Tuesday, January 03, 2012

Budget projection anticipates cuts

By Jamey Dunn 

A three-year budget projection that Gov. Pat Quinn’s office released today calls for cuts in most areas of state government.

The plan lays out a proposed 9 percent decrease in Fiscal Year 2013 to all areas of state spending other than education and health care, which would both remain funded at FY 2012 levels for the next three fiscal years. According to the report, all levels of education — from early childhood education to universities and community colleges — will escape the ax under Quinn’s proposed budget plan.

David Vaught, Quinn’s budget director, emphasized that the analysis released today is a projection, and the level of cuts to each area of government may differ when Quinn presents his budget, but 9 percent is generally what Quinn is looking at. “There will be adjustments up and down,” Vaught said.

He added, “They’re pretty serious cuts.”

The report, which is required under recent budget reforms, said that the cuts are due in part to the squeeze that pension and Medicaid costs will put on next year's budget. The FY 2012 budget pushed about $2 billion in Medicaid costs into next fiscal year, and at $5.3 billion, the required pension payment in FY 2013 is projected to be $1 billion more than last year’s payment.

Quinn has called for rate cuts to some Medicaid providers instead of slowing down the reimbursement cycle, which is the reason why so many FY 2012 Medicaid bills will be paid next fiscal year. “We don’t think that’s a good solution, and we think it just puts off the problem.” The report says Quinn plans to focus on pension reform in the coming fiscal year. “He’s not coming around to anything that’s unconstitutional, and he’s said that repeatedly,” Vaught said. However, he said that other options, such as targeting cost-of-living adjustments in pension benefits or shifting pensions costs to school districts and universities could be on the table.

Vaught said that next year’s budget could result in more staff reductions but would not say if that meant layoffs or simply not hiring to fill positions that open up. He said that agencies have been informed of the level of cuts the governor expects, and they will began presenting their ideas for implementing cuts to Quinn’s budget office next week.

According to the projections, the state will end the current fiscal year with a $507 million deficit. In FY 2015, the year the recent income tax increase is set to begin phasing out, Quinn’s office predicts a deficit of $818 million. Vaught said the projected deficit illustrates the need to turn the state’s economy around. “It shows you that economic growth is hugely important.” He said that supporters of the tax increase planned that the decision of whether to extend it once it is slated to taper off would be a subject of public debate and an issue for the 2014 gubernatorial election. “[The projections] tell us what we’ve got to work with.”

Vaught said today’s report is intended to start the conversation of the budgeting process with legislators, agencies and other interested parties. The report emphasizes that tough budget decisions are needed to get Illinois back on track. “FY 13 will bring challenges. Shortfalls of billions of dollars mean a government must change. Such changes are difficult and cannot be accomplished overnight or even in one fiscal year.” However, Vaught appeared hopeful. “We see a way to get Illinois out of the woods.”

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