Democrats make the case for more revenue

By Jamey Dunn

Democrats on key budgeting committees are beginning to build the case for finding more revenue for the next fiscal year’s budget.

A Senate budgeting committee today called upon agency heads to present the potential impacts of a 20 percent cut. The results were dire. The State Board of Education said that if the cut, which would be $967 million, fell on general state aid it would result in the per-pupil foundation level being funded at 65 percent. Currently, Illinois is meeting 89 percent of its statutorily required per-pupil funding. State Superintendent Christopher Koch said that the number of schools on “financial watch” status would more than double. The number of districts that would be deficit spending would jump from 532 to 724 of the state's 860 districts. He estimated that up to 13,400 teachers could face layoff and many schools would have to eliminate all extracurricular activities. Koch said that the cut in funding could also result in a loss of almost $80 million in federal funds, including Title I and Title II funding, which is meant to assist at-risk students.

“We could eliminate our Early Childhood Block Grant and that would only get us about a third of the way to a $967 million reduction in state spending. It would also mean more than 90,00 children would no longer receive early childhood education,” said Koch.

As things stand now, the Illinois Department of Corrections officials said that without a funding increase, three facilities would need to be closed. If those closures happen, the department would have to find room for about 4,000 inmates in its overcrowded prisons or release them. An estimated 900 staff members would be laid off.

IDOC Director Tony Gondinez said that a 20 percent cut would mean that 11 corrections facilities would have to be closed, and 15,500 inmates would be released. He said that the current parole system, which has more than 27,000 parolees monitored by about 350 agents, would be hard-pressed to monitor those newly released offenders. Corrections officials said that those newly released offenders would be “virtually be unsupervised.” More than 3,000 DOC employees would be laid off without offers of transfer to new positions.

Under a 20 percent cut, the Department of Juvenile Justice would have to close two facilities and release 215 youth out of the 800 it has in custody. The department is currently hammering out the details of a court order to improve its education system, mental health care and the safety standards at its facilities. Experts that were called upon to report on these areas found that the department was in violation of state and federal laws. “One of the issues now is whether or not we can provide minimum services with the funding we had,” said acting Director Candice Jones. She said that the department would lose federal funding if it is unable to comply with required staffing ratios.

Illinois State Police Director Hiram Grau said that his agency would have to lay off 450 state troopers, which is 30 percent of the department’s officers. More than 100 cadets would be dismissed from the current class. ISP would have to close all of its forensic labs and layoff all 400 employees. More than 5,000 rape kits would not be processed. Local law enforcement would lose access to forensic analysis. Grau said that the cuts would require the department to respond to “only the most critical calls.” He said that the department is already having issues with response time. In 2013, the Chicago district had 6,399 calls for which it did not have a car immediately available for response. 

Representatives from the Department of Human Services and the Department of Aging said they would have to cut back on services. In home care for the elderly and childcare for low-income families would be on the chopping block. Nursing home inspectors would be laid off. Welfare benefits would be reduced, and the state would have problems implementing the food stamps program. Illinois could lose up to $585 million in fund for the Temporary Assistance for Needy Families program. The state could also potentially loose hundreds of millions in federal matching funds.

The Department of Child and Family Services would eliminate services for 18 to 21 year olds. Acting Director Bobbie Gregg said that those youth would be less likely to finish high school and would no longer receive support from the department to attend college. She said of those in this age group who are cut off from services: “Many of them end up homeless. ... That’s the outcome that we would anticipate.”

Republican committee members derided the hearing, calling it a “dog and pony show” of “Chicken Little scenarios” that blow the state’s budget woes out of proportion. “This doom and gloom scenario that you have paraded everybody in here to provide is actually as far from the reality that we face in putting this budget together as could be,” Sen. Matt Murphy, a Republican from Palatine, said during the hearing. “And frankly, it’s a pretty cynical ploy because it is not reflective of the revenues that we’re going to have and doesn’t have to happen. And yet, you put all these people through this dog and pony show to make it look like this all has to happen to justify the tax increase.”

The Republicans likely are not wrong, at least in part. It does seem that the Democrats are building the case for some form of new revenue, which could potentially be the extension of the tax increase. The House is contemplating giving appropriation committees 14 percent less revenue to dole out in its budgeting process. Chicago Democratic Rep. Greg Harris, chairman of the House human services budgeting committee, said that the state faces “massive budget challenges” for Fiscal Year 2015 because the temporary income tax will begin to step down. In a post to his Facebook page, Harris made the case for more revenue. “We have undertaken major reforms of Medicaid, our state’s pension plans (no savings can be assumed from those changes until court challenges conclude), a plan to pay down our mountain of old bills and reducing expenses. Now is the time to maintain our revenues to protect core education, public safety and human services spending. I will support plans to maintain our revenues, close tax loopholes and shift the burden of taxes from those with the least means to those with the most ability to pay.”

The way a news release from Senate Democrats’ communications staff described the tax step down is telling. While Republicans say an extension of the current rates would be a tax increase, Democrats are beginning to call the automatic step down a tax cut. “Automatic tax break[s] that take effect next year will have a dramatically negative impact on State functions, according to testimony given to a Senate budget panel today,” said the news release.

But with about $1.5 billion in revenue disappearing along with the step down and growing costs associated with statutory obligations, such as Medicaid, which could be more than $1.5 billion, the Senate Republicans’ claims that things aren’t as bad as they seem, ring hollow.

Nonpartisan group The Civic Federation called for a one-year extension of the tax rates and then a gradual step down to avoid unmanaged cuts to the state budget and enable the state to pay off its old bills. This is the same organization that has for years been hammering home the need for changes to the state’s pensions systems.

Murphy and others have taken issue with the projected revenue number approved by the House and Senate because it allows for $400 million in transfers out to education and medical funds. While that money, and other statutory transfers out could, and maybe should, be reassessed, $400 million in revenue is not going to keep the FY 15 budget afloat without some deep cuts and changes to current law. Gov. Pat Quinn is scheduled to present his budget next week. He is required to present a budget based on current revenue and law. While the sky may not be falling in Illinois, the situation is looking  precarious at this point.