Illinois Public Media News
Gov. Pat Quinn presented lawmakers with a budget proposal Wednesday that would increase state spending overall while skimping on human services and borrowing billions of dollars to pay old bills.
Among the spending cuts -- just a month after Quinn approved a major income tax increase -- are programs helping the elderly buy medicine, payments for medical services to the poor and money to hire new state troopers.
The Chicago Democrat described his plan as a frugal, even painful, step toward getting Illinois out of its cavernous budget hole.
"Our commitment to taxpayers is simple: We will only use tax dollars to provide necessary services. All unnecessary state spending will be eliminated," Quinn said in a speech to the General Assembly.
Republicans immediately said Quinn wasn't living up to that promise. They noted the key measure of state spending would increase by $1.7 billion, to about $35.4 billion.
"We got into this mess because we spent money we didn't have and it's just a continuation. It's the same old song," said House Minority Leader Tom Cross, R-Oswego.
Even Quinn's fellow Democrats questioned his budget math, suggesting that he proposes paying some upcoming expenses with money that isn't available or should be used to pay bills that are past due.
His plan also came under fire from groups that count on state money to provide services to the poor and sick.
Hospital and nursing home groups criticized Quinn's proposal to cut Medicaid rates by $552 million, or about 5 percent. Bob Hedges, president of the Illinois Health Care Association, called it "a terrible blow to our seniors, employees, families and communities."
Quinn spared education from dramatic cuts, but Voices for Illinois Children said his plan appears to slash after-school and mental health programs that keep children out of trouble.
"When the school bell rings, kids still have needs," said the group's policy director, Sean Noble.
The tax increase Quinn approved should generate about $6.8 billion in the budget year that begins July 1, but that's not nearly enough to put state government back in the black.
Quinn's aides say the increased spending in his proposal is a result of using the new income tax to cover the rising cost of services or pay for items neglected in past budgets. They said the spending plan includes more than $1 billion in cuts.
Even with the tax increase, Illinois has $9 billion or $10 billion in overdue bills that must be paid, Quinn's budget director David Vaught said. The governor's plan to pay those bills could be the most contentious part of budget negotiations.
Quinn and Democratic legislative leaders want to borrow $8.7 billion to pay off overdue bills. Instead of informally borrowing money simply by not paying its bills, the state would sell bonds and pay the debt over 14 years.
The governor maintains that this step, which technically would take place in the current budget year, would be fair to the state's vendors and good for the economy.
"We have the opportunity to jump-start our economy by paying our vendors today -- an immediate injection of billions into our economy," Quinn said in his 27-minute speech, during which he wore a sash known as a kente cloth to mark Black History Month.
Republicans called for more spending cuts before any borrowing.
"I don't think the public understands after the single biggest tax increase that we've had in the state of Illinois, that now you want to go borrow over $8 billion," Republican Comptroller Judy Baar Topinka said. "We have to clean up our act and get the budget into compliance first."
Democrats also questioned parts of Quinn's proposal. House Speaker Michael Madigan said the proposal appears to include $720 million from two technical tax changes that have not been approved, violating new policies meant to control spending.
"I'm confident that we will work our way through these differences, but my commitment in Illinois budget-making this year is to live within those spending controls," Madigan, D-Chicago, said in an interview with the public television show "Illinois Lawmakers."
And Senate President John Cullerton said Quinn seems to be using borrowed money to pay for upcoming expenses, instead of devoting it solely to overdue bills.
Still, Cullerton, D-Chicago, saved his sharpest remarks for the GOP officials who oppose borrowing to pay what Illinois owes to businesses, community groups and charities.
"If Republicans are willing to have a conversation that doesn't start with 'No,' I'm ready to listen," Cullerton said in a statement.
Quinn also called for consolidating some of the state's 868 school districts and said he wants a commission to study the always-contentious issue. He predicted taxpayers could save $100 million by merging small districts.
He proposed a major cut in state support for local schools' bus costs and he called for eliminating regional offices of education for a savings of $14 million.
Part of Market Street in downtown Champaign was closed Wednesday morning, after the pavement collapsed.
The section of Market Street between Logan and Bailey runs past the Illinois Terminal Building, and is heavily traveled by both buses and motorists using the Terminal Building's parking lot.
City Operations Manager Tom Schuh said the collapse was due to the failure of the material packed underneath the street's original brick pavement. He said the collapsed produced a series of depressions in the street, cracking and displacing the asphalt surface.
