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Monday, January 27, 2020

GOP senators continue to grill Rauner's budget director over paying pension deficit

State Government

By Angela Underwood | May 23, 2018


Hans Zigmund, new director of Gov. Bruce Rauner's Office of Management and Budget, had more explaining to do to three Republican lawmakers.

Since the last Senate Appropriations I & II Committee Hearing in February, lawmakers had just as many questions for Zigmund at the May 9 hearing.

As part of the governor’s fiscal year 2019 budget, there are a number of shifts in pension cost responsibility, according to Zigmund, who said the policy objective is to align the responsibilities to pay for pension costs with government entities that are actually negotiating contracts.

Hans Zigmund | Linkedin

Sen. Dale Righter (R-Mattoon) said the cost-shift proposal is never easy and asked Zigmund what would happen if the General Assembly did nothing.

“What is the dollar amount that the state gives up and where do we find that money,” Righter asked.

Zigmund said that is the billion-dollar question, adding between teacher, university and healthcare cost shifts, as well as other changes, the total amounts to nearly $1.3 billion.

“If we are not going to do those things, then we would want to hear what the proposal is to do something different that finds that $1.3 billion so that we can balance the budget,” Zigmund said.

There needs to be a surplus to pay bills, he added.

Righter wanted to know what areas in the state budget Zigmund would find that type of funding absent the shifts. 

The two areas would be education and Medicaid, according to Zigmund

“But the biggest cost sink in government is pensions,” Zigmund said, adding debt on previously issued pension obligation bonds and notes, and present contributions are where all the money is going.

Righter said while the pension bill must be paid, that leaves the Medicaid program open for cuts.

“But unless you pass substantive legislation to change the entitlements under the program, then all you are doing is not paying a bill that is going to be due next year, which General Assemblies and governors have been famous for in this state, ” Righter said.

After Righter was told if nothing is done, then the state is going to come up $3 billion short for next year’s budget, Sen. Chapin Rose (R-Mahomet) reminded committee members it was Speaker Michael Madigan (D-Chicago) who started shifting money around.

Sen. Sue Rezin (R-Morris) brought up the economic forecasting nationally as opposed to statewide. She cited stats going back five years, which ultimately showed how Illinois remains 1 percent behind the nation and asked Zigmund why the state is underperforming.

Zigmund said Illinois has a number of negative factors working against it, including the enormous amount of uncertainty around the state budget level, particularly related to property taxes.

“It makes it difficult for people to want to stay in Illinois,” Zigmund said.

Needless to say, if Illinois was bringing in more revenue, the state would be much better off as far as rating higher when it comes to regional and national economic growth, according to Rezin.

"I don't think there is any question," Zigmund said. 

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Illinois State SenateIllinois State Senator Chapin Rose (R-51st)Illinois State Senator Sue Rezin (R-38th)Illinois State Senator Dale RighterIllinois Office of Management and Budget

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