Showing posts with label FY09 budget. Show all posts
Showing posts with label FY09 budget. Show all posts

Thursday, April 02, 2009

"Trifecta" heads to the governor

The House on Thursday night nearly unanimously approved the $9 billion plan for federal stimulus funds, transportation projects and supplemental spending for state operations. The Senate approved the package earlier in the day. The spending plans now head to Gov. Pat Quinn’s desk, satisfying the governor’s request for the General Assembly to approve a small version of a capital plan for roads and bridges before lawmakers left on a two-week spring break.



House Republicans early in the day weren’t on board because it wasn’t clear how the money would be spent, said House Minority Leader Tom Cross. However, working with Quinn’s office throughout the day, he said his caucus finally got a list. “The governor was very helpful, both himself personally and his staff, in trying to make this happen,” he said.

“Today’s actions are a great example of what we can accomplish when we come together with a common purpose,” Quinn said in a statement.

Senate President John Cullerton, however, foreshadowed the difficulty in securing the three-fifths majority needed to do a larger capital program based on tax and fee increases later.

Cigarette tax advances
By Jamey Dunn
A timely example of that difficulty in advancing any tax increase occurred early in the evening. After missing the mark by one vote the first time, a $1 sales tax increase on each pack of cigarettes advanced through the Senate Thursday when a second vote was taken.

Senate Bill 44, which would phase the tax increase in over two years, had 29 in favor, 28 opposed and one voting present. It took a last-minute, closed-door meeting between Cullerton and House Speaker Michael Madigan before the vote was retaken, resulting in the 30 votes needed to pass. Twenty-six members still voted against it.

Cullerton said that the bill has support from Madigan and Gov. Pat Quinn, but he added that the close vote indicates a difficult road ahead for future tax increases. “This was the first bill that required people to actually vote for a tax,” he said. “And you can see it’s not easy for people to do that. Unfortunately, we’re probably going to have to do a lot more.”

The bill heads to the House, which will reconvene Friday morning. The Senate finished its business and headed home for spring break.

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"Trifecta" spending plan on its way — UPDATED

By Bethany Jaeger
UPDATE: The Illinois Senate unanimously approved the $9 billion package to release federal stimulus funds, state bonds for road and transit repairs and supplemental spending for state operations. Senate Minority Leader Christine Radogno applauded the "true bipartisan cooperation" it took to get there. The package now heads to the House, which can either accept or reject it. It won't be able to change it.

ORIGINAL POST: The Illinois Senate this morning advanced a spending plan worth slightly more than $9 billion that is designed to jump start the flow of state and federal dollars for construction plans, state operations and federal stimulus programs.


Democrats and Republicans in a morning Senate committee applauded the plan as a “good first step” toward a bigger capital plan for road and school construction projects, but that’s tied to a string of potential and controversial funding sources, including tax and fee increases.

Before hopping on board, Republicans sought a provision to ensure that the money would flow based on an existing five-year transportation plan, not based on political preferences. Senate Minority Leader Christine Radogno said during a morning committee that given the distrust between the legislative and executive branches during the last few years of former Gov. Rod Blagojevich’s administration, Republicans wanted assurances. This really kind of puts a public face on the private conversations that have been going on,” she said, adding that the plan was a “very good, positive step forward” for Illinois.

Senate President John Cullerton said: “We let the engineers decide, not the politicians. It has nothing to do with Blagojevich or past scores to settle. We’re just trying to do it on the square.”

For instance, $150 million would be doled out based on a traditional formula, where Chicago-area districts get 45 percent of the funding and downstate districts get 55 percent of that funding. Another sum of $450 million would be distributed based on an existing five-year plan for construction projects, which Illinois Department of Transportation engineers rank by another formula.

Labor groups represented by the AFL-CIO and some operating engineers support the plan; however, one Springfield-based chapter of the operating engineers union opposes it because the state-funded capital plan would only designate $8 million to the central Illinois district that includes Sangamon County. But Cullerton pointed out that the central Illinois district would get $54 million of federal stimulus funds.

Federal stimulus funds will distribute money for everything from weatherization to education. However, the plan advanced by the Senate today would take some money out of the portion that would have gone to public education and use it for state operating expenses. Then the state would use incoming federal stimulus funds to eventually backfill the amount for education. According to Sen. Donne Trotter, chief budget negotiator for the Senate Democrats, education, in the end, would come out about even. That is, after all, the intent of the federal stimulus, he said.

“The stimulus package was never intended for us to grow anything. It was to ensure that we didn’t have to cut anything, and that’s what we’re utilizing those dollars for.”

The full package now heads to the full Senate, where a vote is expected this afternoon. If approved, it would head to the House later today or tomorrow.

Here are some more highlights of the “trifecta,” dubbed by Trotter:

Federal stimulus funds = $6.7 billion

  • $1.7 billion to pay down the state’s Medicaid bills, including an enhanced federal reimbursement rate of about 61 percent for 27 months.
  • $500 million for high-speed rail.
  • $300 million for a Chicago-area project to reduce freight and vehicular traffic congestion.
  • $285 for Amtrak improvements.
  • $40 million for transit.
Other funds are earmarked for low-income housing, developmental disability and mental health services, programs for women and children, youth services, criminal justice and domestic violence grants, weatherization jobs and training, environmental protection, water treatment and education.

Read more in Illinois Issues this month.


$3 billion state bonding program for transportation projects
  • $2 billion bonded from the dedicated Road Fund to repair roads and bridges.
  • $1 billion bonded from the state’s general fund for transit maintenance projects.
  • $150 million for emergency pothole repair on state and local roads.
  • $40 million for Chicago-area transportation agencies to release funds that previously were suspended under a previous capital program.

Supplemental spending for FY09 operating budget = $109 million
  • $363 million to reopen closed historic sites through June 30.
  • $25 million for services for women and children, capturing more federal matching funds.
  • $20 million for flood relief.
  • $10 million for line-of-duty awards.
  • $6.7 million for court reporters.


Read more...

Thursday, February 19, 2009

Prepare for the stimulus

By Bethany Jaeger, with Jamey Dunn contributing
Jack Lavin prefers not to be called this state’s “stimulus czar,” but his first two days on the job as Gov. Pat Quinn’s chief operating officer (corrected) have been dominated by projections of the amount of money Illinois will capture from the $787 billion federal stimulus package.

But Lavin also responded to concerns that his appointment could be clouded by his past ties to former Gov. Rod Blagojevich and convicted felon Tony Rezko. Rezko was one of the people who recommended Lavin for his previous job as director of the Illinois Department of Commerce and Economic Opportunity during Blagojevich’s administration. Lavin and Quinn reportedly have been friends. Lavin pointed to his record. Here’s what he had to say:


I worked for those two men. They made some bad decisions. I had no part in any of those decisions, and I think my track record at DCEO speaks for itself. And it was a track record of working with business leaders, labor leaders, local governments, local mayors, legislators on both sides of the aisle, the congressional delegation. If you ask them, they will all say that we treated people with respect and integrity. We returned their calls, and that’s just the kind of thing and the kind of collaboration and partnership that we had at DCEO that we need now across all agencies, and working with the legislature, to be on the road to economic recovery.

Lavin testified to a special Senate committee this evening that Illinois could receive about $7 billion for programs and state operations, as well as about $2 billion for transportation-related and capital projects.

While the National Governor’s Association and the National Conference of State Legislatures ranks Illinois 6th in the nation for the amount of money it's estimated to receive in stimulus funds (projected to be about $8.8 billion), it’s clear that the incoming money won’t stretch far enough to cure the state’s $9 billion budget deficit next fiscal year. Estimates also are very fluid and vary.

The anticipation of the federal funds sparks two concerns among legislators. 1) Lawmakers fear that the essentially one-time stimulus funds will build expectations and a false sense of hope that the state could maintain the increased funding levels once the federal money runs run out. 2) It’s widely acknowledged that the stimulus money could help, but it’s not even close to the amount of money that the state and service providers need to completely heal from the recession and consecutive years of deficits. 3) State agencies, particularly the Illinois Department of Transportation and the Illinois Environmental Protection Agency, are concerned about having enough staff on hand to handle stimulus-funded projects. Both said they could hire temporary workers or consultants to get through increased work load.

Lavin said while those concerns are valid, the stimulus package is designed to plug budgetary holes and avert layoffs, particularly in education. And then, in theory, as the state’s economy begins to recover, the state would be able to pay for some of these ongoing costs and new programs. (Some of the stimulus money will help expand or fund existing programs by using existing funding formulas, while other portions will create new programs.)

Higher education officials also expressed the concern that the $2 billion in stimulus funds could lead to a game of shuffle. Judy Irwin, executive director of the Illinois State Board of Higher Education, said there’s a possibility that money could be cut from education in the state budget to make up for shortfalls in other state operations, and then the federal stimulus money would be used to fill in the cuts to education. If that happened, schools would end up not getting much more money than they do now, she said.