Schuh said it will take until Friday for a crew to rebuild the roughly 50-foot section of Market Street. Until then, he says that section of Market Street is closed to all but parking lot traffic.
The announced closure of the Border's store in Normal could change the approach of a locally owned bookstore. Sarah Lindenbaum manages Babbitt's books, located near Illinois State University.
She says her store, which sells solely used books, has been anticipating the Border's closing. Lindenbaum said her store buys a lot of trade paperbacks that customers have bought at Border's.
"Are people going to be bringing as many?," she said. "But again, there are still bookstores in Peoria, there's still Barnes and Noble in Bloomington. And another thing we've discussed as far as what would happen if Border's closes, and maybe even Barnes and Noble, is would we start to stock new books and try to capitalize on that."
Lindenbaum said if her store did sell new books, it would take more than a year before those sales could take place. She said Babbitt's took a dip with the recession, but has rebounded lately, and has retained all of its regular customers. And Lindenbaum said she thinks there will continue to be a market for modern first editions and collectable books.
Illinois Gov. Pat Quinn wants to increase public school spending slightly in the coming year. But he would save state money by consolidating schools and cutting spending on regional offices of education.
The Democrat outlined his budget proposal for the coming year Wednesday.
Elementary and secondary education spending would be up about 3 percent.
But the governor is proposing mergers to reduce the 868 school districts across the state - an emotional issue that has failed in the past.
Quinn also wants to cut $14 million the state spends on 45 regional education offices. He says the State Board of Education can take up their tasks.
And he would reduce state spending on bus transportation for students by $95 million. He says local school districts should shoulder that cost.
Illinois Gov. Pat Quinn proposed a slight increase in education spending Wednesday but wants to save state money by pushing school consolidation and eliminating regional education offices, two ideas that have gone down in flames over the years.
Quinn resurrected the idea of consolidation, which has caused ll feelings since the days of the one-room schoolhouse, but didn't say how much might be saved.
His chief of staff, Jack Lavin, said he number of districts in Illinois -now 868 - "should be down significantly."
The Democratic governor also proposed cutting a $14 million subsidy to 45 regional offices of education, which conduct training and special schools, and reducing by $95 million the amount the state pays to bus students to the classroom.
Overall state support for elementary and secondary education would climb 3.2 percent to $7.2 billion, still 1 percent lower than in 2009-2010 school year.
Higher education would see just a slight increase in money, 1.2 percent to $2.15 billion.
(Additional reporting from the Associated Press)
Bookseller Borders, which helped pioneer superstores that put countless mom-and-pop bookshops out of business, filed for bankruptcy protection Wednesday, sunk by crushing debt and sluggishness in adapting to a rapidly changing industry.
The 40-year-old company plans to close about 200 of its 642 stores over the next few weeks. In Illinois, more than 15 stores are closing at locations across the state, including Matteson, Chicago, and Normal. There are also stores closing in Indiana at branches in Evansville, Indianapolis, and West Lafayette.
All of the stores closed will be superstores, Borders spokeswoman Mary Davis said. She doesn't expect those stores to be closed any later than the end of April, but it depends on when the stores sell out of books.
The company also operates smaller Waldenbooks and Borders Express stores.
Clearance sales could begin as early as this weekend, according to documents filed with the U.S. Bankruptcy Court in New York. Borders said it is losing about $2 million a day at the stores it plans to close.
Cautious consumer spending, negotiations with vendors and a lack of liquidity made it clear Borders "does not have the capital resources it needs to be a viable competitor," Borders Group Inc. President Mike Edwards said in a written statement.
Borders plans to operate normally and honor gift cards and its loyalty program as it reorganizes.
The company will receive $505 million in debtor-in-possession financing from GE Capital and others to help it reorganize.
According to the Chapter 11 filing, Borders had $1.28 billion in assets and $1.29 billion in debts as of Dec. 25.
It owes tens of millions of dollars to publishers, including $41.1 million to Penguin Putnam, $36.9 million to Hachette Book Group, $33.8 million to Simon & Schuster and $33.5 million to Random House.
It's significant that Borders could not reach an agreement with creditors and file a "prepackaged bankruptcy." Said Nejat Seyhun, a bankruptcy expert at the University of Michigan.
