When the Illinois General Assembly returns for the fall veto session on November 17, what can we expect to be the top issue?
All eyes will be on the economy and whether the state appears to be keeping within the budget that was adopted. There will be some fine-tuning to the action the Governor took on the bills passed in June. The governor was handed an almost hopeless situation. I don’t think any of us realized how bad the financial situation was in the State of Illinois. He has handled it as well as he could possibly handle it, facing it squarely, making cuts and trying to contend with it. His challenge is that the Democrats, looking ahead to the next gubernatorial election, have given him a budget that is almost doomed to fall apart around the first of the year. In the veto session we will make restorations of some very necessary money, and make additional cuts depending on the revenue side of things, so he can have a workable budget.
There are tremendous pressures on our budget. Revenue in general funds this year totaled about $14 billion. We spend $5.5 billion in education, so that’s a big piece of the general funds. The other monster there is Public Aid, which gets $6.4 billion. The really incredible thing about Public Aid is Medicaid. In 1970 Illinois was spending $219 million for Medicaid. In 1990 Illinois was spending $2.3 billion. This year we will spend $4.76 billion. Those are huge numbers that are the result of federal mandates. The feds just keep heaping more and more mandates on us and we have to scramble to pay for them. When we have a public policy which says that education is not going to be cut, an out-of-control Public Aid/Medicaid situation, and a stagnant Illinois economy, then we have an extraordinarily difficult budget. As a result we wind up doing things like not opening a prison that is already built, or making cuts to home healthcare services. We are under a federal consent decree to make all kinds of changes in DCFS; many people say we won’t have the money to implement it.
What will happen concerning the Governor’s unpopular move to cut tax increment financing for local governments?
We will make every effort to restore it. There are people in the administration who don’t understand what tax increment financing is; that money is not state money. Once the commitment is made to tax increment financing district, that money is the local community’s money and there should be a pass-through from the state back to the local community. For the state to take the position that it is “appropriating” money to the cities for tax increment financing, as it would with a grant, is totally inappropriate. We have to make the state keep its word on the commitments that it has already made. Now if we don’t want to go forward with the program in the future, that’s another issue, but to be pulling the rug out from underneath communities that have already sold bonds and relied on the state’s word, is totally wrong. I don’t know how the votes will come down, but we will do everything we can in a bipartisan way to overturn it.
How should Illinois handle its backlog of unpaid bills?
Pay them. Borrow the money and pay them. Illinois government is doing to people what it would put them in jail for doing to the state. The state is quite ruthless in the way it enforces laws concerning money owed to the Department of Revenue. There is no excuse for not paying these bills on time. It’s a total embarrassment and totally unacceptable. We have many fiscal practices which urgently need to be corrected. We have to get to a generally accepted accounting practices system including accrual accounting. Whoever heard of being on this cash basis? This year we had over $750 million in “lapse spending,” meaning that we paid in 1992 for $750 million worth of things we did in 1991. This is a very unhealthy practice and one which will only snowball.
There is an $11.4 billion unfunded liability in our state pension systems; that is scary. It would be illegal in the private sector. We have legislation on the books, passed several years ago, to amortize this over 40 years. We adopted the legislation as about the first substantive action in that session. About the last substantive action we took in that session was to postpone the schedule by seven years and add another $1 billion to the unfunded liability. This is reckless, unsound, and it simply has to stop.
Will fiscal changes needed at the state level necessitate changes at the federal level?
Yes. I think we need a revolution in this country to get our rights back. The regulatory agencies are totally out of control. One example, that I’ll bet no more than ten people in Peoria know about, is a mandate by the federal government for Medicaid coverage on all young people up to age 18 by the year 2000. Everyone up to age 18 in a household that is at 133 percent of poverty or less has to be covered by Medicaid. Currently the requirement is age eight. Now, this may be great public policy – if it is, then send us the money! I had our staff add up the mandates in Medicaid this year alone, and they total $312 million. Where is the money going to come from?
Another example is the terrorizing of average citizens by the EPA. The incompetent administration of underground storage tank and landfill issues is ludicrous. What happens to the average person who is unfortunate enough to have an underground storage tank on his property is absolutely criminal! We have 8,000 of them that need to be dealt with in Illinois, and only 25 people directly managing the program.
I believe we have to start all over again in some of these areas with a couple of principles. One of them is that every problem cannot be solved by government. Experience shows that government often makes them worse. Secondly, every problem cannot be solved with more money. Lots of good ideas cannot be legislated; they simply cannot be accomplished. If we can’t implement proposed solutions, then we have no business imposing them. It’s more frustrating to contend with the idiocy that’s being perpetrated by regulatory agencies and the Congress.
