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