I KNOW

IS A PASSION OF THE GOVERNOR'S

AND HE IS DETERMINED TO MAKE

ILLINOIS A NATIONAL LEADER

THERE.

>> ADAM, RALPH MARTIRE SAID THAT

MAKING CUTS DOESN'T ADDRESS THE

FACT THAT ILLINOIS HAS BEEN

DISINVESTING IN THE CORE

SERVICES LIKE HIGHER ED OR LIKE

MENTAL HEALTH FOR 20 YEARS.

IS HE WRONG ABOUT THAT?

>> NO, WE LARGELY AGREE THAT THE

STATE IS NOT PROVIDING VALUABLE

SERVICES TO THE RESIDENTS AND

THEY ARE NOT GETTING A GOOD BANG

FOR THE TAX DOLLAR AND RALPH

MARTIRE POINTS TO THE FACT IN

REAL TERMS ADJUSTED FOR

INFLATION SPENDING ON KEY

PRIORITIES LIKE HIGHER EDUCATION

IS DOWN.

THAT IS BECAUSE BACK IN 2000,

THE YEAR HE USES AS THE BASE

YEAR WE WERE SPENDING 5% ON

PENSIONS IT'S 25%.

PENSIONS ARE THE SINGLE ISSUE.

WHAT ALL THE CREDIT RATING

AGENCIES AND ALL THE BOND BUYERS

ARE CONCERNED ABOUT GIVING US

THE HIGH YIELDS WHICH COST

TAXPAYERS AND WE NEED TO

MEANINGFULLY NEED TO ADDRESS THE

PENSION ISSUE.

THAT PROTECTS EVERY DOLLAR THEY

HAVE BEEN PROMISED BUT REDUCES

THE FUTURE GROWTH RATE IN THE

BENEFITS TO BRING THEM IN LINE

WITH WHAT WE CAN AFFORD AND IT

MAKES THE SYSTEM SUSTAINABLE.

RIGHT NOW THE SYSTEMS ARE AT

RISK OF INSOLVE VEN SI.

>> DO YOU AGREE WITH THAT?

>> I CANNOT SAY THAT I AGREE

WITH IT THAT IS THE HILL THAT

THE RAUNER ADMINISTRATION CHOSE

TO DIE ON.

NOT JUST IN THE LEGISLATURE

BUT AT THE JUDICIARY LEVEL AS

WELL.

TO ACHIEVE PENSION REFORM, THE

ANSWER IS NOT GOING TO BE TO

MOVE PEOPLE TO A 401K BECAUSE

THERE'S GOING TO COME A POINT IN

TIME WHEN THE STOCK MARKET IS

NOT AS ROBUST AS IT IS RIGHT

NOW.

AND THEN PEOPLE ARE GOING TO BE

LEFT VERY VULNERABLE.

THAT SAID, I DO THINK THAT THERE

IS A WAY TO CONSOLIDATE CERTAIN

PENSION FUNDS AND HAVE A MORE

BALANCED INVESTMENT PORTFOLIO.

>> SO I TAKE FROM THE TWO OF YOU

IN THE 10 SECONDS WE HAVE, THAT

NEITHER ONE OF YOU THINK THIS IS

BALANCED BUT IT'S NICE THAT

PEOPLE ARE GETTING ALONG

FINALLY?

IS THAT A FAIR SUMMARY?

>> I DON'T WANT TO BUY INTO THAT

CHOICE.

I THINK WE NEED A TRULY BALANCED

BUDGET THAT GIVES TAXPAYERS THE

RESPECT THEY DESERVE.

>> AND I GIVE IT MUCH, MUCH MORE

CREDIT THAN THAT.

AND THE CENTER FOR ILLINOIS

POLITICS HAS DONE AN EXCELLENT

ANALYSIS.

I AM A BOARD MEMBER OF THE

CENTER AND I ENCOURAGE PEOPLE TO