House votes to restore Medicaid cuts, pay old bills and fund construction projects

By Jamey Dunn

The Illinois House voted Wednesday to restore several cuts to Medicaid and to tack more than $1 billion in spending onto the current fiscal year’s budget.

Senate Bill 741 would rollback several Medicaid program reductions that were cut under sweeping Medicaid reforms approved in 2012. The bill would restore podiatry services and preventative dental care for adults. It would lift the four-prescription limit for people with “severe mental illness.” It would also remove the limit on the number of physical therapy sessions patients can access. The bill allows for more funding for programs that care for children with extensive medical needs, such as those on ventilators. “We are restoring this simply because we have found out from experience that these cuts actually did not save us money. They cost the people of the state of Illinois more money, and they brought suffering and hardship to families. They brought overutilization to our emergency departments and interfered with the delivery of health care to other patients in need,” said Chicago Democratic Rep. Greg Harris, who sponsored the bill. The restorations would cost $221 million upfront. However, the spending would bring in federal matching funds, so Harris said the net cost would be about $125 million in general revenue funding.

Opponents questioned rolling back changes to Medicaid that were put in place to ensure that the system remained sustainable at a time when the state was pushing billions of Medicaid bills from one fiscal year into the next. The reforms now bar the state from shoveling Medicaid bills into future fiscal years. “How are we going to pay for that, and how are we going to sustain the system for the people who need it most?” Rep. Patricia Bellock asked on the House floor.

Those who have advocated to restore the cuts argue that they do not save the state money in the long run because Medicaid patients are forced to skip preventative care but later call on the system once their health deteriorates into an emergency situation. Chicago Democratic Rep. Mary Flowers said that a lack of dental care means missed wages when Medicaid patients stay home from work with tooth pain and missed opportunities when dental problems, such as missing teeth, keep them from making a good first impression at job interviews. “Access to dental services—like filling, cavities, root canals, dentures—means that the most vulnerable in our state will not need to suffer from unnecessary pain,” she said. 

Harris also sponsored House Bill 6060, which would add $1.8 billion in spending during the current fiscal year. Around $1 billion would go toward paying down old bills, and $600 million of that would go to Medicaid, triggering federal matching funds. The backlog stands at about $4.7 billion now. The money comes from new revenue that came in this year above projections for Fiscal Year 2014.

The House also reapproved ongoing capital construction projects for next fiscal year and tacked some new spending on, while they were at it. The new spending includes:

• $13 million for sewage treatment and water projects. 
• $10 million grant to the Uptown Theatre in Chicago. 
• $40 million for school construction projects outside of Chicago. 
• $35 million to Chicago Public Schools for school construction projects. 
• $50 million for back pay to state employees in the departments of Public Health, Human Services, Corrections, Juvenile Justice and Natural Resources. The money would cover about half the cost of deferred raises that the state owes employees. 
• $50 million for the Chicago teachers pension fund. 

 Chicago Democratic Rep. Barbara Flynn Currie, who sponsored HB 3793, said that the money for the additional spending would come from revised revenue estimates for Fiscal Year 2015 and funds left from the sale of the state’s 10th casino license.

 The measure did not have a standard committee hearing and came to the floor just hours after the amendment that contains the spending was filed. “We need to pass this bill if we want to make good on the commitments and promises we have earlier made,” Currie said of the spending that was part of the ongoing capital program. Republicans called the vote on the more than 1,000-page-bill rushed and argued that they did not have time to know what the legislation contained “We’re making a substantive vote with very little time to vet this vote,” said Downers Grove Republican Rep. Ron Sandack. “We seem to continue to do the wrong thing the wrong way, so I guess that’s consistency if nothing else.” 

House Speaker Mike Madigan also released his hold on the House budget bills approved yesterday, and they have been read into the record in the Senate. That means that the Senate could technically pass the budget and—as many in the Statehouse have been speculating—the spring session could adjourn a day early on Friday. However, such rumors always run rampant at this time of year. And so far, that possibility falls into the rumor category.

Budget "middle road" paved with short-term fixes

By Jamey Dunn

The House passed what some have dubbed a “middle of the road” budget, which keeps many areas of state government funded at current levels.

