May 24, 2010
As the General Assembly nears the final days of this year’s regular session with no FY2011 budget in sight, a group of lawmakers is attempting to advance the negotiations by proposing a $1.3 billion package of spending reductions and savings.
The proposal by ten Democrats on May 24, 2010 represented an uncommon effort by Illinois lawmakers to suggest significant and broad-based reductions in the State of Illinois’ budget. In contrast, the cuts contained in Governor Pat Quinn’s recommended FY2011 budget for the State of Illinois were heavily concentrated in the area of primary and secondary education and were followed by the Governor’s proposal to avert the education cuts through an income tax increase.
The Civic Federation views the legislators’ proposal as a positive step. However, even if all the cuts were passed, the State would still have a long way to go to close its projected General Funds budget deficit of nearly $13 billion. General Funds support the regular operating and administrative expenses of most state agencies and are the funds over which the State has the most control and discretion.
The General Assembly adjourned on May 7, 2010 without passing a budget. Lawmakers were scheduled to reconvene on the afternoon of May 24. Under the Illinois Constitution, a supermajority will be needed after May 31 to pass a budget for FY2011, which begins on July 1, 2010.
As discussed in a previous post, the Senate passed a $26.0 billion General Funds budget plan that gave the Governor sweeping powers to impose cuts and did not provide for the State’s statutorily required $3.8 billion in contributions to the retirement systems. The plan also did not account for making all the necessary transfers out of General Funds for debt service and other statutory requirements, estimated to total $4.2 billion.
The House failed to pass an appropriations measure and overwhelmingly voted down a proposal by Speaker of the House Michael Madigan to reduce appropriations by roughly the amount of the required pension contributions. After that vote, Speaker Madigan invited House members to file amendments proposing their own alternative cuts to State spending.
The group of legislators drafted its package of spending reductions in response to the Speaker’s suggestion. The proposal would cut $1.3 billion from the enacted FY2010 General Funds budget of $26.3 billion, resulting in FY2011 General Funds appropriations of $25.0 billion. The total is slightly higher than the $24.8 billion FY2011 General Funds budget recommended by the Governor.
The Governor recommended $1.5 billion in cuts to appropriations (net of increases), of which $1.2 billion—or roughly 80%—were to elementary and secondary education. The Governor’s proposed cuts included a $613.1 million reduction in General State Aid (GSA), funding that may be used by local school districts for any purpose. The legislators’ proposal contains $300 million in reductions to primary and secondary education, but the proposed cuts involve categorical grants, which provide funding for services mandated by state and federal programs, and targeted grants, which provide funding for specific populations and purposes, rather than GSA.
The legislators’ package includes:
- $100 million in unspecified cuts to higher education;
- $300 million in reductions from a 5% operational cut to all state agencies;
- $300 million in cuts from renegotiating or rebidding contracts up for renewal in FY2011; and
- $200 million in Medicaid savings from allowing the Department of Healthcare and Family Services to lower payment rates and co-payments through administrative action rather than by statute.
Under the package, the State would save $100 million by requiring increased health insurance contributions from state retirees. The Governor had proposed to limit the state subsidy of retirees’ health premiums at $300 a month, but backed off the idea after strong opposition from lawmakers and labor unions. The legislators’ proposal calls for increasing premiums on a sliding scale based on retirees’ total incomes.
The lawmakers proposed to save $6 million by decreasing state employees’ mileage reimbursement from 50 cents a mile to 39 cents a mile for all state employees; the Governor had proposed $2.4 million in savings from reducing the mileage reimbursement rate. The legislators’ proposal also includes saving $2.5 million by a 5% cut to the General Assembly’s operational spending; $2.5 million by eliminating salaries for part-time boards and commissions; and $4 million by ending the state subsidy of salaries of local assessors, supervisors and coroners.
Beginning in FY2012, the lawmakers would revamp the entire budget-making process to require forecasts of short and long term revenues, determination of annual priorities, establishment of performance targets and measurement of results.
The package of cuts is contained in amendments to SB 1211, SB 3660, HB 6878 and other bills to be filed by the group of ten legislators: Representatives Linda Chapa LaVia, Sara Feigenholtz, Paul Froehlich, Naomi Jakobsson, Karen May, Elaine Nekritz, Carol Sente, Karen Yarbrough; and Senators Susan Garrett and Dan Kotowski. At a press conference on May 24, the House members said they expect House leaders to call the proposals for votes but did not predict the outcome. Senate President John Cullerton supports some of the proposals, according to the Senators in the group.