Republicans and Democrats voiced concerns that schools in their home districts are expecting large funding increases that they may never see. “The frustration is that there really isn’t going to be a lot of money. …While it looks like there’s a lot of money going to schools, it’s really not going to be there,” said Sen. Dave Syverson, a Rockford Republican.

We’ll have much more about the details of the stimulus funds and how the state decides to divvy up the money. In the meantime, here’s a quick list of highlights, provided by Lavin’s testimony. Also, the state on Friday will launch a stimulus-specific Web site: www.recovery.illinois.gov.

General stimulus highlights for Illinois
About $7 billion for programs and state operations, according to Lavin’s estimates.
That includes funding for existing programs, using existing funding formulas:
  • $2.9 billion for Medicaid
  • $2 billion for school aid
  • $110 million for workforce investment programs (to help people get trained to take on another job)
  • $276 million for “green” jobs and weatherization programs
The stimulus also could bring in about $2 billion for infrastructure and capital, including:
  • $935 million for rebuilding highways and bridges
  • $371 million for transit assistance
  • $260 million for wastewater and clean drinking water
  • $222 million for public housing
  • $24 for education technology
  • $110 million energy programs, some of which can be used for operations and some of which can be used for capital
The state also will have a chance to compete for grants, including through the Department on Energy. That’s where Mattoon could compete for funding to rekindle the FutureGen project that got scrapped under President George Bush last year. Other projects of homeland security, broadband infrastructure and Army Corps of Engineers also could be eligible for grants.

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Tuesday, February 10, 2009

Belt-tightening begins

Gov. Pat Quinn started the process of trimming the fat, ordering all state agencies to further cut their budgets by 1 percent and hold the line on travel, equipment, contracts and hiring. Agencies already were operating on a 3 percent reduction under former Gov. Rod Blagojevich. “We have to make sure that state government is lean and cuts costs wherever it can,” Quinn said this afternoon in the Capitol. He estimated savings at “hundreds of millions” of dollars.

But lean state agencies could challenge the state’s ability to compete for federal transportation funds, according the Associated Press. It reported this afternoon that the Federal Highway Administration sent a letter to Quinn to warn that the Illinois Department of Transportation may be too understaffed to carry out major road construction projects.


Quinn said this afternoon that he had not seen the letter but that Illinois would do whatever it takes to ensure the ready-to-go projects are, in fact, ready to go.

After meeting with House Democrats in the Capitol this afternoon, Quinn reiterated his priorities of health care, education, transportation and public safety; however, he also sent the message to legislators to be prepared to take some tough votes, keep their wish lists in check and consider the fiscal context under which decisions will have to be made.

He also set the tone of a more cooperative budget-making process. Democratic Rep. David Miller of Lynwood said his approach is less antagonistic than it was under Blagojevich. “My opinion will be evaluated for its merits,” Miller said. “It will be looked at closely, and if there are ways that I can come up with trying to decrease the cost to the state, streamline efficiencies, then [Quinn will] be very, very open to it.”

But according to Rep. Julie Hamos, an Evanston Democrat, Quinn simply set the stage for some more belt-tightening and reforms. “We don’t know exactly what that means. Are we cutting programs, or are we raising taxes? He didn’t get specific, but he did talk about being very realistic this year and the tough choices facing us.”

She said the effort to build uniform understanding of the dire fiscal straights — a nearly $9 billion deficit next fiscal year — is necessary. “If we are going to take the very difficult leap to raise taxes, we are all going to have to be on the same team. And we’re going to have to sell it to the people.”

Other than watching for proposals to reform the state’s tax structure, also watch for alternative borrowing schemes. We’ll have more on that in the near future.

Read more...

Friday, February 06, 2009

Time for some long-term fiscal planning

State Comptroller Dan Hynes already painted a dismal picture of the state's fiscal status with his projection of a nearly $9 billion deficit in fiscal year 2010, which starts July 1. He estimated that could drop to a roughly $6 billion deficit if the state received $3 billion from the federal stimulus package, but the federal bailout amount for states is in flux at this very minute. Adding to the problem is that the current fiscal year 2009 budget keeps getting more and more out of whack. The revenue forecast looks worse than it did in November, according to the legislature’s economic forecasting arm.


Last fall, the bipartisan Commission on Government Forecasting and Accountability said revenues for the current fiscal year 2009 would fall $550 million below the previous year, or $1.34 billion less than the level budgeted.

Part of that spending plan assumed the state would collect $435 million by selling the state’s 10th riverboat license, but the winning bid for the license came in at only $125 million — and it won’t be available in time to ease this year’s budget crunch. According to the Illinois Gaming Board, the money could come in two chunks, one in fiscal year 2010 and the rest in 2011.

In short, the current year’s revenue picture “worsened virtually over night to nearly $1 billion less than the previous year,” the commission said in its January revenue forecast.

The commission added that it may need to make further adjustments when state income and sales tax revenues decline as the national recession unfolds. The cumulative damage: at least $1.6 billion by March.

As all four legislative leaders met with Gov. Pat Quinn this past week, talk of tax increases and budget cuts circled the Capitol. Public administration professor David Merriman at the University of Illinois at Chicago said even if the state gets $3 billion in federal bailout money, cuts spending and increases the state income tax by 1 percentage point, it's still going to be a rough road ahead. "The state needs to do long-term fiscal planning, and they need the legislature to take that seriously," he said.

Watch for more context and analysis in the March edition of Illinois Issues magazine.

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Wednesday, February 04, 2009

$5 billion worse off and U-N-I-T-Y

By Hilary Russell
Just days after the conviction and removal of former Gov. Rod Blagojevich, members of the 96th General Assembly wasted no time Tuesday learning how dire the financial straits of Lincoln’s land really is. The state is on track to begin fiscal year 2010 saddled with a $9 billion deficit. That far exceeds the $4 billion estimate released during Blagojevich’s last few months in office. Comptroller Dan Hynes said the state’s financial security isn’t going to improve in the near future.


“It dwarfs any previous budget faced by a governor and essentially shows just how bad things have gotten,” Hynes said from his Statehouse office.

Several factors are to blame for the state’s fiscal crisis. The first is attributed to two former governors, Blagojevich and former Gov. George Ryan, both of whom Hynes said “neglected and ignored” budget issues year after year.

The second factor that leads Hynes to use the words “disturbing” and “unprecedented” is the discovery that the fiscal year ’09 budget brought in far less money than projected. “(It) was imbalanced from the beginning by several billion dollars,” Hynes added. “So we started our year in a hole.”

He said a third factor is the worldwide economic crisis that hurts the state’s investments.

Even with a federal stimulus package in the works and the possibility that Illinois could receive $3 billion, it would only offer a one- to two-year reprieve, leaving the state with at least a $6 billion deficit.

One of Blagojevich’s accusations was that the legislature wanted to get rid of him to raise taxes. Now, the question of a state income tax hike comes to mind, and Hynes, rather than directly address the possibility of an increase, said the government would have to make the first sacrifice before asking taxpayers for more money.

Hynes added that the backlog of Medicaid bills is one of the largest problems, causing health care providers to struggle as they try to maintain services in the absence of state reimbursements.

Gov. Pat Quinn has requested a one-month extension to examine the budget before he presents his annual budget address March 18.

New laws
By Jamey Dunn
The legislature sent SB 1132 to Quinn's desk Monday. He plans to sign the bill into law tomorrow afternoon in the state Capitol. The measure would restore funding to the secretary of state, the attorney general, the treasurer, the Department of Healthcare and Family Services, the Department of Commerce and Economic Opportunity and several conservation projects geared toward Illinois habitats, fish and birds. The measure was approved last month, when Blagojevich was still in office, but it was held until a new governor was in place.

Quinn also signed his first bill, SB 2757, into law today. The bill addresses recent court cases by making a change to the Illinois smoking ban. Now, violations of the ban will be civil rather than criminal offenses and will be handled by the Illinois Department of Public Health. The bill also includes certain exemptions to the ban and describes the processes for issuing and appealing tickets.

"Unity and harmony"
By Jamey Dunn
In a public gesture of bipartisanship, all four legislative leaders met with Gov. Pat Quinn in his office Wednesday to discuss the problems facing the state.

The meeting itself was brief, under half an hour. Afterward, Quinn addressed reporters with House Speaker Michael Madigan, Senate President John Cullerton, Senate Minority Leader Christine Radogno and House Minority Leader Tom Cross. Before taking questions from the press, Quinn said that “we are going to be focusing on unity and harmony today.”

Quinn did not give specifics on how Illinois would address its budget deficient. He said a gasoline tax increase, which already has been proposed in HB 1, was not going to be ruled out. He also said it is very important that Illinois gets its “fair share” of the federal economic stimulus plan, which is why he made a trip to Washington, D.C., Tuesday.

Senate leaders made another gesture of unity when they approved the resolution, SJR 1, to create a joint bipartisan committee on ethics reform. The resolution went forward with the understanding that the House would amend it to allow Radogno to appoint more members. As written, Cullerton would be allowed to appoint six members and Radogno four. She argued that ethics reform will require true bipartisanship, and Cullerton said he was open to having more Republicans on the committee.

