PEORIA
Illinois budget director David Vaught's visit to Peoria on Friday was a case of good news and bad news.
Speaking at the Gateway Building on the riverfront, Vaught said the Illinois economy continues to improve after a damaging recession.
"This is a diversified economy in this state. It's not just agriculture. It's not just Chicago. It's not just Caterpillar in Peoria or John Deere in Quad Cities," he said.
But then there was the bad news. The state is $83 billion behind in funding state pensions. "That's the worst in the nation and 13 percent of the state budget," said Vaught, referring to "the pension bomb that's hanging out there."
"It's a problem we have to address. It's a major challenge and it's hard," he said, noting that a bipartisan group seeking to find a solution held its first meeting last week.
In answering a question from state Rep. David Koehler, D-Peoria, about finding a long-term strategy for the state's pension problem, Vaught acknowledged that "the state needs to find a funding method that passes muster with standards."
Jim McConoughey, CEO of the Heartland Partnership, wondered if the state had plans to transfer some of its debt to local municipalities.
"Transferring (pension) costs back to the local government has been proposed, but how do you do that without a spike in property taxes?" said Vaught, adding that a meeting between legislators and organized labor was planned for next week to discuss the issue.
Medicaid also presents a problem for the state, said Vaught. "Doing nothing about (mounting payments) is not an option," he said.
Vaught pointed to plans recently outlined by Gov. Pat Quinn: to provide $1.6 billion for school construction this year; to undertake a clean water initiative to fix leaky water pipes in communities across the state; and to promote Gigabit, a recently launched competitive program that offers select Illinois cities high-speed Internet service.
Illinois must look beyond competition with surrounding states such as Indiana and Wisconsin, said Vaught. "We're competing with countries like China, Brazil and Turkey. Illinois exports are on the rise, leading our economy. Caterpillar is a great part of that, by the way," he said.
Vaught added that China now purchases one-quarter of all the soybeans raised in Illinois.
Steve Tarter can be reached at 686-3260 or starter@pjstar.com.