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Report to present magnitude of Ill. fiscal woes

SPRINGFIELD – A report due Wednesday on Illinois' fiscal crisis is heavy on definition but light on recommendations for repair, one of its authors said Tuesday.

An offshoot of a national report released in July that was headed by former Federal Reserve Chairman Paul Volcker and former New York Lt. Gov. Richard Ravitch, the Illinois edition of the State Budget Crisis Task Force aims to drive home how big of a hole Illinois has dug itself, according to Richard Dye.

"It spends a lot of time talking about the magnitude of the problem, which is huge – somebody's ox is going to be gored, or oxen," said Dye, an economist with the University of Illinois' Institute of Government and Public Affairs.

"Rather than weighing in on the tough choices and focusing people's attention on specific cuts that we might recommend, we stayed out of that," Dye said. "That's the big thing: Something's got to be done and sooner rather than later."

The report, released in Chicago, lays out in detail what many already know: Illinois is $9 billion behind on its bills. Its pension systems are underfunded by $85 billion to more than $90 billion, depending on the source. Medicaid health care costs are eating bigger parts of the state budget every year.

While the task force doesn't make specific recommendations, it points out some weaknesses in the state's funding mechanism. Illinois doesn't charge sales taxes on services such as a haircut or eyeglass-fitting, and retiree income isn't taxed. Both are straightforward ways to increase revenue, Dye said, noting the potentially explosive political fallout of those options.

The task force is trying to "make sure people understand all the consequences of the current course of action; Illinois' budget is not fiscally sustainable," Ravitch said in a prepared statement. "Despite recent progress and difficult choices, it is still in a deep hole."

Focusing heavily on the underfunded pensions and Medicaid's budget bite, the report then turns its attention to better planning, or, in the words of the task force, developing a "fiscal tool kit," Dye said. Those suggestions revolve around multiyear economic planning to keep from compiling yearly budgets in reaction to fiscal trends and developing a meaningful "Rainy Day" fund that is untouched in good times but can be used to maintain services in a downturn.

Abdon Pallasch, spokesman for Gov. Pat Quinn, said the report is "a comprehensive look at all the budget problems facing Illinois – problems Gov. Quinn has been busy tackling since the day he came into office."

Among other things, Quinn pushed through a 67 percent income tax increase, and the national report noted the $2.3 billion Medicaid-cut plan the Legislature adopted last spring, which he wanted.

Pallasch said the Democrat welcomes all suggestions in facing down "the budget problems that were created over decades of fiscal mismanagement by previous governors and legislatures."

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Contact John O'Connor at https://www.twitter.com/apoconnor

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Online:

State Budget Crisis Task Force report: http://www.statebudgetcrisis.org/wpcms/

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