August 6, 2010
Roughly a month ago, on July 1, 2010, Governor Pat Quinn announced that he planned to cut $1.1 billion from the $26.0 billion FY2011 State of Illinois budget previously approved by the General Assembly. At that time, the Governor did not say where $891 million of those spending cuts would be made.
During the week of August 2, 2010, Governor Quinn revealed the specific reductions to agency budgets. As a result of the Governor’s actions, it is now possible to provide a more detailed comparison between the State’s enacted budgets for FY2010 and FY2011.
The following chart shows the year-to-year changes in agency budgets from the enacted FY2010 budget to the Governor’s revised budget for FY2011.
As shown in the table, the FY2011 budget totals $24.9 billion, down $1.4 billion or 5.3% from the FY2010 budget of $26.3 billion. The FY2011 budget includes $183.7 million that the Governor plans to hold in reserve and not spend.
The largest reduction is to the Department of Human Services, where appropriations declined by $575.9 million, or 14.2%, from $4.0 billion to $3.5 billion. Non-Medicaid programs in mental health, developmental disabilities and rehabilitative services were reduced or eliminated. However, community mental health residential services were restored and a threatened payment reduction to Medicaid-covered developmental disabilities services was averted.
Funding for elementary and secondary education was reduced by $311.1 million, or 4.3%, from $7.3 billion to $7.0 billion. The main reductions were in student transportation and in reading improvement block grants and other grant programs.
Appropriations for the Department of Healthcare and Family Services declined by $215.7 million, or 2.7%, from $7.9 billion to $7.6 billion. The department did not specify how it would handle the cuts. Instead, it said that it plans to reduce operations and “enact various quality and efficiency measures.”
As previously discussed in this blog, Governor Quinn was authorized to cut up to roughly $2 billion from the budget as part of the extraordinary powers granted to him by the legislature under the Emergency Budget Act of FY2011 (Public Act 96-0958). The Governor also made some cuts through $155 million of line-item vetoes.
Despite the Governor’s cuts, the FY2011 budget still has an operational shortfall of approximately $5.8 billion and an accumulated deficit from previous years now expected to reach $6.5 billion, according to documents accompanying the State’s most recent bond sale on July 14, 2010. The total deficit at the end of FY2011 is currently estimated at $12.3 billion.
The General Assembly authorized borrowing $2.2 billion to pay down some of the operating shortfall. The State also plans to sell $1.3 billion in short-term bonds to relieve current cash flow pressures. When the General Assembly reconvenes after the elections in November, the administration has indicated that it will try to address the operating shortfall through an income tax increase to raise additional revenues and a pension borrowing plan.