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Thursday, November 20, 2008

Partial restorations and restored hope

State parks could remain open, but historic sites definitely would not. And substance abuse treatment services would receive the $55 million they need to remain active and to secure federal matching funds. But the state attorney general, other constitutional officers and legislative commissions weren’t so lucky.

In short, the battle ain’t over, even though the legislature’s annual fall veto session is.


Gov. Rod Blagojevich signed legislation Thursday restoring, according to his office, about $180 million that had been vetoed as part of his $1.4 billion budget cuts earlier this year. That leaves about $55 million unfunded from what the legislature wanted to restore this fall. The General Assembly approved a plan to transfer money from special dedicated funds to save state parks and historic sites, programs that deal with substance abuse and developmental disabilities, and funding for constitutional officers. Blagojevich approved half of the plan in September, leaving the restorations up in the air. And some of the budget restorations for state parks could remain up there, as the governor left himself some space to maneuver.

Blagojevich announced the $180 million in restorations minutes after the House and Senate adjourned their annual fall session Thursday evening. Through a news release, Blagojevich said certain special funds are restricted by the federal government and could jeopardize future federal funding if swept.

“If you discount those federal funds that are restricted, then that only leaves a certain amount available,” said Katie Ridgeway, a spokeswoman for Blagojevich’s budget office.

She added that the bigger picture is that these cuts are accompanied by a $2 billion deficit, for which the governor introduced a four-point economic plan. The House started early Thursday by discussing one part of the plan to let the governor reserve up to 8 percent of the budgets approved for numerous state services, but the bill wasn't called for a vote. Ridgeway said the governor will continue to work with the legislature to find more agreeable language, but she would not specify whether those changes would address some lawmakers’ concerns that the governor could withhold 8 percent of the budgets for some state services and not others. (See background here.)

The legislature is not supposed to return until January 12, meaning the governor’s economic plan won’t advance unless Blagojevich calls lawmakers back into special session before then.

What’s funded by SB 1103:
The governor’s release says he restored $175.9 million, much of it for substance abuse treatment centers, front-line staff for the Department of Children and Family Services and a reduced fare subsidy for the Chicago-area Regional Transportation Authority. Other beneficiaries include state parks front-line staff, water and soil conservation, higher education, mental health and developmental disabilities.

What’s not funded because of the veto of SB 1103:
The governor did not spare the $2.4 million for the Historic Preservation Agency’s front-line staff, which means the 32 employees already laid off won’t get their jobs back. And without the staff, about a dozen historic sites scheduled to close Nov. 30 will close for the remainder of the fiscal year, says Dave Blanchette, agency spokesman.

Another significant portion of the $55 million vetoed by the governor is from Attorney General Lisa Madigan’s office. Functions affected range from personnel to state law enforcement and contributions to the state employees’ retirement system.

The attorney general’s chief of staff, Ann Spillane, didn’t buy the governor’s explanation and said through e-mail that the restorations would have come from “money generated exclusively through this office’s litigation — and Illinois law requires that this money can only be used by the attorney general’s office. The governor’s decision to veto this funding is nothing more than petty politics. And his explanation for the veto is false. In this current economic crisis, when the attorney general’s office is working to help Illinois homeowners stay in their homes, it is a disgrace to let the governor’s politics get in the way of this critical work.”

Ridgeway would only say that the governor made difficult decisions and set a priority of protecting core services.

The secretary of state, also, maintained significant losses. Others include the lieutenant governor, the treasurer and the auditor general. The legislative branch wasn’t immune, either. Cut were budget items for legislative research, printing and audits, as well as funding for two commissions that project economic activity and review the governor’s administrative rules.

A brighter spot: New leaders
Thursday was a historic day in the Senate. Wednesday night’s rare, simultaneous internal elections of new leaders for the Democrats and Republicans undoubtedly will change the dynamic of leadership in the Capitol. Sen. John Cullerton of Chicago is slated to become the next Senate president and leader of the extraordinarily large Democratic Caucus. Across the aisle, Sen. Christine Radogno of Lemont will replace Senate Minority Leader Frank Watson as the first female caucus leader of either party. They start in January.

The mood in the Capitol Thursday felt lighter. People smiled, mingled, debated some serious legislation and congratulated each other. Perhaps the most touching moment came when Watson returned to the chamber floor for the first time since experiencing a stroke last month. Shortly after the stroke, he announced he would not seek re-election as minority leader but would continue to serve as a senator.

He spent four days in the hospital, 18 days in recovery and numerous days in therapy, but on Thursday, he Watson was walking, talking, laughing and crying. He broke down as he recalled the way he felt when he realized he had the symptoms of a stroke: slurred speech and difficulty walking. “I thought of [former Sen.] John Maitland and my dad,” he said, unable to finish his sentence through the tears. Both had serious strokes with lasting side effects.

Watson is undergoing intense therapy three hours a day, three days a week. He said he had low cholesterol, low blood pressure and didn’t smoke, although his family history increased his risk. He urges awareness. “People need to take care of themselves. They need to recognize that something like this can happen at any time. You need to take care of your diet, take care of your weight, take care of your blood pressure, take a baby aspirin every day.”

The previous night, Watson cast an important vote for Radogno over Sen. Kirk Dillard of Hinsdale. “She was my deputy leader,” Watson said. “I supported her and wanted to see her become leader. She did such a good job on the campaign side and on the policy side. And that’s important.”

Radogno, a moderate Republican, says she sees her role as a continuation of Watson’s. “One of the things that Sen. Watson did very well is keep the caucus together. And I think that’s probably the primary job that the leader has because when you’re in the minority, if you’re fractured, you’re even less effective. It’s going to be a challenge because we do have diversity within our caucus, but I think everyone in our caucus recognizes that we need to stick together. And I think it’ll be easy for us to do on both issues that are in the forefront right now, which are the tax issues and fiscal issues.”

We’ll have much more from Radogno in the coming months of Illinois Issues magazine.

Cullerton says he, too, will foster a more inclusive atmosphere in the Capitol, where the governor, House Speaker Michael Madigan and outgoing Senate President Emil Jones Jr. have been in years of gridlock. “I’m not going to fight with the speaker. I’m not going to fight with the governor. And hopefully, I can be a good go-between to try to bring about positive change.”

He already appointed Sen. James Clayborne, the runner-up in the Democrats’ internal elections, as his majority leader to signal a fresh start. “Even though we ran against each other, we remain friends,” Cullerton says of Clayborne. “He’s a very talented guy. He comes from another part of the state from me, and we need to make sure the downstaters feel like they can work with a leader from Chicago, which we can. So it’s important to have him as a person and the symbolism of having somebody from downstate in majority leader.”

Watch Illinois Issues for more about Cullerton’s first priority: advancing a long-awaited capital bill.

Read more...

Wednesday, November 19, 2008

Keep your sights on 2011

The state’s bipartisan legislative Commission on Government Forecasting and Accountability projected the state’s budget shortfall between $2 billion and $3 billion for the current fiscal year, FY09. And that striking deficit includes a one-time windfall when the state collects on a lease of the 10th casino license.

Yesterday, Gov. Rod Blagojevich pitched a four-point plan. Tonight, Rep. Gary Hannig, the chief budget negotiator for House Democrats, said he plans to discuss legislation Thursday that would advance one of the governor’s proposals. (Watch for the new language in an amendment of SB 2083.) It would allow the governor to withhold 8 percent of general revenue funds in “reserve.”


This and previous governors have applied that power to state agencies under the governor’s control in the past, but the new proposal would expand that authority and allow Blagojevich to impound some additional funding for K-12 education, higher education and state pension funds. It also potentially would allow Blagojevich to collect some tax revenues typically shared with city and county governments.

The same power to reserve up to 8 percent also would be extended to other statewide officers. The governor already applied a 3 percent reserve on state agencies and cut funding for constitutional officers earlier this year. The potential for further reserves begs the question of how state managers would be able to cut more programs or institute more furlough days than they already have.

Hannig said the current proposal also would allow Blagojevich to apply the reserves unevenly, potentially requiring 8 percent reserves, say, for higher education but not for K-12 education. The House will have to flesh out the details of this serious but controversial proposal, Hannig said. “Our view in the House is in light of the fact that we’re scheduled to go home tomorrow and not return until January 12 that we shouldn’t just ignore the governor’s proposal.”

Hannig pointed out: “The language says he may. So he may not.”

Hannig’s budget negotiating counterpart in the Senate, Sen. Donne Trotter, agreed. “He doesn’t have to do this against any agency. This is an alternative to us getting dollars from the feds or selling the license, so it’s a contingency plan.”

While the House could move the bill Thursday, Trotter said the Senate could still act on it by week’s end or in the first two days of session in January.

Either way, the FY09 budget is in bad shape, and the Commission on Government Forecasting and Accountability projected that FY10 will be worse. The first thing that sticks out, Hannig said, is a massive payment to the state’s five pension systems for public employees. He anticipates an additional $1.2 billion payment, and if revenue projections are accurate, the state might not even garner $1.2 billion in growth for FY10.

