Paying increased costs for employee pensions, health care for the poor and debt service will eat up virtually all new money the state can expect to bring in over the next three years, Comptroller Dan Hynes said Monday.
The state faces “a serious crisis” by 2010 unless lawmakers take a long-term view of state finances, Hynes told a business group in Chicago. But a spokeswoman for Democratic Gov. Rod Blagojevich said the administration was well aware of the problems when it came into office and has continued to alleviate them.
Hynes, a Democrat, said the state will have to pay about $1 billion more each year to keep up with growth in the built-in budget obligations. That’s just about the amount of new money _ through increased tax revenue, for example _ the state has gained annually for the past 10 years, he said.
“If current trends continue and the state fails to address these looming issues, the state could face a serious crisis by fiscal year 2010,” Hynes told the state finance task force of the Civic Committee.
Specifically, Hynes said the state’s contribution to employee pension systems will grow from $1.4 billion this year to $3.4 billion in 2010, an increase of $700 million per year.
Medicaid, the health care program for low-income residents whose cost the state shares with the federal government, will jump as much as $275 million per year, to $8.3 billion three years from now.
And although this year’s debt service of $1.7 billion levels off and then slightly decreases in coming years, the treasury still will have to shell out as much as $70 million more each year through 2010, he said.
Spokeswoman Becky Carroll said Blagojevich is the one who brought the problems under control and continues to reverse them.
“We’ve proved that by keeping new spending down, reducing the size of government and creating new revenue streams, we can address challenges facing the state without having to raise taxes,” Carroll said.
Blagojevich’s Republican opponent in the governor’s race, Treasurer Judy Baar Topinka, plans to cut $2.9 billion in Medicaid obligations over four years through measures such as tightening rules for proving eligibility and increasing managed-care caseloads. She also has pledged to pay the state’s full obligation to pensions during the next four years, arguing that Blagojevich short-handed the accounts by skipping payments the last two years.
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