Tuesday, May 27, 2014

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.”

1 comment:

Anonymous said...

And they wonder why residents and businesses alike are leaving in droves.