Guv Hopeful McKenna Urges Budget Cuts, Spending Freeze
Greg Hinz
Chicago Business
GOP gubernatorial hopeful Andy McKenna Jr., is calling for returning overall state spending to the 2006 level and freezing it there "for the next three to four years."
But he gave only partial detail on what would have to be cut to reach that goal.
In a press conference and an earlier interview, Mr. McKenna said the state cannot dig itself out of what some fiscal watchdogs say is as much as a $12-billion budget hole without cutting spending, reforming health care and pensions and growing the state's economy.
The state literally "could run out of money soon" and be unable to pay its bills, he said. "The problem in Springfield is an unwillingness to make tough decisions."
Mr. McKenna, who recently stepped down as state GOP chairman, said he'd start by rolling back spending to the 2006 level — an action that would require nearly a 20% cut of about $5 billion. Then he'd hold spending at that level at least until 2012 or 2013 — "until revenues have grown enough for us to pay down some of the state's debt, unpaid bills and unfunded pension liabilities."
How would he get $5 billion in savings?
About a third of that would come from Medicaid, by moving patients to managed care, attracting more federal funds, reducing use of institutional care and reducing income-eligibility levels to where they were before former Gov. Rod Blagojevich added tens of thousands of working parents to the rolls, he said.
Another unspecified chunk would come from cutting pension benefits for newly hired state employees. That wouldn't create much savings initially, but Mr. McKenna said he would "ask" current employees to boost their annual pension contribution.
Mr. McKenna did not say how he'd persuade state workers unions to get their members to pay more, but added, "The alternative is, we go bankrupt. That's not good for everybody."
Mr. McKenna did not specify other cuts, but said in a press release that he also would review all programs for possible waste. If that was not enough, "I will make across-the-board cuts and direct my agency heads to prioritize."
Another key to getting the budget in balance is to spur job growth here, particularly in small and start-up companies, he said.
Mr. McKenna called for more seed money and tax incentives, fewer regulations and reform of the state's workers compensation system.
Until he recently stepped down, Mr. McKenna was president of the family-owned Schwarz Paper Co.
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