“If we don’t do something, we may not even be able to make the pension payment next year, let alone anything else,” Hannig said.

To avoid ending on a bad note, take the advice of Scott Pattison, executive director of the National Association of State Budget Officers. He spoke to Statehouse reporters during a national conference in North Carolina last week and said: Look forward to FY11, when things actually might start to look better. Hannig agreed with that projection and compared post-FY11 to a spring day after the long, dark days of winter.

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Tuesday, November 18, 2008

Nervous energy and four-point plans

The national economic doom and gloom is starting to cast ominous clouds on existing state budget problems, leading Gov. Rod Blagojevich and other state officials to propose some ways to adjust. So far, it seems as though the state is running in place. There’s no indication that the General Assembly and the governor are going to start getting along any time soon to follow through on some of these proposals. The legislature returns for its annual fall session Wednesday and Thursday. Friday is still up in the air.


The governor's proposal foreshadows this month's closure of numerous state parks and historic sites, as well as reduced human services, that resulted from $1.4 billion in budget cuts. While the first two rounds of money already have been transferred from special dedicated funds to help restore some of the funding, the governor hasn’t yet signed legislation authorizing the spending. He has until December 5 before it automatically becomes law.

In the meantime, Blagojevich released a four-point plan that includes borrowing money, asking the feds for some bailout money and withholding more state money. Announced through a news release, part of the plan would create a new law for emergency budget management. He seeks authority to hold as much as 8 percent of general revenue funds in reserves for state agencies, education, higher education, state pension funds and local government funding. That would be on top of the 3 percent reserves he already requested. Another portion of his new plan seeks as much as $3 billion in federal aid during the next three years.

Part of his proposal also relates to Comptroller Dan Hynes’ idea announced last week. It would allow the state to borrow money, which is nothing new. But instead of having to pay back the loan by the end of the state’s fiscal year (June 30), the state would have 12 calendar months to repay the loan. The premise is that because the comptroller would have more time to repay the loan, his office would have more flexibility in cash flow.

The proposal would need legislative approval by a three-fifths majority of each chamber so it could immediately take effect.

Right now, cash flow is a huge problem because the state can’t pay about $4 billion of its bills, including Medicaid payments to medical providers. The comptroller wrote in a letter to state officials to announce that the backlog could top $5 billion and inflict 20-week delays for payments by March. “To characterize this as an imminent crisis risks understatement,” he wrote.

Hynes’ spokeswoman, Carol Knowles, says the comptroller’s office is getting continuous complaints that unpaid bills threaten everything from police officers being unable to fill their gas tanks to prisons being unable to pay their vendors for food deliveries. Bills are paid as cash flows in, but the comptroller’s office also has to have enough money on hand to pay such long-term obligations as employee payroll and general state aid for schools. “It’s a very delicate balancing act,” she says, “and the larger the bill backlog is, the more difficult it is to answer the emergencies when they arise because it gets to the point where everything is an emergency.”

Senate Republicans describe the governor’s four-point plan as “begging and borrowing.” Sen. Christine Radogno, deputy minority leader from Lemont, says while she could support further belt tightening for state agencies or regular short-term borrowing as legitimate cash-management tools, she wants specifics that aren't available from the governor's press release. And she says she has concerns about short-term borrowing that crosses over into the next fiscal year, as proposed by Hynes. “I’m certainly willing to look at any proposal of the comptroller or the governor, but we just need to be careful not to fool ourselves and the taxpayers,” which, she says, are the same taxpayers who are footing the bill for the federal government’s $700 billion bailout package approved last month.

Cindy Davidsmeyer, spokeswoman for Senate President Emil Jones Jr., says he acknowledges that the state is facing a huge crunch, and he looks forward to hearing more details as they come out. House Speaker Michael Madigan’s spokesman, Steve Brown, says only that the plan is under review.

Education re-reform
Also Tuesday, a new diverse, well-funded education policy group announced efforts to issue comprehensive reforms by this spring, although it’s unlikely that the group’s recommendations would be ready to go by the time the legislature is supposed to enact a state budget for fiscal year 2010.

Founders of Advance Illinois, a nonprofit based in Chicago, plan to travel around this state and others to gather evidence during the next six months. The goal is to take a broad and long-term view of ways to reverse some of Illinois’ worst academic trends that hamstring its students and workforce.

“The bottom line is … that Illinois schools are performing, despite the fact that we’re the fifth largest economy in the country, at an average to below-average level,” says Robin Steans, executive director of Advance Illinois and sister of state Sen. Heather Steans of Chicago. “On any academic measure or any attainment measure you might care to look at, we’re trailing the nation. At all grade levels in all subject areas.”

Ellen Alberding, president of the Joyce Foundation, serves on the board and says the Chicago-based foundation funds educational policy efforts throughout the Midwest. Illinois’ condition sticks out, she said after the news conference, because a large gap exists between educational attainment of low-income minority students and higher-income white students. According to information released by the group Tuesday, Illinois ranks 6th in the nation for having one of the largest achievement gaps between African-American and white students. Alberding also said she was struck by a study of Chicago students that shows only 10 percent of eighth graders who score well on the Illinois Standards Achievement Test later score 20 or above on the ACT, which indicates that most students in the study were ill prepared for higher education.

“It’s outrageous that the state has its expectations so low,” she said.

The Joyce Foundation supports the new effort along with the Bill & Melinda Gates Foundation, the Chicago Community Trust, the Grand Victoria Foundation, the John D. and Catherine T. MacArthur Foundation, the McCormick Foundation and the New York-based Wallace Foundation.

Board members include a vast political mix, starting with co-chair and former Gov. Jim Edgar. The Republican unsuccessfully pitched a plan in the 1990s to reduce local property taxes and increase state income taxes as a way to reform education funding. He said Tuesday that he still believes the state relies too heavily on local property taxes to fund education, but the group would not focus on funding reforms. It only would announce recommendations for funding reforms as part of a more comprehensive plan, he said.

Deflecting the focus away from the question of whether taxes would increase, however, will be a challenge.

The other co-chair is former U.S. Commerce Secretary Bill Daley, the Democratic brother of Chicago Mayor Richard Daley and a rumored candidate for governor in 2010. Also among the board members is former U.S. House Speaker Dennis Hastert, a Republican who helped lead negotiations between Blagojevich and legislative leaders to draft a capital program for road and school construction projects. That plan stalled. Former state Sen. Miguel del Valle, a Democrat and current city clerk of Chicago, used to chair the Illinois Senate Education Committee. Del Valle said Tuesday that Advance Illinois “is the most promising” of all the efforts he’s seen to reform public education.

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Tuesday, September 23, 2008

Warning: Rocky road still ahead

State parks and historic sites would stay open. Substance abuse prevention and treatment services would avoid losing $55 million in state funding and the same amount in federal funding. State funding for human services would return to the levels approved by the legislature in May. The same would apply to the constitutional officers, which could hire back employees already laid off. Mass transit districts would receive more than $36 million in reimbursements for having to provide free rides to seniors and people with disabilities. But there’s a big “if.”

That will happen if Gov. Rod Blagojevich signs a plan approved by both chambers. The House approved the budget restorations earlier this month, and the Senate followed suit on Tuesday. But there’s no telling how long this could take. The Senate could send the approved measures to the governor’s desk right away, or it could wait for whatever reason. And once the governor does get the measures, he still has 60 days to sign them into law, veto them completely or send them back to the legislature with changes. Given the timeline or lack thereof, it’s questionable whether state parks and historic sites will close in October and November as scheduled.

All agree that the ball is in the governor’s court.

Rep. Mark Beaubien, a Barrington Hills Republican and budget negotiator for his caucus, expressed a concern about Blagojevich's next move. “Now he has the ability to take the veto pen and play games and eliminate programs to try to make different people look bad.”

Brian Williamsen, a Blagojevich spokesman, said the governor’s office has to review all of the details and added that it’s too early to speculate on a timeline. Williamsen could not say whether the governor would delay closing parks and historic sites if the House and Senate plan had potential to become law.

The House and Senate agreed to sweep unused money from the special state funds to collect about $221 million, which is included in SB 790. The package also would create a new fund, dubbed the “Budget Relief Fund,” so that the money could not be used for anything other than restoring the budget cuts spelled out in the spending bill, SB 1103.

The 15 votes against the fund sweeps were among Senate Republicans, who said there is no guarantee that the governor will sign the measure and, if he does, that he’ll release the money as intended.

The deal to accept the House’s version of the plan came only after much of the day was spent behind closed doors negotiating an even larger plan that would have increased funding for various programs, but the wish list ballooned out of control and eventually collapsed at the last minute. Literally at the same time, the Illinois Department of Revenue issued new information that revenue projections are coming in lower than anticipated. Income and sales tax revenues, as well as other tax revenues, are coming in below the levels on which this year’s budget was predicated. The difference: $200 million.

