SPRINGFIELD, Ill. (CBS) - It’s going to be painful. Illinois Gov. Pat Quinn was putting the finishing touches Tuesday night on what can only be called a bad news budget; one which might stop the bleeding, but does little to treat the wound.

The spending plan Quinn will formally propose Wednesday in his annual budget address includes cuts aimed at keeping the state’s $8 billion in unpaid bills from increasing, an effort applauded by the non-partisan Civic Federation.

“There are some very big, and painful, and politically unattractive changes and reductions in state institutions,” Civic Federation President Laurence Msall said. “But those are necessary in order to begin to dig out of the hole that Illinois is in.”

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But as CBS 2 Chief Correspondent Jay Levine reports, the governor’s budget plan appears to simply keep that hole from getting any deeper, not dig the state out of it.

“Illinois did not get into this problem overnight. The governor does not have a plan to get us out of this overnight,” Msall said.

A budget briefing for reporters outlined a plan relying on layoffs, closing 14 state facilities, and making major cuts in Medicaid and other services, but not the across-the-board 9 percent budget cut the governor had said he was demanding from state agencies and other statewide elected officials.

“We said most agencies, the goal was 9 percent; we didn’t say every agency would,” said Quinn’s chief of staff, Jack Lavin.

The Department of Corrections is hit hardest under the governor’s plan, with the closing of two major downstate prisons – Tamms and Dwight – plus two halfway houses in Chicago, which would be replaced by electronic monitoring of recently released inmates.

Quinn is also set to propose Medicaid cuts of $2.7 billion, but won’t be specific as to how to achieve such savings.

Overall he will say every element of state spending he controls will be reduced.

State Sen. Matt Murphy (R-Palatine), a key budget negotiator for the Senate GOP, said the governor’s numbers are little more than a shell game.

“He’s taking large chunks out to make it look like they’re being responsible, when overall spending is still going up,” Murphy said. “That’s like saying ‘I gained some weight over the holidays, but if I don’t count that weight, I’m still thinner than I was before the holidays.’ Well, you know, that’s no the way it goes. You have to count the whole picture.”

Illinois GOP Chairman Pat Brady said, during a teleconference from Springfield Tuesday, that Quinn has done little to get the needed federal approval for his proposed cuts to Medicaid spending.

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Brady said Quinn must find a pension plan the state can afford and get behind it. And he said Quinn must take a hard line in contract talks with state employee unions, whose contracts are up for renewal later this year.

“We don’t have the money for a generous union giveaway, regardless of whether that’s your donor base, and Gov. Quinn has to stand firm on that and not extend exorbitant pay or benefits to AFSCME or any of the other public sector unions,” Brady said. “We simply need to have a government we can afford.”

Brady said many homeowners fear that pension costs will be pushed down to the local level, resulting in increases statewide in real estate taxes. He said the state of Illinois has become a notorious deadbeat, and said it is what’s driving people and business to move elsewhere.

He also said spiraling pension costs have left virtually no new money to pay for state programs, despite the increase in state income taxes, and said it is hurting Illinois’ “most vulnerable constituents.”

The real culprit, all agree, is pension costs; which have gone from $1.7 billion in five years ago, to $5.2 billion in the FY2013 budget, squeezing everything else out.

Republican State Treasurer Dan Rutherford said, “All this stuff we’re doing in getting rid of … closing prisons and closing mental health facilities, that doesn’t do a thing to fix it. It has got to be dealt with in the state public pension side.”

House Speaker Mike Madigan (D-Chicago) declined a request for his reaction, but all seem to agree that, no matter how much you cut, there is simply no way to balance the budget and pay the state’s bills without meaningful pension reform.

It’s a goal that seems to be high on everyone’s to-do list in Springfield this year.