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Illinois' statewide budget crunch hits home, threatening crucial services

January 11, 2010

SPRINGFIELD - Little did Angie Hunter know when she caught Gov. Pat Quinn explaining the state budget deal on the news last year that there would be a home-equity loan in her future.

Part of the state's red-ink-laden budget plan was to not pay more than $4 billion in bills owed for state services -- money owed to people like Hunter, whose Naperville business employs 70 therapists offering early-intervention services to infants and toddlers suffering from Down syndrome, cerebral palsy and other conditions that cause developmental delays.

The state reimburses businesses like Hunter's for providing those federally required services, which account for roughly 85 percent of her caseload. Now those reimbursements are increasingly delayed, late by a growing number of weeks and months, at times making it impossible for her to pay her employees. She's had to borrow against her home to make payroll, has essentially worked for free herself and increasingly worries her employees and other therapists will look for different jobs because they can no longer rely on the state to pay them.

Making it worse, Hunter said, is there's no consistency to state payments and no one has been able to tell her when the next checks might arrive.

"It stinks. Some of these other agencies have had to fold," said Hunter, who considers herself fortunate that her husband's job allowed her to make financial moves that others couldn't. "If I was not married, our agency would be done. It's total personal assets keeping us afloat."

Hunter's personal finances may be unique, but her business situation isn't. The payments she's waiting on are just a small portion of a backlog that now has grown to nearly $9 billion, according to the state comptroller's office, where claims and reimbursements often linger for more than four months before being paid.

And it's not just health care providers.

School districts and preschool programs across Illinois are collectively owed $1 billion in grant money.

The University of Illinois announced last week that 11,000 employees will be required to take four days off without pay in order to cut costs while the university awaits $436 million in overdue state funding. Southern Illinois University is owed $100 million, and other state schools are in similar situations.

A smidgen of relief could be on the way. Another aspect of this year's budget balancing deal was borrowing nearly $3.5 billion to cover payments to the state pension system. That loan occurred late last week. But in the meantime, the state has been making pension contributions, nearly $1 billion so far, out of the state's general account.

Finalizing the pension loan means nearly $1 billion will soon be available to pay other bills.

Unfortunately for those waiting on payments, it's not enough to cover the entire backlog, and there's a good chance things will get worse. In addition to the backlog, the state must begin repaying another $2.25 billion in short-term loans taken out earlier to ease cash flow problems.

This financial predicament awaits lawmakers when they arrive back at the Capitol this week to begin spring session, one in which the state budget outweighs everything else.

"Public policy is a pretty complex thing," said Ralph Martire, executive director of the Chicago-based Center for Tax and Budget Accountability. "That said, this is a one-issue session. You've got a $13 billion revenue shortfall in what is supposed to be about a $26 billion budget. That's 50 percent as I do math. They can't beg, borrow or steal their way around it."

While the session starts this week, it is the scheduled adjournment in May that draws attention as budget deals and big moves traditionally come in the waning days.

Political observers wonder whether the state's financial situation has indeed become so dire that a majority of lawmakers will support a tax increase, or if yet another scheme of short-term budgeting, borrowing and stalled payments will be used to buy elected officials more time - specifically until after the November elections.

The budget gimmicks are like continuing to rack up hundreds of thousands of dollars on credit cards while failing to pay household bills for months on end. At some point the lights get turned off.

Quinn recently predicted a tax increase would pass by the end of March, telling the Daily Herald he considers his Democratic primary campaign a referendum on raising taxes to solve the state's budget crisis. The primary election is Feb. 2.

But those who've followed state government see little reason to be optimistic a resolution will occur in the near future.

First, the impeachment and ouster of Gov. Rod Blagojevich was supposed to lead to more responsible budgeting if not clear the decks of his threatened tax hike veto.

Then it was the looming fall deadline for candidate filing and lawmakers wanting to see whom they'd face in the 2010 elections before considering tax hikes.

Now it's those elections that have observers doubting there'll be meaningful action on state finances this session. Democrats are already wary of a bad year for the party at the polls and continue to look for Republicans to put votes on any tax increase at the Capitol. Republicans, meanwhile, plan to bang away at Democrats throughout the campaign season and see little reason to risk their political careers to solve Democrats' budget problems.

"I hope I'm wrong about this. I would hope the governor and the legislature will squarely address the fiscal situation," said Mike Lawrence, former spokesman for Republican Gov. Jim Edgar and the recently retired executive director of the Paul Simon Public Policy Institute at Southern Illinois University in Carbondale. "But what I fear I will be telling you (at session's end) is the governor and legislature failed to address a humongous deficit and have further jeopardized the health of the state and generations to come."

All this has people like Hunter and her employees questioning the state's priorities and wondering what they should do next. The purpose of early-intervention programs is to get children and their parents to make improvements to reduce the services needed once the children enter school. Without early intervention, the costs to schools will likely go up, and opportunities to help children advance might be lost.

"I believe in this, that's why I do it," Hunter said. "What do I do? Personally, I can't just keep borrowing against my family's assets."

Ronda Dible, an occupational therapist from Lombard who works for Hunter, said she appreciates the sacrifices Hunter has made but also wonders what happens next.

"If I miss a few more paychecks, I'll have to go somewhere else," Dible said. "I absolutely love my field. I love what I do. It's amazing what we can do to make a difference for these children.

"Years ago, we didn't have children who were (born at) 25 weeks living. We have that now. There's a lot of intervention that needs to be put in place to help those children," Dible said.

She said payment delays are turning therapists away and ultimately the state could end up paying more as families turn to hospitals for services or the problems are passed along to the schools in the future all in the name of the state trying to save money now.

"We're going to be known as a state that puts our kids last," Dible said. "And we're going to be no further ahead fiscally in doing that."