Under current law, the state will lose nearly $2 billion in revenue next fiscal year when the income tax increase begins to roll back. The income tax rates are set step down from 5 percent for individuals to 3.75 percent and from 7 percent for corporations to 5.25 percent half way through Fiscal Year 2015. Earlier this month, the House voted to approve a nearly $38 billion budget, which would have required an extension of the current income tax rates to fund. However, House Speaker Michael Madigan later said that there were not enough votes in his chamber to extend the current rates. The House then rejected a so-called “doomsday budget plan,” with only five members voting in favor of the bill. That proposal would have made deep cuts to education and human services.

On Tuesday, the House approved with little debate a budget that would spend about $35 billion and not require an extension of the tax rate. After the bills passed, Madigan used a parliamentary procedure to block them from going directly to the Senate. Senate and House Democrats are working together on the plan in the hopes of getting it through both chambers before the regular legislative session is scheduled to adjourn at midnight on Saturday.

Debate on the bills was lacking in the House in part because lawmakers on both sides of the aisle were uncertain about the details of the budget. For example, none of the key budgeting players in the chamber were able to give a definitive answer on the total spending number for the plan. All the responses were between $35 billion and $36 billion, but nobody knew the number spot on.

The bills were worked out in House budgeting committees, but many Republicans on those committees said they were not included in negotiations. Complaints aired by Republicans on the floor were primarily about the process and not the specifics of the budget itself, which they say they got this morning. “This is not a good budgeting process when you don’t know what you’re talking about. You don’t know what you’re advancing,” said Rep. Ron Sandack, a Downers Grove Republican.

“I guess that the speed-reading classes that you’ve taken are paying off over there. Thank God. But the process has been a complete joke,” Elmhurst Republican Rep. Dennis Reboletti said to Democrats on the House floor. “You do this every year, and then you’re surprised that we’re not working with you, or that we’re angry or frustrated.” Democrats said they tried to include Republicans, but that many did not attend meetings held budgeting committees yesterday. They say that because Republicans have been unwilling to vote for budgets in recent years, they likely would not have been in favor of the plan, no matter what the process.

Those Democrats who crafted the proposal were able to keep the budget relatively flat by tapping into some well-worn creative budgeting tactics, such as delaying payment for some spending obligations, adjusting revenue estimates up and borrowing from funds outside of general spending. Democrats say that the moves freed up about $2 billion. Most of the tactics are short-term solutions or one-time sources of funding. Republicans, who had previously accused Democrats of exaggerating how painful a budget would be to try to pass an extension of the income tax rates, reacted with sarcasm to the plan unveiled today. “Magically, hundreds of millions of dollars extra have been found. Shocking. I am so surprised that now we’ve looked under the couch cushions and found a little bit of extra walking-around money to sprinkle around the budget,” Reboletti said.

But flat funding does not mean that the budget picture is rosy. The bill backlog would grow substantially and there would be layoffs under the plan, according to those who worked most closely on it. “As the year goes on, things are going to get tighter and tighter in our departments,” said Rep. Greg Harris, who chairs the House human services budgeting committee. Harris said that the budget would likely increase the state’s stack of unpaid bills by “a couple billions of dollars” and would result in “thousands” of layoffs of state workers. The backlog is expected to be about $5.6 billion by the end of the current fiscal year.

The House breaks down the budgeting process into general areas of K-12 education, human services, general services, higher education and public safety. The only of these areas that would see a funding increase would be K-12 education, which would go up $167 million over the current fiscal year. The increase would be needed to keep General State Aid to schools prorated at just under 89 percent and to pay for student assessments that are part of the state’s transition to the Common Core curriculum standards. While K-12 education will see a slight increase, Homewood Democratic Rep. William Davis, who is the chair of the House K-12 education budgeting committee, said that it is not enough to meet the need in many Illinois schools. “Is this the budget that I wanted? Absolutely not,” he said. General State Aid to schools has not been fully funded for the last three years.

Harris said that as the fiscal year wears on, state agencies would start to feel the squeeze of trying to stick to flat funding, while the cost of doing business grows. He said that services required by law our under court orders would likely start to crowd out other programs. “It’s going to be after January 1 that you see the problems beginning to add up.” Harris said that if nothing changes, the budget would be in an even worse place in Fiscal Year 2016. “Next fiscal year, we’re going to be in a terrible spot because next year we will have lost a full year’s worth of revenue.”

