Wednesday, February 16, 2011

Legislative leaders take issue with Quinn's budget

By Jamey Dunn and Lauren N. Johnson

Gov. Pat Quinn emphasized the need for economic development and avoiding large education cuts in his budget address today. However, his proposal contains deep cuts to some social services and health care and hinges on a borrowing plan that Republicans say they will not support.

Quinn focused on the need to cut the budget in his speech to lawmakers. According to his staff, there are no new programs in his proposal, which they say cuts spending by nearly $1 billion. However, he did propose spending increases in existing programs. All state spending in the proposal totals $52.7 billion. Republicans claim that figure represents a $1.7 billion increase from last year’s spending. However, Quinn’s staff insists that last year, the state did not make some required payments in full and did not pay the required $4 billion pension fund payment from general revenue funds. So, they say, last year’s numbers do not represent a realistic budget.

“Our commitment to taxpayers is simple: We will only use tax dollars to provide necessary state services,” Quinn said in his address. “All unnecessary state spending will be eliminated.”

The governor’s plan includes a jump in general state aid funding to schools from $4.6 billion to $4.86 billion. This increase would bring the foundation level — the funding the state gives schools per student each year — up to $6,267 from $6,119. But Quinn also called for eliminating all state dollars spent on regional superintendents’ offices. He said the almost $14 million in savings from that cut should go toward schools. His plan also cuts $95 million from state support for transportation costs spent on busing students to schools. Quinn also called for consolidating school districts, a plan that he said would realize $100 million in future savings. He did not explain how the consolidations would be accomplished, but he did say he plans to create a commission to took into the matter.

The governor called for a $25 million increase in the Monetary Award Program, which provides college scholarships to students in economic need, and an end to scholarships doled out by legislators. “College scholarships paid for by the taxpayers of Illinois should go only to those that have true financial need for them,” Quinn said.

Quinn proposed cutting the rates that health care providers are paid to treat Medicaid patients, a move he said could save $550 million in the first year. In recent years, providers have claimed that the rates they are paid to provide health care, coupled with the state’s slow payment of bills, has caused providers to opt not to treat Medicaid patients. In some cases, that has led to Medicaid patients having trouble finding treatment close to home. “Making such deep cuts will pose serious challenges to many financially fragile hospitals, which are already struggling to survive. With hospitals being squeezed between higher costs – for labor, new technology and medical liability – and inadequate revenues during the current economic downturn, their ability to continue to perform the critical role of serving their patients and their communities will be seriously jeopardized by Medicaid rate reductions,” Danny Chun, a spokesperson for the Illinois Hospital Association, said in a written statement.

State funding for addiction treatment and prevention services that are not covered under Medicaid—which brings in federal matching funds—was cut completely. According to Sara Moscato Howe, a spokesperson for the Illinois Alcoholism and Drug Dependence Association, the proposed $53 million in cuts to substance abuse programs would mean almost 19,000 people would lose access to treatment. Howe said about 80 percent of those in state-funded addiction treatment today are not eligible for Medicaid. “We have a lot of the working poor … so they’re stuck in the middle.”

Howe added that Illinois could lose federal funding for those programs if it does not chip in because the state is required to meet certain “effort of maintenance” standards to get the federal dollars that Quinn has written into his budget.

The plan also calls for cuts to mental health services not backed by Medicaid dollars, as well as eliminating programs that help seniors pay for medication and costs associated with owning a home.

“This is my 50th year of lobbying on behalf of persons with disabilities in Illinois, and I have never witnessed a proposed human service budget that would be more devastating to the health and welfare of this vulnerable population,” Don Moss, coordinator for the Illinois Human Services Coalition, said in a written statement. “There is no segment of human service needs that is left unscathed by the draconian cuts put forth by the governor.”