That slightly deflates the cushion that the governor has when distributing money throughout the fiscal year. But Rep. Gary Hannig, a Litchfield Democrat and budget negotiator for his caucus, said the $221 million in budget restorations that advanced to the governor’s desk Tuesday pay for themselves by transferring the same amount from special funds.

Sen. Donne Trotter, the Senate Democrats' budget negotiator, looked to the regularly scheduled fall session in November. “If there’s still an appetite to do more, then we can do more at that time.”

But the question of what the governor would do loomed like a black cloud. “There [are] no assurances — nothing that I can give — other than we know that there is a need, a necessity to get this done,” Trotter said. “And I think that we saw that, at least, in a rare occasion, the entire Senate that is present today voted for it. So we know at least what the legislators would like to see done. … It’s up to him of what he’s going to do otherwise.”

Which message are you sending?
Building on yesterday’s ethics reforms, the state Senate advanced a more sweeping measure that the governor tried but failed to advance through his executive powers. All GOP senators voted in support of the measure, five Democrats voted present and one Democrat voted against it.

Sen. Don Harmon, voted “present." The Oak Park Democrat sponsored yesterday’s successful pay-to-play ban, but he opposed the measure containing the governor’s proposals today because it sends the wrong message. He warned that approving a bill that almost everyone agrees is fatally flawed would undermine the behind-the-scenes negotiations already happening between both chambers and the governor’s office. He said it also could give the impression that the Senate is more interested in claiming that it advanced comprehensive ethics reforms than it is in ironing out the complicated and significant details with the House.

“Let’s negotiate this bill before we start throwing bombs across the building,” Harmon said before the Senate voted to approve the measure.

Fifty senators disagreed with Harmon and said approving the new reforms contained in SB 780 sends a different message: The Senate is ready to enact comprehensive reforms that could help regain the public’s trust during these troubling times. (That message is more likely to sound better on campaign literature landing in voters’ mailboxes from now until the November 4 elections.)

The legislation would enact more limits to political campaign contributions and shine more sunlight on who makes money off of whom. It would prohibit businesses with significant state contracts from donating to legislators and statewide political parties, prevent legislators from working in numerous government jobs as a second source of income, require more disclosure of legislators’ lobbying activities and reform the way the legislature enacts its own pay raises.

Through a news release, the governor applauded the Senate’s action. “This vote sends a message to the people that the tired tradition of double dipping, the fraudulent way pay raises are doled out and the deceitful way legislators who moonlight as attorneys can hide their clout-heavy client list should be a thing of the past.” His news release urged the House to continue the momentum and approve the more sweeping ethics reforms.

The Campaign for Political Reform, a Chicago-based good government group, testified against the legislation last night, saying it was fatally flawed and constituted more “political rhetoric” during the election season. But Cindi Canary, director of the think tank, said she has been working with other legislators and the governor’s office for the past few weeks on the governor’s ethics language.

The Senate president addressed the whole chamber but, at more than one point, seemed to speak directly to Harmon and Sen. Ira Silverstein, a Chicago Democrat who also voted “present.” (In the Illinois legislature, a “present” vote is intended to demonstrate opposition a flawed bill but support of the concept.) Both Harmon and Silverstein also happen to be among the names floating around as contestants to be the next Senate president when Jones’ term ends in January.

Jones said senators who oppose SB 780 want to either protect someone else or preserve their fundraising abilities so they can run for higher office. Silverstein later said that Jones’ comments are part of a political game and won’t hurt other negotiations. “But enough is enough,” he said. “You have to stand up for what you believe in.”

The only senator voting against the legislation was Sen. Mike Jacobs, an East Moline Democrat who often speaks out against Blagojevich. He repeated earlier sentiments that “the cancer of Illinois is the governor.” Jacobs made the point that the governor’s ethics legislation approved by the Senate today would not target the actions of convicted felon and political insider Tony Rezko, found guilty of 16 counts of federal corruption. It also wouldn’t have stopped another political insider and hefty campaign contributor, Ali Ata, from testifying that he donated to the governor’s campaign in exchange for a high-powered state job.

Sen. James DeLeo, the Chicago Democrat sponsoring the governor's ethics bill, defended the measure and said it wouldn’t stop drug dealing or bank robbing, but it would improve the transparency of state government.

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Wednesday, July 16, 2008

More of the same

Most state agencies and services will remain funded at or below the same levels as last year, with slight increases for such items as education, higher education and the legislature’s annual 3.8 percent pay raises. The Illinois House failed today to restore most of the budget cuts that Gov. Rod Blagojevich implemented to balance a lopsided spending plan sent to his desk this summer. And the Senate still doesn’t plan to return to override nearly $480 million of the budget cuts that the House voted to restore this afternoon.

In May, the House and Senate approved a spending plan that exceeded the amount of money the state was projected to generate by about $2 billion, according to the governor’s budget office. So the governor cut $1.4 billion, often striking the increases that legislators sought for everything from alcohol and substance abuse treatment to frontline staff at prisons. But he also scratched entire lines from the budget, including $16 million from a Monetary Award Program for low-income college students.

While the governor’s office said Blagojevich acted “responsibly” to balance the budget, Rep. Gary Hannig, a Litchfield Democrat, called the governor’s method of balancing the budget “unfair” and said the cuts went “too far and were too deep.” Hannig said most Democratic members would have preferred that Blagojevich make more uniform cuts across the board or delay the payment of bills until the next fiscal year.

Minority Leader Tom Cross said the House GOP agreed that some cuts were “too deep,” but he added that they all could have avoided the situation had the House Democrats not approved a state budget that they knew had such a wide spending gap.

“We don’t agree that it’s unbalanced,” Hannig said. “We think it’s up to the governor to manage it.”

A majority of House members, including some Republicans, did vote to restore Medicaid funds that, if cut, would further delay state reimbursements to hospitals and nursing homes that care for Medicaid patients. And they agreed to restore money for such social services as the state Autism Program and centers for independent living arrangements for people with developmental disabilities, but both the Medicaid delays and the human service funding levels are likely to stand because the state Senate still does not plan to return to Springfield to overturn any budget cuts without new revenue sources to pay for them.

“There’s no money to go with it,” said Cindy Davidsmeyer, spokeswoman for Senate President Emil Jones Jr. “They did not pass any revenue.”

The one revenue idea that seemed to gain momentum in the House has now coasted to a stop. Rep. Sara Feigenholtz, a Chicago Democrat in charge of the Human Services Appropriations Committee, said she was trying to cut a deal with House Republicans to transfer extra money from specific dedicated funds to the state’s general fund, which would free up money to reverse some of the budget cuts to human services. That fell through, Feigenholtz said. “But we’re going to keep plugging away at it.”

The House and Senate are scheduled to return to Springfield November 12 for regular session to consider vetoes. House Speaker Michael Madigan closed today’s business by saying, “If the need arises in the interim, I may call the House into session.”

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Tuesday, July 15, 2008

Let's be clear

Yes, Gov. Rod Blagojevich cut $1.4 billion out of the state budget, but even House Minority Leader Tom Cross recently said the governor didn’t have a choice. The Illinois General Assembly approved a budget that, by the governor’s count, authorized spending $2 billion more than it could afford.

While the state Senate approved a few revenue ideas that would pay for the extra spending, the House did not. The Democratic leadership said it’s up to the governor to balance the budget, so legislators expected the governor to make such cuts. Blagojevich had to either cut the increased spending over last year’s amounts or, as he described it, write checks that bounce.

So now the scene has been set for the House to vote this week on whether to restore some or all of the funding cuts. Democrats likely will have enough votes to advance the restored funding levels; yet, the House is unlikely to approve the revenue ideas needed to pay for the increased spending. The budget overrides also would need Senate approval within 15 days. In that chamber, Democratic leadership so far has been disinclined to return to Springfield before the annual November session, particularly if the House only restores funding levels without the associated revenue enhancements.

The scenario increases the likelihood that at least some or most of the funding levels will remain as enacted by the governor, at least until November.

There is a chance the House could approve one quasi revenue enhancement, but it just transfers money from dedicated accounts to the state’s general account. The so-called fund sweeps have been estimated to free up about $300 million to spend on whatever the House specifies, potentially human services.

Don’t expect a whole lot of Republicans to support that plan, and don’t count on the Senate to suddenly go along with fund sweeps that Senate President Emil Jones Jr. recently dismissed as a “drop in the bucket.”

At a Statehouse news conference this morning, Republican Caucus Chairman Rep. Dan Brady of Bloomington said it would be extremely difficult for GOP members to “pick and choose” which funding cuts to restore when Republicans never approved extra spending in the first place. (The caucus united in late May to cast “no” votes on the spending plan crafted by Democrats, but Democrats, the majority party, had enough votes by themselves to approve the budget bills.) Brady added that his caucus historically has opposed transferring money out of dedicated funds into the state’s general fund, although they're caucusing right now to decide where they stand.

That’s a brief synopsis of how we got here. When considering where we could go, look toward November. The House Democrats and the governor could swap a few jabs at each other in the meantime, particularly as it gets closer to the November 4 elections. However, little might change before then.

