This week, Whet Moser is Chicago’s Chief Budget Correspondent, reporting from Springfield as the Illinois legislature scrambles to pass its first budget in two years. Find out more about Budget Mayday.
On May 31, Illinois will have gone 700 days without a budget, an unprecedented political failure. Also on May 31, if a budget is not passed, it could mean that the state could go until 2019—an unimaginable idea, except that senators have already imagined it.
How does a state, led by a successful businessman as governor, a brilliant political strategist in the House, and a consummate dealmaker in the Senate, end up in this kind of political disorganization? Bad political errors led to bad political incentives, and as the problem worsened, so did the political risk of solutions—and what politicians had to ask of their constituents.
Setting the Table
It begins with… well, it begins with many, many decades of fiscal mismanagement. But the more immediate catalyst to the impasse, ironically, was the attempt to address the damage: the 2011 tax hike and the decision to let it drop from five percent to 3.75 percent in 2015, an election year. “I asked Senate President Cullerton about that once and he said it just never occurred to anyone what they were doing,” Rich Miller wrote almost two years ago. “The perils of hurried passage are very real.”
The income tax hike was widely expected to become permanent, because of the need for it in the absence of drastic cuts to spending. But making it permanent would have required doing so as the most vulnerable governor in the nation was up for reelection against a well-funded reform candidate. Quinn lost, and Bruce Rauner entered with his Turnaround Agenda; meanwhile, Democrats dominated with supermajorities in both houses.
Rauner and Madigan’s Big Picture
Rauner was viewed as a political novice who could easily be worked by the experienced Madigan. But the Turnaround Agenda was also good strategic politics, giving the governor an articulated plan and a menu to be negotiated with. Democrats regularly complain about the governor “moving the goalposts,” but that’s more to do with what demands Rauner is prioritizing at a given time. As a whole , the Turnaround Agenda presented itself as a comprehensible recipe and initial negotiation position.
Compare that to the most powerful Democratic politician in the state, Michael Madigan. He’s legendary for his political skills, but from the outside they can seem opaque. As Rauner has targeted him as the face of Democratic intransigence, Madigan has “retreated into the shadows,” as Monique Garcia observed in the Tribune. "I will say, if Michael Madigan is nothing else, he is very specific about what he wants,” says Democratic representative Elane Nekritz, but adding “you have to learn to read the tea leaves a little bit.”
Combined with Rauner’s steely dedication to his message, it can make an unpredictable situation even harder to understand.
“So why is [Madigan] holding on to the job with an iron grip?” Ylisela asked. "He’s certainly not a policy visionary with a bold civic agenda he’s aching to complete. He’s not a do-gooder with a deep-seated need to help others. He’s not a passionate ideologue who won’t rest until, say, same-sex marriage or immigration reform becomes law.”
What does Madigan ultimately apply his political genius and encyclopedic knowledge of policy to? Ylisela reached a conclusion that many others have come to: he wants to protect his most vulnerable members and preserve his majority. He wants to win.
Democrats on the Defensive
Democrats did not have anything comparable to the clarity of Rauner’s agenda, nor a long list of their own demands from which to negotiate, and a couple years went by until House Democrats rolled out a counter-agenda of their own, which Miller described in its competency as “like kiddie soccer.”
“In my opinion, Rauner was elected because the state had severe problems, and voters knew it, felt it, and didn’t have confidence in Democrats to solve those problems,” says Democratic state senator and gubernatorial candidate Daniel Biss.
“The governor came in with a specific explanation for what the problems were, and a specific set of ideas for how to fix them. Democrats have done a good job of saying why his ideas are crazy and terrible and stopping them, but in the meantime we haven’t done nearly a good enough job in explaining what we’re for. We have a machine system of transactional politics. It’s not about articulating a vision. It’s about cutting a series of deals. I think we need a visionary party.” Biss says. ” Let’s not kid ourselves. It hasn’t historically been a visionary institution. It wasn’t set up for that kind of thing.”