It could be a sign that creditors do not believe Borders will be a "viable operation going forward," Seyhun said.
Activist investor William Ackman, whose Pershing Square Management Co. has a nearly 15 percent stake in the company, also stands to be a big loser. Shareholders are often wiped out in a reorganization.
He offered to finance a $16-per-share Borders-led takeover bid for rival Barnes & Noble in December, but nothing materialized.
The filing was expected, but it is far from clear if it will be enough to save the company.
"They are going to have to be an entirely different company than the one that went into bankruptcy protection if they want to emerge successfully," said Jim McTevia, managing partner of turnaround firm McTevia & Associates in Bingham Farms, Mich.
It has been a long fall for the Ann Arbor, Mich., company, which 15 years ago appeared to be the future of bookselling.
Big-box bookstores have struggled as competition has become increasingly tough as books become available in more locations, from Costco to Walmart, online sales grow and electronic books gain in popularity.
Borders also suffered from a series of errors: failing to catch onto the growing importance of the Web and electronic books, not reacting quickly enough to declining music and DVD sales, and hiring four CEOs in 5 years without book-selling experience.
"Books and content just became so available at so many other locations, online and offline, the 'grow, rinse, repeat' mindset just wouldn't work anymore," said Michael Norris, senior trade analyst at Simba Information.
In addition, Americans are simply buying fewer books. Sales fell nearly 5 percent in 2010 to 717.8 million from 751.7 million last year, according to Nielsen, which tracks about 70 percent of book sales but doesn't include Walmart stores.
For book lovers who like to shop in stores, the news was worrisome.
"It's just really sad to hear that happening," said Monika Barera, 50, shopping Wednesday at a Borders store in its hometown of Ann Arbor, Mich. The downtown store she was shopping at isn't closing, but four others in Michigan are. "I just hope they can find a way through."
At its peak in 2003, Borders operated 1,249 Borders and Waldenbooks stores. Now it operates barely half that. Its annual revenue has fallen by about $1 billion since 2006, the last year it reported a profit.
Borders' rival Barnes & Noble, which has 29.8 percent of the book market compared with Borders' 14.3 percent according to IBIS World, has done better by adapting to e-commerce and electronic books more quickly and keeping management stable.
Tom and Louis Borders opened their first store in 1971, selling used books in Ann Arbor, Mich. At the time the brothers were mostly interested in offering other bookstores a system they'd developed for managing inventory.
But in 1973, the store moved to a larger location and starting selling new books. The brothers decided to focus on opening more bookstores.
The birth of the superstore was still a decade away. The Waldenbooks and B. Dalton mall chains, with small, 2,000-square-foot stores and 20,000 to 50,000 titles, were growing rapidly.
Against this backdrop, Borders opened its second location in 1986. From there, the company opened one or two bookstores a year; the pace eventually increased to 40 a year.
The new superstores, in contrast to mall chains, ran 10,000 to 15,000 square feet and offered between 100,000 and 200,000 titles and enticements to linger like comfortable chairs and attractive lighting.
Kmart Corp. saw the potential and acquired Borders in 1992, forming a book unit with Waldenbooks. It then spun the bookstores off as a separate company in 1995, the same year a company called Amazon.com started selling books online.
Analysts say a key error for Borders came in 2001, when it contracted out its e-commerce business to Amazon.com.
"Termites don't team with Orkin," said Simba Information's Norris. "Amazon had no incentive whatsoever to promote Borders. ... It really marked the beginning of the end."
That relationship lasted until 2006. By then, Borders lagged far behind Barnes & Noble, which had been selling books online since 1997.
By the time Borders' current CEO, financier Bennett LeBow, came aboard in May 2010 after investing $25 million into the company, the ship was listing badly.
Fordham University marking professor Al Greco said Borders can operate with fewer stores, but the same challenges remain, Greco said.
"This is not a good day for book retailers, book readers and book publishers," Greco said. "It's a serious problem that a major chain that did a nice job for many years could not survive."
(Photo courtesy of Ildar Sagdejev)
Champaign's city council has unanimously approved a voluntary separation program for employees.
The city will take applications beginning March 1st, and accept them throughout the month. Champaign Human Resource Director Chris Bezruki said the idea is reducing the need for layoffs, and cuts to areas like police and fire. He said there's been informal interest from about 15 workers who want to see how the program would impact their retirement. The city expects 20 employees at the most would be granted the incentive, but Bezruki said sorting out who those people are will take a while.