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Tough times

The waiting list we told you about in June in Illinois Issues magazine could get worse if the General Assembly doesn’t override the governor’s recent veto of more than $43 million from community-based treatment programs for substance abusers.

The budget cuts could cause layoffs, program closures and “insurmountable” waiting lists for services, said Keith Kuhn, community director at Gateway Foundation in Springfield. The trickle-down effect would reach emergency rooms, mental health services, prisons and courts.

“A lot of the progress that we’ve been making in Illinois in trying to reduce the number of individuals incarcerated for addiction-related issues, a lot of those gains will be lost,” Kuhn said during a Statehouse news conference this afternoon. “And that would be a real shame that we had invested that much time, money and effort to only take significant steps back.” He described such a system as “barbaric” in the way it would approach addiction-related services.

Kuhn said the governor’s cuts reduce state funding for addiction treatment services in half, from $86.6 million to $43.3 million. “When factoring in other areas also receiving funding reductions, the cuts to our existing treatment service system total a little over $55 million.” Specific programs include those for domestic violence, youth in the court systems and temporary assistance for needy families. And once the state funding depletes, federal matching funds also decrease. So the effect doubles from $55 million to $110 million, he said, adding that amounts to about half of the $252 million total budget for substance abuse services.

Unlike other state programs where the governor simply erased the increases above last year’s funding levels, the cuts for some substance abuse prevention and treatment programs were “zeroed out,” or erased completely, said Peggy Powers, chief operating officer of the Illinois Alcoholism and Drug Dependence Association in Springfield. “This is gutting what was actually awarded during FY08.”

“The fact that it’s cut from the base of the FY08 funding level is something that has not occurred wholesale in any other programming,” she said. “We don’t know how the addiction treatment system came into the crosshairs of the governor’s cutting ax, but it certainly has, and it’s an incredibly crucial item.”

There’s some skepticism that the governor’s budget cuts target the particularly sensitive area of substance abuse to grab attention and to further apply pressure on the House Democratic leadership to approve funding mechanisms that would prevent these cuts. The governor’s budget office did not return my phone call this afternoon.

The House is scheduled to come back to Springfield Tuesday through Thursday to consider the governor’s budget cuts and attempt to override some of them. Some items that were reduced require a simple majority of 60 votes. Other items that were cut out require 71 votes to be restored.

Some could be restored under a revised revenue idea in the House that would allow the governor to sweep about $300 million from special dedicated funds and pad the state’s general fund. But it has potential to get complicated when the House Democrats likely tie those so-called fund sweeps to specific program areas — possibly such human services as substance abuse treatment and prevention.

Fund sweeps wouldn’t guarantee funding. The Senate would have to approve the revenue idea, as well as any overrides of the governor’s veto. But the Senate so far isn’t planning to come back before November. That could change.

November would be too late, according to Kuhn, who said agency offices would have to close or take on huge debt to stay open before then.

Many other groups also are worrying that the budget cuts would hinder current and future services. The Child Care Association of Illinois issued a press release saying a $45 million cut will affect services for abused and neglected children and foster parents. The Partners for Parks and Wildlife, including members of the Sierra Club, the Illinois Association Park Districts and the Nature Conservancy, will join forces to fight a 20 percent funding decrease for the state Department of Natural Resources. The group projects a loss of 163 jobs and zero out funding for the Water Supply Planning and Management Program and the Wildlife Prairie Park in Peoria.

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Thursday, July 10, 2008

Speaker: Gaming is dead

House Speaker Michael Madigan deflated all momentum behind a capital bill this afternoon with one statement: “Given the conditions that exist here in Springfield, I think that the proposed expansion of gaming is a dead issue.” And the state’s operating budget remains unbalanced, as the House continues to reject ideas that would plug what the governor describes as a $2 billion hole. While the House is expected to vote next week to restore some of the governor’s $1.4 billion in cuts, they’re unlikely to support revenue ideas to pay for them.

Madigan spoke in a Statehouse news conference shortly after the full chamber rejected the Senate’s gaming proposal, which would have allowed a new land-based casino in Chicago, a state-owned casino and a new riverboat somewhere in the state. It also would have allowed slot machines at horse race tracks.

The multibillion dollar revenue source was the crux of a $34 billion capital construction plan. Without it, Illinois enters its ninth year without a major capital plan and without federal matching funds earmarked for transportation projects.

“This is another example of the speaker’s shenanigans to thwart the capital bill, which would put hundreds of thousands of people to work, and to impose an income tax on the people of Illinois next year,” the governor’s office wrote in an e-mail. The governor is not giving up on capital, said his spokesman Brian Williamsen in a phone conversation.

In a characteristically methodical way, the speaker led his caucus in rejecting most of the funding source of the capital plan. Yet Madigan added that he would not declare a capital plan dead, just gaming.

Without gaming, he said he’d consider previous revenue ideas, including one proposed by House Minority Leader Tom Cross last year that would offer a limited expansion of gaming at existing casinos or riverboats. The speaker also has his own version of a gaming plan that would reform the Illinois Gaming Board. And he cited a previous measure he supported: a constitutional amendment that would increase the Illinois income tax to fund education and construction needs.

Madigan denied, however, that he would propose an income tax increase after the November elections, as the governor and some Republicans repeatedly have charged. “I am not going to support an increase in the income tax during a lame duck session of the legislature,” Madigan said. He did not, however, rule out next spring. “Next spring is next spring. That’s a long time away.”

Senate Minority Leader Frank Watson said it’s unfortunate the speaker took gaming off the table to fund capital. “Revenue has to be generated to fund a capital bill, and gaming seemed to be the best alternative.” He added that although he’s not happy about it, Madigan’s statement could have a positive side. “I think we’ve been strung along for a long period of time … If this is going to bring closure to at least the revenue source, then, I guess, so be it.”

Watson said his caucus would be willing to consider alternative revenue sources for a capital plan, and he charged the speaker with the responsibility to propose such alternatives.

Capital bill summary: All parties say they’re not going to give up on capital, but none seems to offer alternatives that would serve as a compromise. Gaming was thought to be the compromise between most of the parties, but the House didn’t like the Senate’s procedural method that prevented the House from being able to make any changes to the gaming plan. So the General Assembly went from having what looked like a compromise to what turned out to be another dramatized clash between two chambers, leaving us where we started.

The operating budget is just as anti-climactic at this point. To be clear, the state does have an operating budget in place with most of the $59 billion spending plan activated. Yet the governor’s $1.4 billion in cuts announced Wednesday still leave an unbalanced budget, according to House and Senate GOP. According to the House speaker, “The word balance is one of these things that’s in the eye of the beholder.”

State Medicaid spending often is one area that can be delayed to balance the current year’s budget. Sen. Dale Righter, a Mattoon Republican, explained last night that regardless of the governor’s budget cuts that affect state Medicaid programs, the state still has to reimburse medical providers who care for Medicaid patients. “We still owe those bills. So the governor’s not cutting growth in government when he cuts Medicaid. He’s just pushing bills off into the future,” Righter said.

The rest of the governor’s spending cuts, particularly to human services, could be considered by the House next week. It’s scheduled to return Tuesday through Thursday. The Senate is not, meaning no cuts will be restored unless the Senate also agrees. That could be a while, considering Senate President Emil Jones Jr. said his chamber isn’t scheduled to come back to Springfield until the annual fall session in November. His spokeswoman said they would wait to see what the House did next week before deciding whether to override some of the governor’s vetoes before then.

But, there’s always the chance that the state budget could end up where it started, with relatively flat funding levels for most state services and some decreases for operations. “I could see nothing happening,” Cross said after the House rejected gaming.

The one option remaining on the table in the House is so-called fund sweeps. The Senate and the governor want to allow the governor to transfer about $530 million from dedicated funds to the state’s general fund. It’s been done for years under multiple administrations. Although fund sweeps appears to be the one common ground between all parties, Cross said it’s a) not enough and b) not guaranteed. “If you’re going to end up using fund sweeps, where does it go? Does it go back to pay bills? Does it go to [developmental disabilities]? Does it go to higher ed? To nursing? There’s not enough to take care of all these. So I don’t know. It’s possible at the end of the day nothing happens.”

Madigan said last night that his Democratic members want to define which funds could be swept and where the money would go. They also may want to reduce the amount transferred.

Sen. Donne Trotter, a budget negotiator for his chamber, said there’s actually about $1.9 billion available in the dedicated funds that otherwise is considered “surplus” at the end of each year. He said he’d be willing to consider changing the amount transferred, whether it’s more or less than $530 million. Madigan, however, said fund sweeps historically topped off at $300 million.

Either way, Trotter and many others agree that fund sweeps won’t solve the budget deficit, whether the state operates at $1 billion or $2 billion in the red.

Operating budget summary: There’s a lot of work to do. If the House overrides some of the governor’s budget cuts without approving ways to pay for them, the budget will tilt further out of balance. The level of funding for state services during the second half of the fiscal year could come down to how well the state economy performs and whether legislators agree on ways to plug remaining holes when they reconvene this fall.