The U.S. Congress and the Illinois General Assembly have both recently considered legislation which could be described as anti-business, including legislation designed to outlaw or discourage companies from hiring strike replacement workers. What are your comments on these measures?
This is a reason why everyone ought to vote for Bush and not for Clinton. Clinton would approve legislation to outlaw hiring strike replacements. I would like to see an opportunity for workers to vote on the last contract offer before a company would have the right to replace them. Then you would see what the workers really think.
The worse thing we could do is to elect a Democratic president to go along with a Democratic Congress, because I believe they would pass a tremendous amount of legislation which would be very adverse to our nation’s economy. In Illinois, all you have to do is look back to the election of Dan Walker as governor. When Dan Walker was elected, a Democrat, to go along with Democratic majorities in the House and Senate, the entire labor agenda was adopted. We have never recovered from that. I believe that set our state back tremendously, and we are not competitive. Until we get competitive, we are going to continue to be stagnant.
A recent InterBusiness Issues survey showed that the top two concerns of local business leaders are the area’s negative labor reputation and the restrictive and costly state labor laws. What are your thoughts on the cost of doing business in Illinois?
Small business people tell me they think the workers’ compensation system in Illinois is institutionalized rape. We have to reform it. Until we do, we are going to have a very stagnant business environment. A lot of the things that need to be done are pretty obvious things, but it required the political will to do them, and it requires a mobilization of public support to get these issues out of the hands of special interest groups. We have to get back to what is in the best interest of the citizens of Illinois.
Will we see the Illinois Legislature widen the independent contractor designations to promote industry growth?
Unfortunately, I don’t think so. That’s a perfect example of what’s wrong with the business climate in Illinois. We are running the trucking industry out of the state because of independent contractor restrictions. Federal Warehouse moved 60 jobs last year right down to St. Louis because of that stupid law. Actually it’s not the law – the law hasn’t changed in 50 years. The thing that has changed is the interpretation of the law and the way that it’s being enforced. It’s just outrageous. There were abuses, but those abuses could have easily been corrected. Instead what has happened is an assault on thousands of legitimate business people.
The Caterpillar-UAW labor situation is still much on everyone’s minds in Central Illinois. What is your view on the situation?
The fact that Caterpillar was ready to replace striking workers says volumes about the situation. When a company and a union are so unable to resolve their differences that the company is ready to replace its workers, that’s the workplace equivalent of nuclear war – all other systems have broken down. The union people believe that the company does not respect them, that they are treated in an impersonal fashion, like a number. Through the layers of management, communication breaks down. Often an intent at one level of management, by the time it hits the shop floor, is not being communicated for whatever reason. The truth is that people don’t go out on strike for money; they go out on strike because they’re mad and they feel they are not respected or valued. The company, on the other hand, believes it has to make some changes in order to remain a competitive, viable company. And, with great courage, they are willing to do what it takes to insure the future of Caterpillar into the next century. They are frustrated because of attitudes that are from the forties and fifties, attitudes that seem to work against the flexibility necessary to get a modern working relationship.
I’d like to see the workers have a chance to vote, instead of having this dictatorial system from Detroit down to the local level. I fee great sympathy for the average Caterpillar worker who has been working 20 years, has a pension riding, and is caught between big business and big labor. I don’t think the international union cares about anything other than the power of the union. They don’t care about these people. These workers, many of whom are my friends and former classmates, tell me they feel they are just pawns.
An effort was made by the Illinois Legislature to move toward a state universal health program. Where do you stand on the healthcare cost problem?
I favor a national system that would be administered by the private sector, where the insurance companies, the doctors, etc. would continue to operate privately. I think we need major tort reform. Right now about 50 percent of medicine is defensive medicine. Providers are ringing up all kinds of procedure charges and doing tests because they don’t want to get sued. We have to put some reasonableness into malpractice and liability limits. We have to get away from the idea where someone thinks they’ve won the lottery if a hospital or a doctor makes a mistake. We must also have a system that’s fairly paid for in a broad-based way. I don’t think businesses or any one piece of the economy should get stuck with the bill. We should face the problem straightforwardly and have a broad-based tax, maybe the income tax, to pay for it. I absolutely do not favor the so-called universal healthcare proposals which would have the government running the system. We don’t pay our bills in Illinois for Medicaid. Who would want to ruin the best medical system in the world by letting the government, of all people, run the healthcare system?
