Quinn Says 1,900 Layoffs Needed to Fill Illinois Budget Gap

Illinois will have to lay off more than 1,900 state employees and close seven facilities to avoid a partial government shutdown next spring, Democratic Governor Pat Quinn said today.

“It’s time for a rendezvous with reality,” Quinn said at a news conference in Chicago. The state “clearly does not have enough money.”

The governor’s proposed austerity measures set the stage for a budget clash with state lawmakers, who three months ago approved a $33.2 billion general fund budget that Quinn said is inadequate to run state services through the end of the current fiscal year, which ends June 30.

His job-cut threats are similar to those made by fellow Democratic chief executives. In New York, members of the state’s biggest public union, the Civil Service Employees Association, voted to approve wage and benefit concessions last month after Governor Andrew Cuomo had vowed to fire almost 10,000 workers. State-worker unions in Connecticut on Aug. 18 authorized a two- year wage freeze and other changes after Governor Dannel Malloy notified 3,000 workers of job losses.

Illinois joins other states anticipating less revenue as the U.S. economy struggles to recover. California faces drastic reductions in payments to universities, schools and social programs if revenue continues to trail budget forecasts, the state controller said after July collections fell short by about 10 percent.

Ohio Shortfall

Ohio Governor John Kasich, a Republican, has asked aides to monitor collections to determine whether the state needs to reduce planned spending. Revenue in July trailed the budget forecast by $16 million, or 1.3 percent, according to preliminary data.

The facility closings in Illinois, including one prison and three mental-health institutions, would be “around the first of the year,” Quinn said, adding that this will give lawmakers “time to reflect.” Laid-off employees could be hired back if the Legislature appropriates the money, said Kelly Kraft, a Quinn spokeswoman.

The timing of the governor’s threatened actions was unnecessary, said Anders Lindall, spokesman for AFSCME Council 31, which represents 40,000 state workers.

“The cuts, closures and layoffs threatened today would do great harm to the people of Illinois,” Lindall said.

Billions in Bills

Illinois lawmakers ended their spring session June 1 without paying an estimated $6.2 billion in overdue bills to vendors. Quinn, who had proposed a borrowing package to cover the backlog, said earlier this week that the Legislature did not approve enough money in the budget to keep the state operating for a full year.

Lawmakers in January increased personal income taxes by 67 percent and the corporate rate by 46 percent to eliminate half of a projected $13 billion deficit in the previous budget year.

“He has come here to lecture the General Assembly on how to spend even more,” said state Senator Matt Murphy, a Republican from Palatine. “That tax increase that was sold as temporary -- how temporary does it look right now when it doesn’t even pay the bills we have today.”

Senate President John Cullerton, a Democrat from Chicago, said in a prepared statement that lawmakers will “study the governor’s plans to determine what legislative action may be needed.”

Budget Confrontation

A new budget confrontation has been looming since July 1, when Quinn canceled 4 percent pay raises for 30,000 state employees that were due to take effect that day, saying the state didn’t have the money. AFSCME Council 31, the state’s largest public employee union, challenged the move in court, calling it a violation of a collective bargaining agreement.

A federal judge today rejected the union’s challenge. AFSCME said in a statement that it will appeal the ruling.

Lawmakers are scheduled to return to Springfield, the state capital, in October for the fall session.

Illinois is tied with California as the lowest-rated state in the estimation of Moody’s Investors Service, at A1. Standard & Poor’s has it at A+, one level above California.

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

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