Illinois Senate approves more budget bills

By Jamey Dunn

Illinois Senate Republicans supported legislation today to spend unexpected tax revenue on the state’s old bills but rejected the rest of a budget plan crafted by Democrats of both legislative chambers.

Education spending, which the Senate approved Wednesday, passed without Republican support, and the vote totals for the rest of the about $35 billion Fiscal Year 2014 budget looked the same today. The one exception was that most of the Republicans in the chamber voted in favor of a measure that would put an unexpected income tax revenue windfall toward the state’s stack of unpaid bills. House Bill 206, the supplemental appropriation that would pay down bills this fiscal year, now heads the Gov. Pat Quinn. The education budget bills — Senate Bill 2555 and SB 2556 — await a vote in the House. The legislation also includes the payments to debt service, employee health benefits and pensions.  “I think it’s a responsible use of the additional billion dollars that came in from income tax,” said McHenry Republican Sen. Pamela Althoff.

House and Senate Democrats crafted the budget this year after cutting Republicans out of talks a few weeks ago. Here’s a breakdown of the bills:

HB 208 is the operational spending for state education agencies, as well as some higher education costs, including student aid.

HB 213 is human services funds and Medicaid spending.

HB 214 is general services spending, the General Assembly’s budget and the constitutional officers' budgets.

HB 215 is public safety and transportation spending, Illinois Department of Corrections budget, capital construction spending for the next fiscal year and the Illinois Department of Natural Resources budget.

The bills give some lump sums to state agencies to allow for flexibility in funding programs and personnel costs. Sponsors said the hope is that agencies can manage spending and meet the requirements of the new public employee union contract, which includes pay raises. However, the proposal does not include funding for previous raises still owed to state employees. Democratic Sen. Heather Steans of Chicago said $60 million is in an escrow account that can be used to start to pay down those wages. But she said she does not know of any immediate plans to pass a supplemental bill explicitly for the back pay. A representative from Quinn’s budget office said during a Senate budget committee hearing yesterday that the administration does not plan to provide all the back pay without a supplemental spending bill because it would likely require layoffs, something Quinn’s office says he wants to avoid.

Quinn and the American Federation of State, County and Municipal Employees are backing a spending bill to cover the back wages, but as of today, the bill is sitting in the House, still on second reading. It could not pass in its current from before tomorrow's adjournment deadline. However, the measure could be drafted into a different bill and still make it through by the end of the day tomorrow. “There is strong bipartisan support in the General Assembly for HB 212, the supplemental appropriation to pay wages owed to caregivers, correctional officers and other state employees dating back nearly two years,” said Anders Lindall, a spokesman for AFSCME Council 31. “Public servants shouldn’t have to wait a day longer for the wages they earned, and Illinois taxpayers shouldn’t have to pay another penny of interest or legal costs incurred by the state’s continued failure to fulfill its responsibility to its employees.” The raises were not paid to workers in 2011 because Quinn said that lawmakers did not approve the funding for them.

Sponsors of the budget plan said that paying off bills this fiscal year with the additional revenues would make next year’s budget less painful. They said the spending for next year fully funds programs and agencies and will keep them from having to budget from crisis to crisis, as has been the case during the past few years. “We should not have any providers getting notices next June that they’re not going to be getting payments,” Steans said. Such notices went out to childcare providers last year and providers of in-home care for the elderly this year. In both cases, lawmakers approved additional spending late in the fiscal year to keep the programs afloat. The budget would reduce many human services operations by 3 percent from Quinn’s proposed budget. Grants would be cut by 1 percent from the budget introduced by Quinn, but many areas, such as community mental health, would be shielded from the reduction. The Department of Corrections would see a $70 million increase that supporters say was needed to avoid further prison closures.

Republicans complained that the rest of the budget does not reflect their priorities and that funding went to programs without proven results. They hit on $1.5 million included for a program that is a perennial target for their criticisms: Grow Your Own Teachers. Republicans said the program, which works to encourage minority residents to become teachers in the state, is too expensive and pointed to historical statistics that show that the bulk of enrollees drop out before receiving teaching certificates.

