Week of February 25, 2008
Last week, the governor presented his FY09 budget proposal to a joint session of the Illinois General Assembly. By this time, you have likely read some stories about the proposal. Many of the initial accounts related to the governor’s budget mentioned that his budget address was short on some of the facts. The actual speech lasted only twenty two minutes and served as both the “State of The State Address” and the Budget Address. Fellow Democrat and House Speaker, Michael Madigan, was quoted as saying that the “devil is in the details” of this proposal. So, this week, I want to get into some of those details.
The total increased spending in operating funds suggested by the Governor for FY09 is $1.9 billion. Most of the increased spending is accounted for in the following departmental budget increases: Pre-K-12 Education spending is increased by around $300 million, Human Services is up by $260 million, Corrections is up $71.5 million, The Department of Children & Family Services is up by $4 million and Health Care and Family Services is scheduled to receive an increase of $377 million. Other State Agency budgets are relatively flat or would receive less funding in FY09 than in FY08. When you add to these increases the increased payment of around $750 million to the state pension systems which is due in FY09, the total increase in spending is right around that $1.9 billion mark. The pension payment holidays and raids are coming home to roost with these ramped up pension payments.
Among those State Agencies not receiving increases is Agriculture with a cut of around $7.5 million (6.4%). The Department of Natural Resources takes a huge hit with a decrease of over $26 million (around a 40% cut). Higher Education, including Community Colleges, also will see decreased operating funds under this budget. There are already predictions that sizeable college tuition increases will occur if this version of the budget is passed.
The increased spending in the PreK-12 Education budget will actually not allow for much of an increase in the per pupil foundation level. Around $75 million of the $305 million in increased education spending would go toward increasing the foundation level and that would result in a $125 increase compared to a schedule $400 increase in FY08. Of course, the FY08 increase has not been paid as yet and many people wonder if the funds will be available to fulfill this promise by the time the fiscal year ends on June 30 th. The state currently has around $2 Billion in unpaid obligations according to Comptroller Dan Hynes.
Other increases in the proposed PreK-12 Education Budget are for mandated program reimbursements for transportation and special education. These mandated program cost increases account for $132 million of the $305 million. An additional $45 million would go to expand Early Childhood programs, a new Homeless program would cost $3 million and increases in required state testing would add about $12.5 million in new spending.
The Health Care and Family Services budget increase of around $377 million is necessary to pay for expansion of healthcare services that have occurred the past several years. Part of this increase pays for the new “FamilyCare” expansion which the governor ordered December 1 st of 2007 after that program was not approved last year by the General Assembly. You might remember that this expansion is the one ordered by the Governor after the Joint Committee on Administrative Rules (J-CAR) rejected his request for this expansion. It is also the subject of a current lawsuit which could determine whether JCAR has the Constitutional authority that would allow for it to adopt rules related to legislative intent. By the way, this expansion allows a family of four, making up to $82,600 to receive state sponsored health care services.
The increases in the Healthcare and Human Services Budget do not change the payment cycle to health care providers. At this point, the average payment cycle is 71 days. However, payments to nursing homes average 97 days and payments to hospitals and pharmacists will remain at over 90 days. This budget increase covers expanded programs and does not help Illinois pay debts on time.
Increased costs associated with the care of the developmentally disabled accounts for most of the increase in the Human Services budget.
The increased budget at the Department of Corrections would pay for additional staff at some facilities including a planned expansion at Lawrence County which would add 271 beds and increase the employee headcount by forty-four. The employee headcount at Robinson would increase by fourteen under the proposed budget.
The spending side of the budget reflects the same basic priorities that we have seen in previous budgets presented by the governor. Healthcare and education receive most of the increased spending. Many in the General Assembly share some of these spending priorities. There are other spending proposals that have support as well. Of course, there is never a shortage of ideas related to spending!
A major part of the problem with this budget is the revenue side. The Governor proposes to balance the increased spending with a combination of raiding dedicated funds, new taxes on business that he calls “closing corporate loopholes”, increasing taxes on riverboats, and borrowing. The list of dedicated funds to be swept has not been presented but his estimated is $600 million. Most of the projected revenue growth from new taxes on business comes from a new 3% payroll tax and removing job growth incentives for corporations. These anti-business proposals have already cost Illinois thousands of jobs. The increased riverboat taxes are calculated to provide an additional $250 million. However, boats are showing profits down over 17% in January. That could be from a combination of the new smoking ban and the economy.
The bottom line is that while spending increases are permanent, the projected revenue to pay for these increases is shaky to say the least. Does that sound familiar? Out of the gate, there is not much support for this budget proposal on either side of the aisle. I will keep you updated as the long budget process moves forward.
I am interested on your thoughts regarding this proposal or other issues. Keep up with legislation at www.ilga.gov
You can write to me at either P.O. Box 125, Hutsonville, IL 62433, or 222-N, Stratton office Building, Springfield, IL 62706, or you can e-mail me at reddyunit1@aol.com. I will also keep you updated on my web site: www.peopleforeddy.com