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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