Democratic Sen. Dan Kotowski of Park Ridge acknowledged the past problems with Grow Your Own Teachers, but noted that it has improved its stats. He said that after the program was unable to show lawmakers that its results justified its spending line, they program was cut and restructured. He said now the graduation and placement stats are better. “When we said to them last year, your data isn’t good enough they came back” with improvements, Kotowski said. “We’re seeing progress as a result of the policy decisions and the changes that we made here as a byproduct of the appropriations process.”

Republicans said the money would be better spent on K-12 education or restoring some of the Medicaid cuts made last year. “Including things like this in this budget undermines the credibility of the budget overall because they lead to the conclusion that the budget is more of a political document than it is an outcomes-based reflection of priority,” said Sen. Matt Murphy, a Palatine Republican.

Quinn: Close tax loopholes to pay old bills

By Meredith Colias

Gov. Pat Quinn’s proposed state budget would continue to chip away at Illinois' overdue bills, but he hopes lawmakers will agree to eliminate corporate tax breaks and use the proceeds to pay down some of the state’s current backlog.

Quinn said that under his plan, $2 billion in late bills would be paid down during the current fiscal year and the next. His budget projections estimate that the backlog, which is now more than $8 billion, would be $6.8 billion by the end of Fiscal Year 2014. He proposed further measures to make a larger dent in the backlog.

Quinn called on lawmakers to close corporate loopholes, which he estimated would bring the state $455 million per year in revenue, and place the money into a special fund to be used only to pay past obligations. “Suspending corporate loopholes like these until the bills are paid will be good for our vendors and good for our economy,” he said in his budget address. “Why should we give costly, ineffective loopholes to some of the biggest and most profitable corporations on Earth when he have bills to pay?”

Doug Whitley, of the Illinois Chamber of Commerce, opposes Quinn’s proposal. “I find it troubling that on one hand, the governor wants to improve the business climate ... [and then tells business], ‘Oh, and by the way, how about turning around and kicking in [more taxes],’” he said.

Members of the House seemed equally unreceptive. Rep. John Bradley, a Marion Democrat who chairs the House Revenue Committee, said it would be a nonstarter in the chamber. Those working on the budget in the House hope to pay down a portion of the bills in the same gradual way they have over the last two years. “We dedicated about $1.5 billion toward old bills last year, and we’re prepared and anticipate trying to do something similar to that this year. And we have to make that one of our spending priorities. But we’re living within reality.”

Republican leaders said they support making cuts and using the savings to chip away at the backlog over several years. “The only way to do this is to spend less money then we have coming in and begin to pay the bills off,” said Sen. Christine Radogno, a Lemont Republican and Senate minority leader . As far as closing loopholes, House Minority Leader Rep. Tom Cross, an Oswego Republican, said, “That’s not going to be on our table, but other ways to pay it, we’re clearly open to that.”

Rep. Ester Golar, a Chicago Democrat, said the focus should be on those who are waiting on payments from the state. “We have to pay the individuals who have not been paid,” she said. Golar said she plans to introduce a bill calling for the state to borrow money to pay down the backlog. She proposed $4 billion in borrowing at the end of the last legislative session. Quinn has backed such plans in the past but has since moved away from them after they failed to gain traction with lawmakers.

Illinois Comptroller Judy Baar Topinka’s office manages payments to vendors, and documents in quarterly financial reports how the backlog is being paid. “It’s our office’s job to patch. We use baling wire and bubblegum to hold the whole place together, and I’m now looking at the possibility of Silly Putty,” she said. Topinka said the bills needed to be prioritized. “Legally we can’t declare bankruptcy, so we’ve got to make something happen. As long as this goes on, we’re going to keep taking bad credit ratings, the costs [of borrowing] are going to go up. It has to get done now.”

 Topinka said another Quinn proposal to cut 5 percent from the budget of the General Assembly and constitutional officers and redirect it to the backlog is not feasible. “We’ve already cut 10 [percent] out of our [office]. We’re at 1997 operations in our office. So it can’t be done. It can’t be done.”