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Wednesday, July 09, 2008

Two-week notice

State employees and service providers should know within 15 days whether state funding for the current fiscal year will decrease by more than $1 billion. Gov. Rod Blagojevich not only cut $1.4 billion Wednesday, but he also asked state agencies to tighten their belts and avoid spending their entire allotments to save another $700 million. His office couldn’t say whether those actions would result in layoffs.

He made the announcement during a special session of the General Assembly, convened to address an unbalanced budget for state operations. Legislators sent to the governor in late May a budget that Blagojevich says approved spending about $2 billion more than the state is expected to collect in revenue. While the Senate approved a series of ideas to plug that $2 billion hole beforehand, all of those ideas failed in the House.

The governor used the special session to blame House Democrats, i.e. House Speaker Michael Madigan, for approving an unconstitutional budget they knew would result in drastic cuts. The House reacted by scheduling a special committee of the entire chamber to hear pros and cons of all of the governor’s big ideas. In the past, those special committees have served as a springboard to trounce on the governor's plans before flat out rejecting them.

The governor called the House committee a circus. “Forget about phony committees on the whole that are circuses of excuses to do nothing and to fail to meet their constitutional responsibilities,” Blagojevich said at a Statehouse news conference before the House even voted on any of his revenue ideas. “But understanding they’re unlikely to do that, a couple of hours ago, I did their job for them. I balanced the budget. So now the ball’s in their court.”

The House Democrats did, indeed, reject one of his funding schemes that would have freed up $400 million. A House smaller committee soundly rejected a $16 billion pension bonding plan that would have restructured the state’s annual payments to the state’s five public employee pension systems.

But the House showed some wiggle room in transferring about $500 million in special dedicated funds to pad the state’s general fund — but not before gutting the governor’s original version that already received Senate approval in the spring. Madigan said the intent of the revised “fund sweeps” measure is to show a willingness to work with the governor on the idea. (It's a blank slate — they still have to insert the language.) But Madigan’s caucus wants to spell out which funds could be swept and where the money would go. Otherwise, his members object to giving free reign to the governor to sweep about half a billion dollars and spend it on whatever he pleases. Rep. Sara Feigenholtz, a Chicago Democrat and point person on human services, said she would be willing to consider fund sweeps if it saved human services from the budget ax. The governor’s cuts on Wednesday did reduce funding for human services by $210 million, erasing increases for autism programs, substance abuse treatment and mental health services.

House Minority Leader Tom Cross said the fund sweeps idea would “probably not [be] well received” in his caucus. While the GOP will continue to push for a statewide capital plan for construction projects, he reacted to the governor's cuts to the operating budget by saying: “We’re for less spending … but we weren’t part of the budget process.”

Some of the governor’s other cuts also scrap increases for higher education, which has gotten flat or reduced funding for a handful of years. (CLARIFICATION: Higher education still would receive a 2.8 percent increase across the board, minus community colleges. Their funding levels slightly decreased. The governor's higher education cuts relate to specific grants, including the monetary award program for needy students. So-called MAP grant funding stands to lose $18 million if it's not overridden by the legislature.) The same goes for about $150 million that would have funded school construction projects in 24 districts that have been waiting as long as five years for the state’s share of the cost.

The House has 15 days to respond to the governor’s cuts before they automatically become active. Legislators will hold another special session Thursday, when the House will continue to debate components of a $34 billion capital plan for a whole host of construction projects. Few expect the House to vote on the governor’s budget cuts before they wrap up and go home Thursday afternoon. If so, the chamber would have to return by July 24 if Democrats want to attempt to override the governor’s budget cuts.

The rest of the state budget that was left untouched by the governor immediately takes effect. That means legislators and constitutional officers could receive annual pay raises, or cost of living adjustments, that were left in the budget. Cross described it as “absurd.” “The whole idea of a (cost of living adjustment) is just mind boggling to me in this economic climate.”

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Tuesday, July 08, 2008

For better or worse

Don’t expect House Democrats to deliver on the governor’s wish list in the next two days. Gov. Rod Blagojevich called a special session of the General Assembly for Wednesday and Thursday to urge House members to approve a series of revenue-generating ideas, combined with a major capital plan, to help plug a hole in the state operating budget. If they don't, he said he’ll have to cut $1.5 billion from the budget approved in late May. The proposed capital plan also would allow the feds to release matching funds earmarked for road and school construction projects that have accumulated over the past nine years.

The House rejected the revenue and capital ideas this spring, and there’s little evidence to suggest House Democrats would change their minds this summer. House Republicans, who would be needed to approve a capital plan, are expected to support the governor's proposal. Their ability to vote on it, however, depends on whether the proposal even makes it to the House floor in the next two days.

A lot of issues are at play here: 1) stubborn political agendas, particularly between House Speaker Michael Madigan vs. the team of Blagojevich and Senate President Emil Jones Jr.; 2) distrust of the governor to disperse money for the capital projects; 3) fuzzy math, or inconsistent projections about the money needed to balance the budget; 4) fuzzy projections about whether the state would jeopardize about $9 billion in federal funds if Illinois failed to approve a capital plan this year; and 5) the campaign season leading up to the November elections.

Regardless of which combination of factors comes out strongest this week, the consequences of not acting on the governor’s wishes likely would threaten some state employees’ paychecks and some service providers’ reimbursements. With little hope that the House will come through on the governor’s wishes, he’ll likely feel a lot of pressure to cut out portions of the budget by week’s end to prevent state government from shutting down. A spokeswoman for his budget office said last week, “The governor has said there will not be a state shutdown.”

So what would be better for the state? Option a) Balance the budget by allowing the governor to sweep about $500 million of special funds, float a $16 billion pension bonding scheme and approve a major construction plan? That would include leasing the Illinois Lottery, constructing new gaming facilities and expanding of other forms of gambling. Or option b) Reject most or all of those ideas and force the governor to cut $1.5 billion from the budget, which would erase funding increases for higher education and social services and reduce funding levels for many other state operations.

(A bipartisan state panel issued an analysis about a variety of the governor’s proposals. See the report here, but note that it was issued in February based on the governor’s original plans that have since been revised.)

This morning, the governor’s negotiating team pleaded its case for a compromise during a teleconference, led by former U.S. House Speaker Dennis Hastert and Southern Illinois University President Glenn Poshard.

Poshard referred to inconsistencies within the House Democrats’ complaints about the $34 billion capital plan. First, he said, they approved a $57 billion operating budget for one year and gave the governor total discretion to trim where he sees fit. Then they argued that they couldn’t support the capital plan — which Poshard said breaks down to about $5.5 billion a year — because they don’t trust the governor to spend the money as planned. Poshard countered that by describing “accountability provisions” that would check the governor’s power and grant legislative oversight. “Any contention that there’s no limit on the governor’s authority here and that he can end up doing what he wants to do with this money is just absolutely untrue,” Poshard said. He welcomed legislators to propose more ideas, which he said could be considered and added in a matter of days if done in earnest.

Steve Brown, spokesman for House Speaker Michael Madigan, said this afternoon that other proposals were suggested from the beginning but not included in their final proposal. Brown referred to provisions that would define all money allotted to specific projects, reform ethics provisions for the state’s gaming authority and decrease the fee that Chicago would have to pay to acquire a new gaming facility. Brown added that the speaker would be unlikely to sit down with Poshard and Hastert to discuss the ideas. “I don’t know what that gains. I mean, they’ve been aware of all these things for weeks, if not months.”

Requiring construction projects to be defined line by line has never been done before, Poshard said, adding that it could limit the Illinois Department of Transportation’s ability to adjust if projects came in over or under budget. “We discussed all those things, openly, honestly, thoroughly. To come up now and use those two things as concerns and issues, I don’t think are valid at all.”

As far as the best outcome for the state, Brown said this week’s so-called committee of the whole could help legislators decide what to do. The committee is scheduled to start about 1 p.m. and end about 5 p.m., when they’re scheduled to split off into a smaller committee to consider ways to close the budget gap. Brown said they could return Thursday morning but expect to wrap up that afternoon.

Then all eyes will turn to the governor’s office, which likely was the intent of House Democrats when they approved an unbalanced budget in the first place.

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Thursday, June 26, 2008

Campaign finance law ruled unconstitutional

By Patrick O’Brien
Candidates for federal office who are running against deep-pocketed opponents could face tougher odds after the U.S. Supreme Court struck down a key piece of campaign finance law today.

In north central Illinois, the race for Congress in the 14th District could be affected.

Jim Oberweis, the Republican candidate, already donated more than $1.7 million to his own campaign through the end of March. Oberweis previously self-funded his campaigns for elected office. The Sugar Grove resident runs a family-founded dairy company and an investment firm.

His opponent, Democrat Bill Foster of Geneva, donated more than $122,000 to his own campaign. Foster is a scientist who worked at Fermilab, as well as a businessman who helps run a company that makes theater lighting equipment.

The federal law previously allowed opponents who faced self-funded candidates to exceed federal limits for the amount individuals could donate to their political campaigns.