"There will be several positions that we've already looked at, and said that these positions probably should go," he said. "Then there will be those other positions that are trying to be backfillled by others, and then there will be some other positions that, if we have to do this next year, maybe these are the positions that we should accept."
Bezruki said the process should be completed by December. The incentive is two weeks of pay for every year of service, up to a maximum of $45,000. Employees whose applications are accepted may not be rehired for two years.
Meanwhile, a Champaign public works employee, Steve Beckman, suggests the city explore a different cost-saving option. After logging more than $4,000 in overtime removing ice and snow, he suggests giving his staff comp time would save more money than the six furlough days that public works expect to be required of them in the next year. Beckman said the savings from comp time would be greater than what the city would gain from the six furlough days he expects the city to impose on public works. Beckman also said that his union's contract won't grant them.
"We don't believe that the contract allows for it, so we have to grieve that," Beckman said. "And then there's a chance that we go arbitration, you'd have to pay us for it anyway, and we don't want to do that. So if we could open up the comp situation for even one year in a year like this and save money on it, why not do it?"
Beckman said a couple of his co-workers are seeking the buyout, and they should be allowed to pursue it. But he said there are some stipulations put on the AFSCME union that lets the workers re-organize their contract, and Beckman said they're not willing to do that. The Champaign City Council Tuesday night also unanimously backed a budget revision for up to $356,000 in snow removal costs.
Rod Blagojevich's attorneys are asking that jurors in the former governor's upcoming retrial be allowed to remain anonymous.
In the first Blagojevich trial, Judge James Zagel kept the names of jurors secret until after the verdict. He said members of the public had already called his office to weigh in on the high profile case and he didn't want jurors subjected to that. Zagel plans to withhold the new juror's names again in the retrial scheduled to begin April 20th, but Blagojevich's attorneys say those jurors should have the choice to remain anonymous even after the verdict. They say jurors will almost certainly become quote, "media prey" after the trial.
Blagojevich's attorneys don't want deliberations to be affected by jurors who are worried about impending press and public pressure, and they say Blagojevich's right to a fair trial and an impartial jury require that jurors be allowed to remain anonymous if they so choose.
Just weeks after signing a major tax increase into law, Gov. Pat Quinn gets the privilege of telling Illinois lawmakers and taxpayers that the state's budget is still a mess.
Even with higher income taxes, Illinois won't have enough money to pay all its expenses for the coming year, let alone cover the billions in old bills that have been allowed to pile up.
When Quinn delivers his budget proposal Wednesday, he's likely to call for significant spending cuts in some areas. He will undoubtedly renew his call for borrowing $8.7 billion to pay old bills. And a document from his budget office indicates he wants to take another try at raising cigarette taxes.
Quinn has largely stayed out of sight in the run-up to his budget address, but in an appearance Friday the Chicago Democrat talked about the importance of money for education, health care and public safety. At the same time, he warned Illinois must be "very, very frugal."
State budget director David Vaught said Quinn will make it clear that raising taxes by two-thirds did not solve Illinois' budget problems.
"The General Assembly and the public will see the spending pressures," Vaught said in an interview with The Associated Press last week. "They'll see where we plan to spend and where we don't. We'll make clear not just that we're saying no but why we're saying no."
The Quinn administration has been studying possible cuts to human services - cuts that advocates for the poor describe as draconian.
"We're terrified," said Maria Whelan, president of Illinois Action for Children. "Our hope is the pain will be shared and the most vulnerable people in our state do not bear the brunt."
State employees and retirees may also be targeted, if not by Quinn then by the Legislature.
House Speaker Michael Madigan, D-Chicago, recently warned lawmakers of tough decisions that lie ahead and even suggested cutting pension benefits for current state employees, a move generally considered unconstitutional.
"If you come here and you don't want to cast a difficult vote, well, you ought to go back home and give the job to somebody else," Madigan said.
It's not clear just how big a deficit Illinois faces in the budget year that starts July 1. The Quinn administration has avoided direct answers to that question.
A three-year budget outline from Quinn's office shows he's counting on some revenue measures that haven't been approved yet, notably a $330 million increase in cigarette taxes.
A review of the document suggests a gap of more than $3 billion between income and expenses in the coming year. On top of that, the state owes about $8.7 billion to groups that provide services on government's behalf, to corporations waiting for tax refunds and to the program that provides medical care for government employees.