I’m opposed to virtually all of the state-mandated health insurance policy coverages. There are only a couple of exceptions, one of which is mammography. I was a sponsor of the legislation requiring insurance companies to pay for mammography examinations, and I think that’s legitimate. Most of the insurance mandates are matters best worked out between the employer and employees.
Tell us about your experience serving on the human services appropriations committee.
I sense a tremendous generic anger in the public against government and against incumbents. In serving on the human services appropriations committee, I’m finding out the specifics of this tyranny coming straight out of Washington and the runaway dictates of the regulatory agencies. We have to make a stand as states and get our rights back. What’s going on right now is totally unacceptable and out of control. Most people feel the pain of it someplace but they can’t put their finger on it. They don’t know about the specifics of the $312 million in Medicaid mandates this year alone. They just know we aren’t paying our bills and that the budget is out of control.
The stupidest thing we’ve done in a long times is to enact the nursing home tax on private pay patients, and the tax on the hospitals – a tax on the old man and the sick to capture Medicaid money. The most obscene part of this is that the fed not only impose the mandates – they now have the gall to impose the rules on how we raise matching money to get their mandates. I think the Governor got miserable advice from the Department of Public Aid, as they tried to cram the $6.30 per day charge for nursing home patients and the 2.4 percent tax on the hospitals down our throats. House Republicans were able to get a circuit breaker rebate program that will get most elderly people $1500-2000 of their tax back. The Governor said that if we didn’t pass the tax, Medicaid reimbursements would be cut by 30 percent, which would have bankrupted a number of institutions, including some here in Peoria. Instead of $6.30 per day, it would have brought the private pay charges of a resident up by at least $20 per day. This whole thing illustrates the frustrations that many of us feel with the unthinking mandates that flow here from Washington. We’ve got to change that.
In these difficulties are opportunities to return to some basic means of solving problems that could be very healthy. We’ve got a superb human service network in Peoria. At a state level, we should be sending money to the local level to work with volunteers and local community organizations to solve our problems. Why does the state think it has to go out and develop a competitive system instead of strengthening the system at the community level? Incentives need to be created for communities to solve their own problems, encouraging volunteerism and the best things about their citizens. Financial trouble is an opportunity to do things differently. I am among those who will be trying to move things in this direction.
To what extent does our current welfare system contribute to the proliferation of poverty? What needs to be done in welfare reform?
Right now, I’m looking into a variety of ideas for welfare reform. The welfare system, by any objective standard, has been a total failure. It’s been one that has made the problem worse and not better. A mother cannot receive Aid to Families with Dependent Children if the father is present, very often, because his income would be counted. All the incentives in the current system are for breaking up families or not having the father in the home. It is a cruel policy that has caused severe breakdown in the poor families. We have to change a whole set of incentives. Currently there is virtually no incentive to be married and raise children in a traditional way, and virtually no incentive to get off public aid, because the minute someone goes out and gets a job, they lose their health benefits.
I would be in favor of developing a system with at least two tiers. One tier should deal with the chronic cases who will probably never be employed. I would like to see a second tier for people who have a real hope of liberating themselves from the welfare system. For those people we need incentives to get jobs, and raise families in a traditional fashion, not disincentives. The overwhelming majority of people on public aid do not want to be on public aid, but the system itself is trapping them.
Do you have a quick comment on state family leave legislation?
It will be back again next year, and will probably get back to the governor’s desk.
The Peoria to Chicago highway study?
We were successful in persuading the Governor to put up the state’s $1.5 million very early in the session. Our portion of it is secure.
The movement to build a third Chicago airport?
I don’t think anyone knows yet why Mayor Daley backed away from it. I suppose we’ll learn based on actions this November. The mayor never had people from his office lobbying for it down in Springfield, which I thought was curious. If he sends his lieutenants down to lobby for it, I think it will become a real issue again. Otherwise, it will drop off the table.
The efforts to build a Chicago casino?
I totally oppose an extension of casino gambling in Illinois. There will be increasing pressure over the years to pass it. It’s the kind of bill the legislative leaders won’t call until they know they have the votes to pass it. It will be a major bargaining chip for the next several years until one does pass. I think it’s very unfortunate. I was among those who led the charge against casino gambling in Illinois on the rivers, on the theory that it would be just a matter of moments before it went to land. Here we are; this state is known for two things – political corruption and the mob, right? We can’t keep the Chicago mob out of Las Vegas; by what theory will we now keep it out of the first ward in Chicago? This is poor public policy, another incentive which brings out the worst in people instead of the best. IBI