This put Democrats in a defensive position from the beginning. Because they are agile legislators, they’ve been effective in wearing down the governor’s lengthy agenda to just a handful of positions, some of which are reduced from the governor’s demands, like Rauner’s demand for term limits being negotiated down to term limits for legislative leaders. (Biss calls it “the only good idea he’s ever had.")
But the defensive stance also meant that major Democratic wins, in terms of legislation, would in some ways be losses: a tax hike and pension reform, the first broadly unpopular even if basically a necessity, the second unpopular with the most important part of the Democratic base, labor.
Rauner’s Big Mistake
Rauner, though, had the opposite problem of Madigan. One theory for why Rauner has, in his own way, failed in this scenario, goes back to his experience as a businessman. He’s a takeover artist, as Carol Felsenthal wrote in a 2014 profile: “Through the years, Rauner has invested largely according to [mentor Stanley] Golder’s winning formula: Find a business that’s difficult to make profitable locally but that could be profitable regionally or nationally. Select a star CEO. Give him a couple hundred million dollars to buy companies in the same fragmented industries that are ripe for consolidation and economies of scale.”
Change the management, and cut. It not only made Rauner rich, it was a decent pitch for voters as well, which is why Rauner ran against Democratic leadership and in particular Madigan. Then he made redistricting and term limits two of the most important parts of his agenda. (He’s not the first governor to try to break Madigan; as Ylisela points out, Rod Blagojevich did as well.)
Rauner, however, couldn’t fire Madigan or anyone else. And as much as Democrats’ success in maintaining majorities or supermajorities can be attributed to Madigan’s machinations, it would be difficult without Illinois being a blue state. Rauner was perceived as desiring to transform the state along the lines of Wisconsin governor Scott Walker and former Indiana governor Mitch Daniels. But Daniels had a Republican Senate for his entire tenure, and a Republican House for half of it (and when he didn’t, it caused a budget stalemate). Walker had Republican majorities in both houses beginning in 2011, and drew from a deep-red vein in the state’s politics that is unmatched anywhere in Illinois.
“What [Rauner didn’t] realize is that in 2010, when Republicans did really well nationally, Madigan beat the crap out of them in Illinois,” says Thomas Bowen, a Democratic political consultant and former political director for Rahm Emanuel. “We were able to go in the opposite direction and build a Democratic map. He needed to compromise and get wins, and he did none of that.”
In other words, Rauner set out to transform the state both structurally and politically at the same time, and his biggest advantage was money. He used it to challenge Democratic legislators with some success, but not enough. And he failed to unseat a Republican who bucked him on a labor vote, the popular Plainview-based senator Sam McCann. It demonstrated that Rauner was not to be trifled with within his own party, but it also showed the limits of his spending. Not only was Rauner trying to turn around the state, he was simultaneously trying to transform his own party.
Under any circumstances, it was a lot to expect. And he was up against a great political operator, whose greatest skill and seemingly primary goal in life was preserving a legislative majority.
Rauner’s political weaknesses also gave Democrats incentive to resist him. “Mitch McConnell is one of the smartest political minds of his generation,” Bowen says. "He correctly identified that if you break anything, it hurts the leader of the government. That’s what he understood. The evidence is that the executive wears the jacket. Rauner’s biggest failing is that if there’s no budget, it’s his fault. He thinks he can blame Madigan; that’s not what voters think.”
Today’s Political Calculus
Democrats have reason to believe that 2018 will be an extremely advantageous year for them because of the national political situation. Midterms are always difficult for the party in power, and Donald Trump’s waning popularity and the tumult within his administration suggest an even worse map than usual. In other states with Republican legislatures, that could be offset by favorable maps, but in Illinois it could easily cut the other way. It’s not inevitable, and voter anger over the impasse could hurt Democratic legislators. But, the anticipation of a leftward swing gives Democrats an incentive to resist compromise.