The 5-4 majority, represented by Justice Antonin Scalia, said the law “impermissibly burdens the 1st Amendment rights” of candidates to use their own money as political speech. Previous campaign finance laws also have been ruled invalid based on 1st Amendment arguments.

Not everyone agrees that the ruling automatically gives self-funding candidates a big edge, however.

“Regardless of how substantially a candidate self-funds, the voters still have to like what they’re hearing,” said professor Ron Michaelson, former director of the Illinois State Board of Elections. He currently lectures on campaign finance at the University of Illinois at Springfield.

He said he believes the “millionaires amendment” — part of the 2002 reform package sponsored by U.S. Sen. John McCain, this year’s Republican presidential nominee — was designed to limit the amount of money spent on federal political campaigns. He said it was a step in the right direction.

“I think it’s unfortunate. The amendment was an attempt to try to level the playing field,” he said.

The ruling likely will affect races for Congress only, as the amount of money needed to self-finance presidential campaigns is now in the hundreds of millions of dollars.

Michaelson cautions that voter resentment of candidates who may appear to be trying to purchase higher office may backfire.

The ruling, coupled with U.S. Sen. Barack Obama’s decision not to take $85 million in federal funds to limit his campaign’s spending in the presidential election, will bring campaign finance reform to the forefront this year, Michaelson said.

Obama defended his decision by saying the finance system was broken. He has said little during his campaign about reforming the system.

“If Obama’s elected, we’ll see how serious he is about the issue,” Michaelson said.

In another race for Congress ...
By Bethany Jaeger
Comptroller Dan Hynes endorsed Colleen Callahan, a Democrat, for the 18th Congressional District today in Springfield. At a press conference in the AFL-CIO building, Hynes said he supports Callahan, who is a longtime farm reporter for radio and television, in her race against state Republican Rep. Aaron Schock of Peoria. The district has long been held by Republicans.

Both Schock and Callahan say they grew up on farms and formed a hard work ethic. Schock has served on his local school board and represented the 92nd House District for two years, proving to be a strong political fundraiser. Three months ago, his campaign finance report shows he raised more than $1 million and had about $188,000 cash on hand. (See the report by selecting his name in this pull-down menu.) See more about Schock and his race against Callahan in the April Illinois Issues magazine.

Callahan has less money and says she has never worked as a public official, but she recently was named as one of 20 “emerging races” by the Democratic Congressional Campaign Committee. That doesn’t guarantee, however, that the national party will flood her campaign with financial support. She expects her June 30 campaign finance report to show about $250,000 in contributions and about $130,000 and $140,000 cash on hand, although numbers could change between now and June 30. See her March report by selecting her as a candidate.

“I am a candidate who didn’t just dip my toe in the water here. I went right to the high dive in my efforts to serve our district and our country,” she said this morning. “This being a new process for me, I was told at the beginning and am learning that typically, the national party money from either party doesn’t typically come until later in the campaign.”

“Money begets money,” she added.

What-ifs
By Bethany Jaeger
While in Springfield, Hynes also addressed the state budget or lack thereof and sent a letter to legislative leaders and constitutional officers outlining what would happen if they failed to enact a state budget by July 10, more than a week after the new fiscal year begins.

The General Assembly approved a budget that Gov. Rod Blagojevich says is unbalanced by about $2 billion. He threatened to cut $1.5 billion if the House didn’t approve two revenue ideas that already passed the Senate. Expect to find out in the next couple of weeks whether the governor will go through with the cuts or call legislators back in a special session in an attempt to force them to vote on new revenue ideas to plug the hole.

If revenue ideas failed and the budget remains unbalanced and unsigned by July 10, Hynes says, first, about 4,900 state employees would be in jeopardy of not getting paid on time. Tens of thousands more would be at risk the longer the budget remains unresolved.

Second, the state couldn’t pay its other bills that reimburse health care providers and other social service providers. Most people focus on the payroll because they have a deadline and a more tangible effect, Hynes said, “but every day we don’t have a budget, tens of millions of dollars don’t go out the door and don’t go into businesses all over Illinois, which has a real impact.”

He called on the governor to lead and the legislative leaders, particularly House Speaker Michael Madigan, to do what they should have done months ago and sit down together to negotiate an agreed budget. (The leaders did meet, and Madigan did send his majority leader, Rep. Barbara Flynn Currie, in his place.)

“We are now in a game of chicken,” Hynes said. “We are now basically in a staring contest to see who blinks first. And the ones who are going to get hurt in this contest are tens of thousands, if not hundreds of thousands of vulnerable, innocent people.”

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Tuesday, June 24, 2008

Tennis, anyone?

Gov. Rod Blagojevich wants legislators to come back to Springfield to fill an estimated $2 billion budget hole before he has to chop $1.5 billion from the version they approved before adjourning last month. Given that the new fiscal year starts July 1, the state needs an operating budget in place by July 11; otherwise, the first round of about 5,000 state employees would start missing their paychecks by about the 15th of the month, according to the state comptroller’s office.

But neither chamber wants to or plans to come back before the regularly scheduled fall session, according to spokespeople for the two Democratic leaders.

The governor announced this afternoon in Chicago that the ball is in the House’s court. You should be able to download the governor’s announcement here. Without action, he would be forced to reduce funding for major state functions, including higher education and social services. Employees would have to be laid off or not hired. (See a more detailed list below.)

Blagojevich said the General Assembly has never passed a budget this far out of balance. “Needless to say, I cannot sign this budget. For me to sign this budget would be lying to the people of Illinois. It would be like writing a check that I know would bounce.”

He added that he prefers not to veto the entire budget and require the legislators to start over. He would rather urge “shared sacrifice,” or ask state agencies to reserve spending about $500 million already approved. To avoid making $1.5 billion in cuts, he said he wants the House to OK the two revenue-generating ideas already passed by the Senate.

The Senate approved a $16 billion borrowing plan that would change the annual payments to the state’s five public employee pension systems and free up about $500 million. Senators also advanced a measure that would allow the governor to transfer about $500 million from dedicated funds to other state operations. Both measures stalled in the House.

Complicating the future of the pension bond deal is that it would require a three-fifths majority whether voted on now or in January. That requires at least some Republican support. Rep. Gary Hannig, a Litchfield Democrat and budget negotiator, says given that the House GOP rejected all budget bills this spring, they would be “hard pressed to get a majority.”

“I think that there’s a view that we really shouldn’t be selling bonds for the purposes of budget relief.”

In addition, the state’s contribution to all five public employee pension systems could start to back off in two years. For the fiscal year that starts July 1, the state was scheduled to pay about $2.7 billion. Next year’s payment would exceed $3 billion. But then the “ramp up” backs off. “I think most legislators sort of feel like, ‘We’re almost there, why don’t we just finish it?’” Hannig says.

House Democrats could have some more support for sweeping dedicated funds, although Hannig adds it might make more sense to vote on that idea in January. Not only would the legislation require fewer votes to pass, but also the economy by then could reveal a more accurate picture of state tax revenues. Until this fall, all revenue estimates are just that — a guess about what the economy will be doing a year from now, he says. It would be appropriate to consider fund sweeps as “kind of a mid-course correction.”

He puts the ball in the governor’s court. “Unless he calls special session, we simply aren’t going to come back. We don’t have a mechanism to come back that I’m aware of.”

For a special session to be convened, either the governor or both legislative leaders must call one, according to the state Constitution. That’s unlikely, given the questionable future of the revenue ideas in the House right now. And the Senate Democrats’ spokeswoman says it’s “absolutely not” the desire to call a special session.

Patty Schuh, Senate Republican spokeswoman, describes the governor’s announcement as a “non-event.” But the House’s response could be newsworthy. “We’re concerned that Democrats are setting it up for a tax increase in the fall,” she says.

That door is open. If the governor made budget cuts, Hannig says: “More likely we’ll come back to November and try to renegotiate some of those things. But we have to figure out, ‘What are our priorities?’ Because I don’t know that there’s enough money in sweeps that we can restore everything. So maybe we say we restore education. Or maybe we override him in education and say, ‘Now we’ll find the money.’”

Where they would find the money is the looming question.

Potential budget cuts
By Patrick O’Brien
Here’s a partial list of where the governor said he would have to cut without major revenue tactics approved by the House by mid-July:

Health care would be hardest hit, with a $530 million reduction in payments to Medicare providers, increasing the average wait for payment to 90 days. Nursing homes also would lose $55 million in funding for home care providers. And $260 million for social services, including funding for autism, people with all types disabilities and domestic violence victims, also would be cut.

Another $106 million in funding for veterans would include eliminating a 40 bed, $6 million expansion at the LaSalle Veterans Home. See more here.

Mass transit would lose $255 million, causing the state to end discounted fares for students and people with disabilities in the Chicago region and to eliminate state support for Amtrak.

School construction projects would be slashed $150 million. Education program cuts of $110 million, which are limited almost exclusively to higher education for financial aid programs for the neediest college students and education for nurses and pharmacists.

The anti-violence CeaseFire program again would lose $6.25 million. See more here.

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