August 03, 2009
Hoping that Illinois lawmakers will agree to an income tax increase later this year, Governor Pat Quinn chose not to make the necessary cuts to work within the budget approved on July 15, 2009 by the General Assembly.
At a press conference on July 31, the Governor said he had already trimmed more than $1 billion from the FY2010 budget that he initially proposed in March. However, Governor Quinn also said that the $26.1 billion appropriated General Funds budget that the legislature approved and he signed last month was $1.4 billion short of the amount he believes is required to fund state needs. To generate the additional revenue, the Governor said he will push the General Assembly in the fall to approve an income tax increase, which was included in his initial proposal but rejected by lawmakers.
In the meantime, the State is operating as if it had the additional $1.4 billion—or an appropriated General Funds budget of $27.5 billion instead of the $26.1 billion enacted by the General Assembly. The State can’t fund operations at that level through the end of the fiscal year on June 30, 2010, Governor Quinn said. If lawmakers don’t agree to an income tax increase, the Governor said he would have to make the following cuts:
- $600 million in the Medicaid program
- $600 million in state employee health insurance
- $145 million in education funding from pre-school through high school
- $225 million in college scholarships
The Governor also said he would add $180 million to contingency reserves, so the State would be in a better financial position to respond to crises related to difficult economic conditions.
At the press conference, Governor Quinn outlined the $1 billion in cuts he has already made, including layoffs of about 2,600 state workers and 12 furlough days for most employees. He said some of those actions might be avoided if public employee unions agree to forgo the $125 million in wage increases included in their contracts and budgeted for FY2010. The Governor said he has avoided budget cuts that would jeopardize increased federal funding from the stimulus program.
Before the Governor’s announcement, many details of the new budget remained unclear, a month after the start of the State’s FY2010 fiscal year on July 1. That’s largely because of the unusual degree of discretion granted to the Governor to decide how to spend money and where to make cuts. This year the legislature left $3.4 billion in two lump sums to be allocated by the Governor, rather than the specific line items included in most previous appropriation bills. That meant that the hard job of deciding which programs to cut fell to the Governor.
State budget officials still have not released enough data to permit a calculation of the budget deficit. Under the state Constitution, the General Assembly must balance the budget by appropriating amounts that don’t exceed funds estimated to be available during the year. This requirement seems clear cut, but in practice it simply means that the budget must appear to be balanced on paper. It does not prevent the State from maintaining stacks of unpaid bills to service providers. Nor does the requirement prevent state officials from using overly optimistic revenue estimates.
In broad terms, the FY2010 operating budget consists of about $54 billion in total appropriated spending: $26 billion from the State’s General Funds, which represent the general operating checkbook; and $28 billion from other state funds and federal sources. The State plans to borrow about $3.5 billion to help meet its required pension fund payments, and it will continue to leave about $3.9 billion in bills unpaid through the end of the year.
Return to this blog for more detailed budget analysis as data become available.