Tuesday, June 30, 2009

Great information about the budget mess from the Daily Herald!

State budget mess leaves plenty of questions
By John Patterson Daily Herald Staff
Published: 6/29/2009 12:03 AM
SPRINGFIELD - With lawmakers returning to the Capitol today to take another crack at balancing the state's budget, the Daily Herald seeks to answer some of the basic questions behind the current situation.

Q. What's going on with the Illinois budget?
A. Good question, because no one seems to know. With time running out on the current budget, there seems to be little urgency from elected officials to fix the problem. The new state budget year starts July 1.

Q. What happens if there's no budget on July 1?
A. In theory, there's no authority to spend money on anything, though the state will continue to collect your tax dollars.

Q. Have lawmakers considered a budget for the new year?
A. Yes. They've approved one. But it only has enough money for about six months and leaves it to Gov. Pat Quinn to make it work. So far, however, they've not yet actually sent that plan to the governor's office for approval.

Q. What would that budget do?
A. It would eliminate funding for numerous not-for-profit human service providers who provide therapy and care for the disabled, addicted, poor and elderly on behalf of the state. For instance, Des Plaines-based Lutheran Social Services said it would have to turn away nearly 10,000 people who get care through its programs across the state.

Q. What would Quinn do?
A. He doesn't support that budget and said he will not allow such cuts to happen. "I was always opposed to that," Quinn told reporters.

Q. So who told the groups they'd lose funding?
A. Quinn. He said he had a legal responsibility to do it when lawmakers rejected a budget-balancing tax increase last month, even though he now says he won't make those cuts.

Q. Does this all have to be solved by July 1?
A. Not really, but it needs to be resolved soon.
"You can go about 10 days, 15 days overtime and everything doesn't come completely unhinged. You go past that and it gets real dicey," said former Republican Gov. Jim Edgar, who had his own overtime budget fights with lawmakers.

Q. When was this supposed to be done?
A. The Illinois Constitution was changed in the 1994 to set a May 31 deadline in order to avoid budget fights backing up to the start of the budget year. But in recent years that deadline has routinely been blown.

Q. What happens when the budget deadline is missed?
A. Approving a budget requires additional votes. Before May 31, approval is a simple majority: 60 votes in the 118-member House, 30 votes in the 59-member Senate. On June 1, approval requires a 3/5ths majority: 71 votes in the House and 36 votes in the Senate.

Q. What does that mean politically?
A. It means in the House, the Republicans will be needed to approve any budget deal even if every Democratic member goes along with it, which probably won't happen. There are 70 Democrats and 48 Republicans in the House. In the Senate, there are 37 Democrats and 22 Republicans.

Q. Any other political factors?
A. Elections are just around the corner. Candidates can start circulating petitions for office in August and the last day to get on the 2010 primary ballot for major party candidates is in November. In addition to governor and other statewide offices, all 118 Illinois House seats and 21 of the 59 state Senate seats are up next year. One theory is lawmakers might be more open to tax increases after they see whether anyone is going to run against them in the February primary.

Q. How big is the deficit?
A. According to lawmakers' own budget office, $11.6 billion. However, the current budget was never fully balanced and began with an $835 million shortfall. So the total deficit is $12.4 billion. Yet in recent days, that number has varied, usually to a lower figure, suggesting lawmakers may use some new accounting to come up with a new deficit that'd be easier to fix.

Q. What are the proposed fixes?
A. In May, the Senate approved raising the personal income tax to 5 percent from 3 percent, the corporate income tax to 5 percent from 4.8 percent and begin applying the sales tax to a litany of items and services currently not taxed to come up with $5.6 billion a year. Combined with billions in federal stimulus money, the plan would go a long way toward wiping out the deficit, though at least $2 billion more would need to be cut.
The House considered but rejected a smaller, two-year income tax increase proposed by Gov. Quinn that contained no sales tax hike. The Senate tax plan was never voted on but clearly doesn't have support in the House.

Q. Didn't they already raise some taxes?
A. Yes. The House and Senate voted to increase alcohol taxes and vehicle fees. But that money would be used to finance road, bridge and school construction among other projects. That money's not for the budget.

Q. Anything new being talked about other than taxes?
A. There's a plan being put together to borrow nearly $2 billion to make the required pension payment and then pay it back over the next few years. It's attractive to lawmakers because it reduces the amount of money they need to come up with to balance the budget; and the interest rate is likely to be far less than if the state just skipped the payment, so it doesn't make the pension system's poor fiscal state any worse.

Q. What about cuts?
A. Republicans, and many Democrats, contend not enough has been cut to even talk about tax increases. Even Republican leaders say the state can't cut its way out of this mess, but they want "fundamental" changes to government before they put any votes on Democrats' tax plans.

Q. What do you mean the state can't cut its way out of this?
A. Running the state - everything from prisons to police to school funding - costs roughly $30 billion a year. The total deficit is more than one third of that. For perspective, every state employee could be laid off and the total savings would be roughly $4 billion. Of note, once construction spending and other state expenses are added in, the total state budget is about $60 billion.

Q. What are some of the changes Republicans want?
A. GOP members have pressed for changing state pension systems to require future state, university and public school employees to work more years and pay more of their income toward reduced pension benefits. The state constitution forbids changing benefits for anyone currently in a state pension system, so changes would only apply to those hired after the changes would be made.
Republicans also are pressing for expanded managed care use in Medicaid.

Q. What about gambling expansion?
A. Added casinos and slot machines at Arlington Park and other tracks have been proposed but House Speaker Michael Madigan has said he doesn't see it as a viable solution.

Q. How about state layoffs and furloughs?
A. Gov. Quinn raised the possibility of a dozen furlough days for state workers. However, that'd have to be voluntary or negotiated with the employees' union. If Quinn wants to lay off anyone in the employees' union, he must provide 30 days notice and so far he hasn't.

Q. What are the chances of this being fixed soon?
A. That's a good question since no one, not even the state's leaders, seems to know. Knowing of this impending budget disaster, Quinn ordered lawmakers back to the Capitol last week. They left after two days without taking a vote on any budget cuts or moneymakers. The House returns today, the Senate tomorrow.

Asked what's going to happen, Quinn said: "We'll have to roll up our sleeves."

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