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Illinois’s Quinn Says Budget-Cutting Governors Wrong

(Corrects to remove erroneous reference to 401(k) plans in third paragraph from end of story published March 30.)

For governors cutting education and health care and going after public-sector employees to balance budgets, here’s a message from Illinois Governor Pat Quinn: You’re wrong. Not mistaken, not misinformed.

“Just plain wrong,” said Quinn, 62, during a March 22 interview in his Chicago office. “I don’t buy into all these radical cuts in government as a way to make life better for ordinary, everyday people.”

Patrick Joseph Quinn III, since 2009 the Democratic governor of the fifth-largest state, has made his administration a response to those who charge that government is overlarge and unsustainable. Thirty-one years after leading a successful petition drive to reduce the state House from 177 members to 118, Quinn is the vocal defender of a government he spent decades trying to reform.

Don’t cut, says Quinn. Build instead, he says, referring to the $5.6 billion spent in the past two fiscal years for 3,240 miles of road repair and upgrading 472 bridges. Republicans and some Democrats argue the culture of spending must change. Quinn, who championed a record income-tax increase, is an obstacle, they say.

“He’s out of touch with economic reality and out of touch with national and state finances,” said Douglas Whitley, president and CEO of the Illinois Chamber of Commerce.

Aching to Help

In February, Quinn presented a 2012 budget proposal at least $1 billion out of balance. James Nowlan, a senior fellow at the University of Illinois’ Institute of Government and Public Affairs, said it reflected the priorities of a man “whose every bone aches to do good for little people.

“Pat just can’t say no to people’s needs,” Nowlan said in a telephone interview. “That’s a part of who he is.”

Quinn said there has to be “a moral dimension to the operation of our government.”

“Where there is no vision, the people perish,” Quinn told reporters at a Chicago news conference Jan. 25, quoting the Old Testament Book of Proverbs.

The product of Dominican and Jesuit training in high school and college, Quinn vowed, “We’re not letting anybody perish in Illinois.”

Paying for such protection is a challenge in a state that has a backlog of more than $8 billion in bills, pensions underfunded by more than $80 billion and a retiree health care liability of $40 billion.

Debt Multiplies

Per-capita state debt has tripled since 2001, to $1,924, and would almost double to $3,732 next year if lawmakers approve borrowing, according to a Feb. 15 report from Chicago’s Civic Federation, a nonpartisan public-interest group. Illinois’s debt is tied with California’s as the lowest-rated in the estimation of Moody’s Investors Service, and Standard & Poor’s has it one level above California.

The market seems unimpressed with Quinn’s plans. The extra yield investors demand to hold an Illinois state general obligation bond maturing in May 2024 rather than top-rated debt has risen 38 basis points since Jan. 3, according to a Bloomberg Valuation index. For Wisconsin, whose Governor Scott Walker has promised a smaller government, the so-called spread on a general obligation bond maturing in June 2022 has fallen 7 basis points over the same period.

‘Not in Sync’

“The biggest issue with Pat Quinn is his personal philosophy of populist government, and it’s not in sync with the times that call for fiscal restraint and living within your means,” Whitley, the Chamber of Commerce executive, said during an interview in his Chicago office.

Forty-four states plus the District of Columbia face projected deficits of $112 billion, according to the Center for Budget and Policy Priorities. Republicans and Democrats are finding economies in education, Medicaid and public employment. Many cuts, Quinn said, are “foolhardy.”

Illinois produces farm implements from Deere & Co. (DE) and Navistar International Corp. (NAV), cars and trucks from Ford Motor Co. (F), Chrysler Group LLC and Mitsubishi Motors Corp. and pharmaceuticals from Baxter International Inc. (BAX) and Abbott Laboratories. (ABT) It’s the headquarters of the airline conglomerate United Continental Holdings Inc. (UAL) and the home of presidents Abraham Lincoln and Barack Obama.

Wake-Up Call

It’s known also for corruption. Four of the past seven governors are felons, with the most recent conviction leading to Quinn’s becoming governor.

Budget trouble is nothing new. Facing a projected current- year deficit of $13 billion, the General Assembly approved on Jan. 12 a 67 percent increase in the personal income-tax rate and a 46 percent boost in the corporate income tax.

“We heard directly from our creditors on Wall Street that if you don’t immediately repair the damage your state has right now with your fiscal situation, you can’t borrow any more money, you can’t do anything,” Quinn said. “They’d never said that to us before.”

Two weeks after the increase, Moody’s reaffirmed the state’s A1 debt rating, with a negative outlook on the credit.

No Republicans voted for the tax increases. Some businesses -- Caterpillar Inc. (CAT), United and Deere -- opposed them.

Letter to the Top

Caterpillar Chief Executive Officer Doug Oberhelman told Quinn in a March 21 letter that at least four other states had approached the company about relocating since the tax passed, according to a report by Lee newspapers’ Springfield bureau.

