Sunday, October 25, 2015

Gov. Rauner's rocky start calls into question the 'CEO' theory of government : News


By Kevin McDermott

Kevin McDermott


Illinois Gov. Bruce Rauner vaulted into office this year on the strength of a long-held theory among conservatives: that a successful businessman with no political experience would do a vastly better job of governing than the professional politicians.

Nine months later, Rauner’s state is mired in a legislative standoff and unprecedented budget crisis that has resulted in billions of dollars in unpaid bills, suspended state services, facility shutdowns and, last week, a worst-in-the-nation credit rating downgrade — a showdown, critics say, that stems largely from Rauner’s CEO-like approach to governing.

“Running the government is not like running a business,” James R. Thompson, one of two Republican former governors who have recently expressed concern about fellow Republican Rauner’s performance, said in a published interview last week.

The July start of Illinois’ fiscal year came and went without a state budget in place because Rauner and the Democrat-controlled Legislature have been unable to agree on one. Legislators passed a budget they acknowledge is as much as $4 billion short of revenue, and sent it to Rauner with calls to negotiate a tax increase and spending cuts to cover the shortfall.

But instead of accepting the proposed budget as a starting point for negotiation, Rauner vetoed it, and announced what it would take to get his signature: a series of business-friendly changes to state policy, some of which are ideologically anathema to legislative Democrats. They include proposals to allow local governments to limit collective bargaining, to revamp the state’s injured worker compensation system to the benefit of employers, and to rework the state’s civil litigation system to the benefit of corporate defendants.

Rauner also is seeking term limits and redistricting reform — a fundamental attack on a core of top Democratic legislators who have been electorally untouchable for, in some cases, decades. In addition, he wants a local property tax freeze.

Rauner has argued that, even though those proposals don’t relate directly to the budget at hand, they are systemic reforms that will stabilize the state’s economy in the long run.

“Rather than repeating the mistakes of the past — just kicking the can and raising taxes without real reform — now is our chance to transform Illinois to make it more competitive and compassionate,” Rauner wrote in a published essay June 25, defending his budget veto as a step on “the road back to fiscal sanity.”

Democratic legislative leaders countered that Rauner was abusing the budget process to force through partisan policy changes.

“We’re not going to allow our governor to hold middle-class families hostage over what we think are political issues,” state Rep. Lou Lang, a ranking Democrat, told reporters at the time. “To hold up the budget over things that don’t have anything to do with the budget simply is not a responsible way to move the ball forward in our state.”

The state has since continued to operate in the absence of a budget through court orders and continuing resolutions, but no one claims that situation can continue indefinitely. The state’s backlog of unpaid bills is approaching $7 billion. Next month, it will have to push back a scheduled $560 million payment to the state pension system.

Some selective funding freezes have already begun, including reductions in social service programs and funding to universities. A Chicago social service organization run by Rauner’s wife, Diana Rauner, has criticized the administration for what it calls “devastating” cuts in child-care support for low-income Illinoisans. The state’s decision to give lottery winners IOUs for any winnings over $600 has prompted national headlines and litigation.

Illinois is, “for all intents and purposes, out of money,” state comptroller Leslie Munger said in a public appearance this month.


In most political impasses, each side blames the other for the conflict. What’s unusual about this one is that Rauner has come close to plainly admitting, even touting, the legislators’ main complaint against him: that he’s using a budget fight as leverage to get what he wants from them in other areas.

“Crisis creates opportunity,” Rauner told the Chicago Tribune’s editorial board in April, after it had become clear that he and the Legislature were headed for a showdown over the budget. “Crisis creates leverage to change … and we’ve got to use that leverage of the crisis to force structural change.”

Indeed, in the ensuing budget showdown, some of Rauner’s decisions have appeared to have less to do with saving money than with keeping crisis-level pressure on legislators.

This month, Rauner shut down both the Illinois State Museum system, based in Springfield, and the state-run World Shooting and Recreational Complex in Sparta, Ill., a major downstate tourism draw. Both shutdowns are high-profile losses for the legislators of those areas, but ostensibly necessary to save money during the budget crisis. However, they aren’t actually saving significant money, because the union-protected staffs are still showing up for work and still getting paid, even though the facilities remain closed to the public.

The showdown apparently is having an impact on the public’s image of the man they hired less than a year ago to clean up the mess in Springfield. Rauner, still in what would normally be considered the honeymoon of his administration, is already upside-down in his job-approval rating, according to two recent polls.

The polls, by the Paul Simon Public Policy Institute at Southern Illinois University-Carbondale, and by the pro-business (and generally pro-Rauner) group Illinois Policy Action, both put Rauner’s job approval below 40 percent, and disapproval above 50 percent.

In the past two weeks, several other pieces of bad news fell around Rauner’s administration like dominoes.

On Monday, Fitch Ratings downgraded the state’s credit rating from A-minus to BBB-plus, potentially affecting $26.8 billion in general obligation bonds and making Illinois the lowest-rated state in the nation. Moody’s Investor Service took similar action on Thursday.

Fitch cited the budget impasse in its decision, but also cited problems that long pre-date Rauner’s administration, including the state’s “exceptionally high” unfunded pension liability. That gave both sides plenty of ammunition in the blame game that followed.

“Fitch points out that the Illinois economy lags other states’ and has major structural challenges,” Rauner’s office said in a written statement that attempted to cast the downgrade as vindication of his push for policy changes. “Gov. Rauner continues to fight for structural reforms that will put the state on a path to fiscal health, but the Legislature continues to protect the failed status quo.”

Legislative leaders, of course, offered a different interpretation. “This lowered credit rating is just one way that we can calculate the true cost of doing business the Rauner way,” Democratic Senate President John Cullerton’s office said in a statement.

Also on Monday, the organization that provides national accreditation for the Illinois state museum system indicated that accreditation is now at risk because of Rauner’s current closure of the system. The American Alliance of Museums’ Accreditation Commission, based in Arlington, Va., voted 7-0 to put the museum system on probation, citing “grave concerns” about its long-term viability because of the closure.


Meanwhile, two popular former Republican governors have recently made public statements bemoaning the budget stalemate and laying at least part of the blame on Rauner’s boardroom approach to governing.

“He comes from (being an) entrepreneur where you buy a business, you tear it apart and you sell it,” former Gov. Jim Edgar, who campaigned for Rauner last year, said in a highly critical interview in the Springfield State Journal-Register that shocked the state’s political culture. “I don’t think you’re going to tear apart the state and sell it. He might want to, but you can’t do that.” Edgar accused Rauner of holding the state’s budget “hostage.”

Former Gov. Thompson, who served a record four terms, told the Arlington Heights Daily Herald last week that the situation now was “the worst position the state of Illinois has ever been in,” with Rauner sharing in the blame.

Thompson noted the difference between “running a business” and operating a bipartisan government: “(B)oth sides have to sit down and look at what they’ve requested … (and) negotiate on the basis of what each side can deliver.”

In response, Rauner told reporters last week: “I don’t spend any time criticizing my fellow Republicans. I do not spend any time criticizing decisions made in the past that created the mess that we’re dealing with.”

Gov. Rauner's rocky start calls into question the 'CEO' theory of government : News

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