Not all Democrats are confident in counting Rauner out in 2018, due to the amount of money that he can invest in an election. His polling numbers suggest that he’s extremely vulnerable, but he’s not as vulnerable as Pat Quinn was in 2014; he’s in Rick Scott territory, which gives him perfectly respectable odds of squeaking out a win. That would give him another term to continue building a more effective GOP operation.
But if Democrats concede parts of his agenda, that could help his case to voters. The opposing tactics, politically sound on their own, have created an abysmal set of political incentives, where breaking the system makes sense. Worse yet, as the state’s fiscal situation deteriorates, righting it becomes more difficult, requiring ever-more unpopular fixes that no one wants to own. Amanda Kass, the assistant director for the Center for Municipal Finance at the University of Chicago’s Harris School for Public Policy, argues that even the $5.4 billion in new revenue contained in the Senate Democrats’ bill—which will be debated on the House floor on Sunday—is insufficient at this point. The math reinforces the political incentives that have led to the impasse. Even newspaper editorial boards, as Miller points out in a perceptive post, aren’t getting behind a specific solution of any kind.
The only counter-incentives are exhaustion over the impasse and the fear of what could happen if it continues. Social service agencies are weakening or closing, and it could get much worse very quickly: a federal lawsuit, if successful, would place Medicaid insurers at the front of Illinois’s bill backlog, despite the comptroller’s attempts to prioritize the state’s struggling social service providers. Without a budget of any kind, schools could close early or simply not open at all.
“People are fed up. Not just the constituents, the members of my chamber,” says Steve Andersson, a Republican House member from the Batavia area who was named GOP floor leader in January. “I think the Senate is equally if not more frustrated. People are just not willing to leave this place without a budget by May 31st.”
He continues, “Now, maybe we’re wrong. This place is leadership-driven… But I sense there is so much pent up frustration. I think we all recognize that we are letting the state burn. We’ve destroyed our social-service safety net. In my opinion, at this point, there’s not enough reform to counter the damage we’ve done to the state in the past two years. and so for me, the biggest win is to create stability in this state. I want the [Turnaround Agenda] reforms. I agree with the governor that there are things in there we need to do. But the number one reform in my world is predictability and sustainability. Because people will stay [in the state] if they know what the rules of the game are.”
The Last Mile?
This week, the Senate budget passed on a party-line vote. Andersson says that although Republicans didn’t vote for those bills, negotiations are closer than they seem: “Sometimes you have negotiators who are negotiating, not because they want a deal, but just to drag out the time. I don’t think that’s the case here.”
Republicans will not be the only ones seeking to make changes to bills coming from the Senate. “I think an honest payment of the Group Health Insurance for state employees is missing,” Nekritz says, noting something that was flagged by a Republican senator in committee on Tuesday: the budget assumes hundreds of millions of savings that require the end of heated negotiations with the employees’ union, one element of a successful vote for strike authorization by AFSCME. “You can say we’re going to achieve reductions, but the governor’s been negotiating for two years, hasn’t had a contract, so, is it responsible for the legislature to say, ‘oh well, you’re right, governor, we’re going to trust you to reach $400 million in savings,’ and when it doesn’t happen, the backlog of bills grows.”
Meanwhile, bills are still coming out of the Senate. Two workers’ compensation bills just passed the Senate. A two-year property tax freeze—two years shy of the GOP’s negotiating position—is delayed, waiting on tweaks and enough votes to reach a needed supermajority.
“Any one thing is possible,” says McHenry County Republican representative Mark Batinick, one of the primary movers behind the property-tax freeze in the legislature. “It’s getting everything aligned that’s the problem.” There are lots of moving parts, any one of which could theoretically derail critical pieces of a bargain. This makes Batinick both optimistic and not: "It depends on what minute of the day you ask me.”
I ask Batinick if he could describe, to an outsider, why the impasse continues when the legislature has seemingly gotten to that last mile, or last inch, on multiple occasions. He laughs. “I dunno,” he says. “Maybe an outsider could explain it to me.”