Fact-Check: Did Rauner Really Pour $1 Billion ‘Down the Drain’?

Illinois has racked up a mountain of interest penalties for paying bills late after a record budget impasse. The Democrat hoping to unseat Gov. Bruce Rauner says it’s all the Republican’s fault, but the facts tell a more complicated story.

Big, round numbers play well in politics and this election year, “$1 billion” is having its moment in the race for Illinois governor.

First there was Republican Gov. Bruce Rauner proclaiming in a commercial that the budget he proposed earlier this year contained a $1 billion tax break for Illinoisans. We rated the same claim Mostly False after he unveiled his budget plan in February.

Now, Rauner’s fall challenger, Democrat J.B. Pritzker, is out with an ad skewering the incumbent for squandering the same amount in taxpayer dollars.

“$1 billion—that’s how much Bruce Rauner has wasted with his budget crisis,” the ad asserts. “Bruce Rauner poured that money down the drain.”

There’s no doubt Rauner, as the state’s chief executive, played a starring role in the prolonged budget showdown with the legislature that left the state without a spending plan for two years. But he had plenty of co-stars, among them House Speaker Michael Madigan and Senate President John Cullerton, both Chicago Democrats.

Pritzker’s attack is as short on detail as it is sharp on condemnation. Where does that $1 billion figure come from and why should Rauner own it? The ad doesn’t say, so we decided to take a look.

Adding it all up

The answer to the first question is simple. A spokesman for the Pritzker campaign said the number comes from Democratic State Comptroller Susana Mendoza, the keeper of the state’s books and a frequent Rauner critic.

Mendoza calculated that the state racked up $1.03 billion in late payment penalties in 2017, largely because the budget standoff led to major delays in paying state vendors for their services.

The budget impasse dragged on because the governor and Democrats who run the legislature had very different policy, tax and spending priorities. As a lawyer might put it, there was plenty of contributory negligence—not to mention gamesmanship and plain old stubborness—to go around.

In short, the budget became hostage to an ideological debate centered on so-called Turnaround Agenda demands from Rauner that Democrats argued were largely unrelated to a state spending plan. In dispute were issues that included the imposition of term limits for legislators, a freeze on local property taxes, and workers’ compensation cuts.

Also fueling the budget crisis and the bill backlog that grew with it was a significant drop in revenue after a temporary state income tax increase expired, reducing the rate from 5 percent to 3.75 percent just days before Rauner was sworn into office in 2015.

Rauner had pressed the legislature to let it lapse, and Madigan and Cullerton obliged over the objections of then Democratic Gov. Pat Quinn, who lost to the Republican in November 2014. State law mandated the rate reduction at the end of that year, but Quinn urged lawmakers to step in and prevent it.

“I warned there would be dire catastrophe in my budget address and I laid out what the catastrophe could look like in an attempt to try and get the legislature to extend it, but no Republicans came forward and many Democrats were leery before November's election,” Quinn told us in a phone interview. “They simply did not want to vote on revenue before November—Democrats and Republicans.”

It’s also worth noting that, even before the 2014 tax cut, the state had been accruing large penalties for tardy bill payments. A report from the Civic Federation, a Chicago-based budget watchdog, shows late payment interest penalties totaled more than $600 million in the three years prior to the budget standoff.

David Merriman, an economist who heads the Fiscal Futures Project at the University of Illinois, sees the penalties as evidence of the state’s legacy of poor fiscal management, with government leaders of both parties approving budgets for nearly two decades that balanced out only on paper.

"The fiscal situation has been unsustainable, [Rauner] inherited it, it got worse under Rauner because they didn't have a budget for two years and because he didn't control spending,” Merriman said. “That’s his fault, but it’s also the legislature's fault.”

Eventually, after two years of operating on autopilot and jeopardizing a number of critical services in the process, lawmakers last summer did put a budget in place that included an income tax rate hike, which provided a big jump in revenue. Rauner had vetoed that plan, but a handful of Republicans joined Democrats to override his rejection.

Our ruling

A recent Pritzker campaign ad says Rauner “wasted” $1 billion “with his budget crisis.”

Pritzker’s ad seeks to blame Rauner for the entirety of a huge tab the state ran up last year on interest penalties for late payment of bills. The problem was significantly aggravated by a two-year budget standoff in Springfield that left many state services running on autopilot but with insufficient revenues to cover the costs.

Rauner clearly played a key role in that logjam and it may be smart politics on Pritzker’s part to try to blame the mess entirely on the incumbent. But Rauner hardly acted alone.

What’s more, running up an expensive late payment tab isn’t unique to the Rauner era. Chronic fiscal mismanagement over many administrations has made it harder for the state to pay bills in a timely fashion—even when the income tax rate was higher and more revenue was flowing in.

Pritzker’s ad has its number straight, but uses it to blame Rauner alone for an unfortunate legacy that is shared by many. We rate it Mostly False.

Sources

Video: “Rauner Failed: $1 Billion Wasted,” Pritzker campaign, June 7, 2018

“Does Gov. Rauner truly have a $1 billion ‘tax relief’ plan?,” PolitiFact Illinois, Feb, 16, 2018

Phone interview: Jason Rubin, Pritzker campaign spokesman, June 19, 2016

“Illinois budget impasse cost state $1 billion in late payment penalties,” Reuters, Jan. 22, 2018

“Illinois tax increase to roll back as planned,” Quad-City Times, Dec. 3, 2014

Phone interview: Pat Quinn, former governor of Illinois, June 18, 2018

Illinois Finance 101: Paying Interest Penalties, Civic Federation, April 6, 2018

Phone interview: David Merriman, director of the Fiscal Futures Project at the University of Illinois, June 19, 2018

About the Author
  • Kiannah Sepeda-Miller

    Kiannah Sepeda-Miller is a reporter with the Better Government Association's investigative team. Prior to joining the BGA, she covered state government for The Associated Press while earning her master's in public affairs reporting from the University of Illinois at Springfield in 2017. She also holds a B.A. in sociology from Knox College in Galesburg, Illinois.