So the total deficit could top $12 billion. That's one-third of state government's total spending from general funds.
Quinn and Democratic legislative leaders want to borrow money to pay the overdue bills quickly. They argue it's more responsible for government to take on the debt directly rather than borrowing it unofficially by simply not paying what it owes.
Republicans generally oppose the idea, but Quinn has been trying to build public support. He has set up a website promoting the plan - which he calls debt restructuring instead of borrowing - and is urging vendors to demand their money.
The budget outline also counts on federal aid remaining steady even though the economic stimulus program that has propped up state budgets is ending. It's not clear how Quinn expects to avoid a drop-off that would further add to the deficit.
Vaught made the task of balancing the budget sound like playing a Whac-a-Mole game. Officials reduce employee costs but pension expenses jump. They cut drug-addiction treatment yet medical costs keep climbing.
"If you push it down over here, it pops up over there," Vaught said.
(Additional material from The Associated Press)
Champaign and Urbana were two cities in downstate Illinois seeing a rare population boom over the last ten years. But population losses in Cook County and most of the rest of downstate Illinois slowed the growth in the state's population to 3.3% from 2000 through 2010, according to figures released Tuesday by the U.S. Census Bureau.
The city of Champaign saw more than 13,000 new residents move in since 2000, a 20% jump to 81,055 people. Urbana's population grew 13.3% to 41,250.
Champaign County overall saw a 11.9% population increase - it's now the state's tenth-most populous county at 201,081.
County Regional Planning Commission director Cameron Moore says the numbers determine government funding, legislative representation and a host of other factors.
"It helps you plan better in terms of land use, what types of transportation improvements do we need, are we going to have enough housing stock to accommodate our growth; if not, how do we plan for that," said Moore. "It's really critical in all aspects of looking at the future of any community."
Champaign and McLean counties fared better than many other downstate counties in the latest census figures. The city of Danville lost about 2.6% of its population while Decatur is down about 7%.
The state's population grew modestly from about 12.4 million to 12.8 million people, down from a growth rate of 8.7 percent the previous decade, the bureau said in a release of detailed statewide 2010 census data for Illinois. The overall population figures were made public in December.
Illinois' slowing growth will cost the state a congressional seat.
Much of the state's population growth was in counties that surround Chicago, such as Kendall County where the population more than doubled as well as downstate counties such as McLean and Champaign, with heavily white-collar economies.
And, while the state's populations of both whites and blacks decreased, the population of people who identified themselves as Hispanic grew at a sharp 32.5 percent rate.
"The state essentially owes its demographic sustainability to Latinos, Asians and immigrants," said Rob Paral, a Chicago-based demographer. "They permit the state to overcome a lot of depopulation."
The state had 2.03 million Hispanic residents in 2010, up from 1.53 million in 2000. In all, 15.8 percent of Illinois' residents identified themselves as Hispanic - a category that can include whites, black and other racial categories.
The city of Chicago and Cook County both saw population drops through the decade, and those increases could have been sharper had the recession not slowed migration out of heavily urban areas since 2007.
"Populations sort of got frozen in place by the recession, partially because of jobs, partially because they couldn't sell houses, partially because it made people who might have moved more cautious," said Kenneth Johnson, a University of New Hampshire demographer who previously worked at Loyola University in Chicago for more than 20 years.
Chicago's population decreased by nearly 7 percent since the 2000 Census. It's now nearly 2.7 million, down from nearly 2.9 million.
Cook County's population dwindled to just below 5.2 million, down by 3.4 percent since 2000.
The strongest growth was in counties around Cook County, such as Lake (whose population grew by 9.2 percent), Will (up 34.9 percent) and Kane (up 27.5 percent), according to the census. Other strong growth counties included DeKalb, whose population grew 18 percent, and McLean County, where the population grew 12.7 percent.
Experts believe some of the suburban increases were due to the movement of Hispanics into those counties, some directly from abroad.
Illinois' population of whites dropped 3 percent to 8.42 million. And the state's black population dropped 1.3 percent to 1.83 million.
Even though the state's population increased, Illinois will still lose a congressional seat. Census figures are used to reapportion the House's 435 districts to make them roughly equal in population, with each state getting at least one seat.
The South and West had bigger population surges, so Texas gains four new seats. Illinois and nine other states lost seats.
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