FILE - IL Gov J.B. Pritzker – Progressive Income Tax

Illinois Governor J.B. Pritzker

A memo Illinois Gov. J.B. Pritzker’s administration reportedly sent to state agency directors last week asks for ideas to save 6.5 percent through efficiencies, elimination of boards and commissions and other ideas. But how to deal with the state’s major cost driver of pensions is absent.

The memo, reported by several media outlets, from Deputy Governor Dan Hynes and Governor’s Office of Management and Budget Director Alexis Sturm asked state agencies to propose a 6.5 percent reduction in next year's budget, find boards and commissions that can be eliminated and propose two other areas of “significant efficiency and savings” such as “elimination or consolidation of duplicative programs, reduction in funding for underutilized or inefficient services, or improvements in service delivery that streamline costs.”

A public finance analyst said the memo could be a sign of a few different things, including the state's finances not being as solid as they were four months ago when lawmakers passed and the governor enacted Illinois' largest spending plan to date.

“It may also be evidence of an increase in the obvious financial reality that our ambitious ‘think big’ plans may have been a little too ambitious,” Truth In Accounting Research Director Bill Bergman said.

Bergman said another reason could be groundwork to change the state’s flat income tax.

“The administration may feel the need to feel a little bit more careful in its spending as a way to lay the basis for its case for a graduated income tax,” Bergman said.

Messages seeking comment about the memo from the governor’s office were not returned.

Democratic state Sen. Heather Steans said she didn’t want to speculate the motives for the budget memo, but she said it was a prudent approach given the state's finances.

Steans said the memo to her is a sign that there could be a national economic downturn.

“Illinois is not in the best shape for that,” she said. “We have a high backlog of unpaid bills that we’re still dealing with.”

She also said Illinois faces other pressures, including higher labor costs for the state’s nonprofit service agencies that get grants and contracts from the state as the state's minimum wage increases twice next year.

“And we know that we’re going to have an increase in pension costs for the coming year so we know things are going to be tight,” Steans said.

Republican state Rep. Allen Skillicorn said the state's financial outlook was far from rosy.

“Frankly, Illinois’ finances are so bad because we spend so much money on pensions that the governor has to do everything he can to bring more money in and cut everywhere else because he refuses to do the hard work, which is reform pensions,” Skillicorn said.

Skillicorn said there needs to be a constitutional amendment to allow lawmakers to reduced promised pension payouts, a plan Steans said doesn’t have much support in the General Assembly, where it would require a supermajority to even get it on the ballot for voters to decide.

As to Skillicorn’s suggestion of other reforms such as a consideration model to give retirees a choice on a benefit plan to reduce the state’s costs, or a move to get all new hires into a 401(k)-style retirement plan instead of a defined-benefit plan, Steans said everything should be on the table.

Staff Reporter

Greg Bishop reports on Illinois government and other statewide issues for The Center Square. Bishop has years of award-winning broadcast experience, and previously hosted “Bishop On Air,” a morning-drive current events talk show.