Topinka has grim message about state finances
By Hank Beckman For The Sun December 10, 2012 5:56PM
FILE - In this Aug. 18, 2011 file photo, Illinois Comptroller Judy Baar Topinka participates in a rally during Republican Day at the Illinois State Fairgrounds in Springfield. Topinka and Illinois State Treasurer Dan Rutherford, both Republicans who have criticized government spending and want to consolidate it have handed out pay raises to dozens of employees during a fiscal crisis. The salary increases were discovered in an analysis of payroll records by the Better Government Association, a Chicago-based nonprofit group which showed the findings to The Associated Press. (AP Photo/Seth Perlman, File)
Updated: January 13, 2013 6:15AM
Illinois State Comptroller Judy Baar Topinka was in Naperville Monday, and the message she brought was grim.
Topinka, a Republican, was the featured speaker at the Naperville Area Chamber of Commerce Legislative Committee meeting, and she pulled no punches when talking about the state of Illinois’ finances.
“The clock is ticking,” she told the lunch crowd at the Hotel Arista.
The clock, she said, is attached to a load of debt, unpaid bills and unfunded pension liabilities that threaten to explode in Illinois taxpayers’ faces if something is not done to stop the flow of red ink in the budget.
She laid out the facts for the audience, noting that the state currently has no less than 199,429 unpaid bills owed to various creditors, vendors and non-profit organizations.
The backlog currently totals $6.9 billion and if nothing is done, will grow to $9 billion by next year.
The result has been that many agencies, such as Children and Family Services, is only being funded for one-half year. Standard and Poor’s has downgraded the state’s borrowing profile from A+ to A with a negative outlook.
She criticized the Illinois Democratic leadership for taking out short-term loans last year to pay off state debts, and plans to perhaps do it again for the coming fiscal year to the tune of $4 billion.
Topinka said that long-term borrowing might make sense to take advantage of fluctuating bond rates and economic changes, but short-term borrowing was a recipe for the state having its credit rating downgraded again.
“You’re not dealing with the basic structure,” she said.
Topinka said that growing pension liabilities and Medicaid expenses currently made up 40 percent of the state budget and without any type of reform would grow to 60 percent by next year.
As for the 67 percent state income tax increase that was enacted during the lame duck session of the Illinois General Assembly in 2011, Topinka said that the increase in revenue didn’t help, as it went to fund the state Medicaid program.
“We didn’t get a lick of that money,” she said.
Topinka said rescuing the state from fiscal disaster wouldn’t be easy, but she felt it could still be done.
She advocated going through the entire state government and streamlining it, eliminating waste.
Topinka noted that both parties advocated combining the Comptroller’s office with that of the State Treasury, a move that could save the taxpayers $12 million per year.
“But I cannot get that bill into a committee,” she said.
State Sen. Linda Holmes (D-Aurora) answered some of the criticisms leveled by Topinka. She acknowledged the pitfalls of borrowing to pay the state’s short-term debts, but stressed that the Legislature was in a tough position when the decision was made, having to choose between borrowing or not funding education and human services.
“We still as a government are tasked with taking care of our most vulnerable citizens,” Holmes said.
As for the state income tax increase set to expire in 2014, Holmes noted that it would expire if both houses of the General Assembly failed to vote to renew it.
Regarding unfunded state pensions, Topinka estimated that it currently is at about $97 million and a good chunk of it is in the Teachers Retirement System, which she said is only about 40 percent funded.
With the state picking up the employer’s share of public school’s contributions outside Chicago, many have proposed shifting the responsibility to local districts.
Topinka said that even with implementing the shift over a number of years to lessen the shock to the taxpayer, the effect was in reality just a shift of costs from the state tax bill to the local property tax bill.
“Your property taxes will skyrocket,” she said.
Topinka said meaningful pension reform would be difficult, because the state constitution prohibited the diminution of public pensions.
Some in the audience weren’t satisfied, and former Naperville City Council member Dick Furstenau pressed Topinka on the matter.
“I think it’s a question that needs to be addressed,” he said emphatically, “and it needs to be addressed by the elected leaders of this state.”
Naperville City Manager Doug Krieger noted that the city has gotten used to the state not paying its bills.
“The state has never been one of our prompt payers,” he said. “We plan around it and lower our expectations.”
Krieger did say that the state was currently about three to four months behind paying Naperville its share of state income tax money.