SPRINGFIELD, Ill. • Warning his cash-starved state of a “rendezvous with reality,” Gov. Pat Quinn today formally proposed a $33.8 billion Fiscal 2013 state budget that closes two prisons, cuts services and agency funding across the state and calls for huge (but still-unspecified) savings in state pension and Medicaid costs.

“I'm here today to tell you the truth,” Quinn, a Democrat, told a joint session of the General Assembly gathered in Springfield for his fourth annual budget speech. “This budget contains truths that may not be what you want to hear. But these are truths that you do need to know. And I believe you can handle the truth.”

Quinn then proposed an austerity budget to address the state’s continuing problems paying its bills: Prison closures at Tamms and Dwight, dozens of other state facility or office closures, and a 9-percent across-the-board cut for most state agencies. Education will be spared, getting a 1 percent increase over last year. 

Republicans credited Quinn for his recognition of the state’s seemingly chronic budget crisis, something they say has been missing until now. “I was pleased to see that he didn’t run away from the problem,” Senate Minority Leader Christine Radogno, R-Lemont, said after the speech.

But they complained that Quinn offered too few specific fixes for the problem, identifying out-of-control pension and Medicaid costs as the chief budget-busters, but then punting to bipartisan “working groups” of lawmakers to come up with the solutions.

“What does he want? Tell us what you want,” said a visibly frustrated House Minority Leader Tom Cross, R-Oswego. “Be the governor and introduce a bill.”

Quinn has hinted recently that he believes local school districts should carry their own employee pension costs instead of having the state pay them, and that Medicaid cuts should potentially include both stricter policies that would shorten the list of 2.7 million recipients, and reduced payments to medical providers.

Quinn referenced all those possibilities in the 30-minute speech, but his proposed budget doesn’t specify any of them.

The budget is about $500 million higher than last year’s, a fact that Republicans were quick to criticize. Quinn’s office maintains that discretionary spending is actually down, and that the overall increase is only because the administration is keeping up with the increasing annual required state payments to the pension system -- something the state has often failed to do in the past, prompting the current pension crisis.

Quinn said the working group on Medicaid reform needed to come up with solutions this session. “Don't plan on going home for the summer until we get this job done,” he told lawmakers.

Quinn’s plan to close the Tamms supermax prison in deep southern Illinois is drawing particular ire from both Republicans and Democrats downstate. “I don’t know how you justify closing Tamms when we’ve abolished the death penalty,” meaning the state will have more ultra-violent prisoners to house for life, said Rep. Mike Bost, R-Murphysboro.

The governor’s budget presentation is the first step in a process that generally involves negotiations between both parties in both chambers, with compromise budget legislation emerging later in the spring.

* * *

Below is our earlier live-blog of the speech.

 

11:53: House Speaker Michael Madigan has called the chamber to order. He's introducing luminaries.

11:58: Quinn is in the chamber.

12:04: Quinn: "I'm here today to tell you the truth. This budget contains truths that may not be what you want to hear. But these are truths that you do need to know. And I believe you can handle the truth." (shades of Jack Nicholson?...)

"Today, our rendevouz with reality has arrived."

He says the new pension rules enacted in 2010 (less generous for new employees) "will save taxpayers billions of dollars over the next generation."

He notes his administration has made every scheduled pension payment to the system, but previous administrations didn't.

This "has cost us dearly today," causing a $5.2 billion pension payment this year. That's 15 percent of the entire GRF.

We need to "prevent them (pension costs) from swallowing up our core programs" in education and other areas.

He says we need pension reform, and that "everything has to be on the table." He says it twice. Includes "employer contributions and employee contributions."

The former is a reference to his testing the waters on making local districts take over a huge chunk of their own pension payments that are currently paid by the state. (Here's our recent blog on that.)

He's talking now about Medicaid. "On the verge of collapse." Need to trim $2.7 billion from its costs in order to save it.

He says we need to look at eligibility (potentially pushing some people off the rolls), cutting the numbers of services offered (Quinn's budgeteers last night said there are no restrictions on eyeglasses; you could order a new pair daily if you wanted); and possibly lowering rates to doctors, which is the one cut that Republicans have indicated they DON'T want.

The Medicaid system has to be reformed this year.

Off-script to the legislators: "Don't plan on going home for the summer until we get this job done."

He just mentioned one of the few winners in this budget: Belleville, which is getting a new State Police forensics lab, as the old one in Carbondale is shut down.

12:24: He's going over a lot of the previously reported points of the budget: 9 percent across-the-board cuts in most agencys, but a 1 percent increase in education spending. His proposal for a tax credit to businesses that hire military veterans.

Reading forward over the speech, what jumps out is what's not there: He's been hinting for weeks that we'll see major new ideas for closing tax loopholes. But the only specific reference to that is the one that allows Illinois oil companies to declare their off-shore oil derricks to be in foreign countries when they are actually in international waters. That one example has been out there for awhile. Where are the rest?

"For too long, we've had a revenue code that looks like Swiss cheese," with loopholes "based on politics, not economics." Still, though, no examples other than the one oil thing.

Done at 12:31: Half hour. Remarkably tight and coherent speech (it's not his usual way). But looking at the substance, much of this isn't soup yet. On pensions, Medicaid reform and tax loopholes -- the three big savings areas he's counting on, and which he's identified as urgent -- there were no numbers at all, but rather a vow to form working groups to come up with numbers.

We'll be talking shortly to Republican leaders.