Quinn emphasized economic development and cooperation with the business sector. He touted his recent efforts to bring more business to the state, called for reforms to the workers’ compensation system and announced the creation of an Illinois Innovation Council — aimed at promoting economic growth. He also called for $1.4 billion in new capital construction spending to catch up on maintenance at universities and state facilities that has been put off in recent years because of budget constraints.

“I’m glad we got his attention,” said Jeff Mays, president of Illinois Business Roundtable. Mays said Quinn has become more proactive about concerns the business community has raised in the last month. He said it is a good start, but he hopes to see more policy changes directed at the needs of Illinois businesses.

Quinn renewed a call for $8.75 billion in borrowing to pay overdue bills, which he said are six to eight months late, owed to vendors, social services providers and schools. He called on Republicans, who shot down that proposal yesterday, to present alternative proposals. “Billions of dollars of existing bills will not go away by magic. … If you do not agree with our debt restructuring plan, tell us which [programs] you would eliminate to pay $8.7 billion in overdue bills today.”

Senate Minority Leader Christine Radogno, a Lemont Republican, said although well delivered, she thought Quinn's address did not offer much information about what she called key factors of the budget. “The concepts he talked about — needing to cut, needing to pay bills, needing to focus on job development — are all on target. Unfortunately, we didn’t hear a lot about the numbers,” Radogno said.

Radogno and Senate President John Cullerton, a Chicago Democrat, said Quinn’s numbers do not add up. They say he would spend more than the expected revenues for the next fiscal year, and they are concerned that he plans to use some of the money from the proposed borrowing to fund his budget. “The governor's estimated revenues in [Fiscal Year] 12 are $1.45 billion less than his proposed spending. At first glance, the governor’s budget appears to rely on debt restructuring that has not been secured. I am among those with questions about how the governor plans to use these dollars if they are approved. I urge the governor to provide the details needed to advance his proposal,” Cullerton said in a written statement. He canceled a scheduled news conference after the governor’s address because he said he still has questions about the proposal and needs more information from Quinn.

Radogno accused Quinn of doing a “sloppy” job of explaining where the borrowing dollars would go. “Borrowing has been proposed to pay bills, yet the budget document itself demonstrates that some of that borrowing is used in order to prop up the level of spending that can’t be sustained with the revenue that’s coming in aside from the borrowing.”

A spokesperson for Quinn’s budget office said all the money from the borrowing plan would go toward paying off the old bills.

House Speaker Michael Madigan said on the PBS television program "Illinois Lawmakers" that he thinks Republicans will come around to a borrowing plan, but it will probably be smaller. The Chicago Democrat said in early negotiations, lawmakers were discussing borrowing about $6.2 billion. Like Radogno and Cullerton, Madigan took issue with Quinn’s numbers. He said Quinn was counting on $720 million from two plans — one that would cut state payments to the fund for corporate income tax refunds and another that would split state tax practices from a federal plan — which have not been approved by legislators. Madigan said that under new budget reforms, Quinn cannot base his budget on money the state doesn’t have. “That will be the first point of difference with the governor and the legislature.” He pointed out that the governor’s proposal is just the beginning of the budgeting process, and any disputes could potentially be worked out through negotiations.

Madigan, Cross and Radogno all said changes to pension benefits for state workers, as well as charging some retired state workers more for their health care coverage, should be on the table. They say they are not proposing taking away any pension benefits employees have already earned, but they are open to changing future benefits for current employees. Cullerton agreed that some retired workers should pay more for insurance. However, he maintained his stance that any changes to pension benefits for current employees would be unconstitutional.

Madigan said of the budgeting process that was kicked off today: “There is going to be a whole series of tough decisions to be made on issues, such as unemployment insurance workers’ compensation, support for health insurance programs for retired teachers … all of that in addition to working our way through a budget making process where we acknowledge that we owe $6 [billion] to $8 billion in unpaid bills.” (For more on the Unemployment Insurance Trust Fund and the associated budget problems for Illinois, see Illinois Issues, November 2010.)

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