“I want to stay here,” Oberhelman wrote in a copy of the letter obtained by the newspapers. “But as the leader of this business, I have to do what’s right for Caterpillar when making decisions about where to invest.”

New Jersey Republican Governor Chris Christie called Quinn “a disaster” after the tax vote.

“That guy just likes to poke people in the head,” Quinn said. “People call me names. Big deal.”

Chicago-born Quinn spent most of his career “storming the ramparts,” said Nowlan of the University of Illinois.

Born on the 173rd anniversary of the Boston Tea Party, Quinn graduated from Georgetown University. He started in politics working for Illinois Governor Dan Walker, a Democrat who ran against Chicago Mayor Richard J. Daley’s organization.

Goading the Powerful

Quinn helped create a board representing citizens in utility cases. He created the Coalition for Political Honesty to advocate constitutional changes.

In 1979, a generation before the Tea Party movement, Quinn urged citizens to mail tea bags to the governor to protest legislative pay raises.

“He reminds me of Ralph Nader,” Nowlan said. “A lot of people get tired of politics, and he has had a laser-like focus on being a goad to the establishment.”

In the Irish pub that is Democratic politics in Illinois, Quinn usually drinks alone. He’s not part of the Celtic clans of Daleys, Madigans, Cullertons and Hynes that for decades have called the shots from Chicago wards.

He’s been viewed for almost 40 years by the state’s Democratic powers as a “provocateur,” said Dawn Clark Netsch, a former state comptroller. “He’s sort of his own person and likes to think of himself as an outsider.”

Quinn has lost more campaigns than he has won. After becoming treasurer in 1990, he lost primary bids for secretary of state, U.S. Senate and lieutenant governor. He won his second try for lieutenant governor in 2002, securing the largely ceremonial office that is a heartbeat -- or indictment -- away from the governor’s office.

Funeral After Funeral

As lieutenant governor, Quinn, whose father was a U.S. Navy veteran of World War II, attended almost every funeral of Illinois service members killed in Iraq and Afghanistan.

The December 2008 arrest of Democratic Governor Rod Blagojevich on corruption charges prompted lawmakers to remove him, elevating Quinn to the top office.

“He became the accidental governor,” Whitley said. “He’s a decent individual, not a crook, and a humble man who wanted to do good. Illinois government began to work again.”

Governance did not mean acceptance. Quinn eked out a primary win in March 2010 by one percentage point and defeated Republican Senator Bill Brady in November by eight-tenths of a percentage point.

After getting the tax increases in January, Quinn presented a $52.7 billion budget, including federal dollars, that was at least $1 billion greater than forecast revenue. The linchpin is an $8.75 billion bond authorization that would pay years of accumulated bills.

All to All

Friends and critics said the budget reflected Quinn’s unwillingness -- or inability -- to cut spending.

“We can’t be all things to all people,” Republican Senator Kirk Dillard said at a March 25 budget conference in Chicago.

U.S. Rep. Mike Quigley, a Chicago Democrat, said in a telephone interview that he hopes the “election was a wake-up call. I think he recognized some things he needs to do better.”

“Until the economy improves, he’s going to have to make tough and unpopular choices.”

Quinn says he has made plenty of unpleasant decisions, including raising the retirement age for public employees, restricting cost-of-living increases that new hires will get when they are retired and altering the Medicaid system.

“I’m not going to get our state out of the hole that it’s in in terms of the economy by just severe cuts in education,” Quinn said. “Lay off teachers? What’s that all about? Is that going to help us?

“No.”

Pat Quinn at a glance:

Born: Dec. 16, 1948, Chicago (Age 62)

Party: Democrat

Spouse: Divorced

Children: Two sons, Patrick IV, 27; and David, 26

Education: Bachelor of Arts, Georgetown University, 1971; Juris Doctor, Northwestern University, 1980

Luggage: He carries a tattered, torn and crumbling 29-year-old briefcase he calls “Betsy.” “It’s flexible,” Quinn says.

Career: Aide to Governor Dan Walker, 1973-74; created Coalition for Political Honesty, 1975; 1983 started petition drive to create the Citizens Utility Board; Illinois Treasurer 1991-1995; elected lieutenant governor 2002 and re-elected in 2006; assumed governor’s office in January 2009 after impeachment and removal of Rod Blagojevich; elected governor 2010

Noteworthy: Signed into law repeal of capital punishment in Illinois in March.

To contact the reporter on this story: Tim Jones in Chicago at tjones58@bloomberg.net;

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

Enlarge image Illinois Governor Pat Quinn

Illinois Governor Pat Quinn

Illinois Governor Pat Quinn

Tim Boyle/Bloomberg

Illinois Governor Pat Quinn.

Illinois Governor Pat Quinn. Photographer: Tim Boyle/Bloomberg

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