Leaders expect raucous budget session

Monday, April 16, 2012

ALTON - This year's Illinois state budget, historically voted upon well past the beginning of the state's fiscal year July 1, holds some stark reality for organizations and individuals.

The state owes $1.9 billion in Medicaid payments to providers such as assisted living facilities, nursing homes and hospitals. The Illinois General Assembly wants to pay $1 billion or more to those it owes, state Sen. William Haine, D-Alton, said.

The state owes $8 billion in total to all institutions both public and private, which is down from $15 billion, he said.

"We could pay it all with a bond vote with a three-fifths majority, but there's not enough votes; some say it's 'more debt,'" Haine explained. "The counter-argument is that it's refinancing with no-interest loans, or low-interest."

Haine and House colleague Dan Beiser, D-Alton, talked to businessmen Thursday during the RiverBend Growth Association's Economic Issues meeting at WellSpring Resources in Alton.

Although the debt came down considerably over the last several years without a tax increase, the state received little or nothing in revenue, Haine said. He said the unpopular temporary income tax increase approved early last year stabilized state revenue.

The four-year income tax increase, which is not the first temporary tax passed in Illinois, brought severe criticism of Haine and Beiser, who both voted in favor of the four-year tax.

"We avoided insolvency by passing the temporary tax; I wouldn't vote for a permanent tax, which I voted against two years prior," Haine said. "This gave us a four-year window to achieve economic balance."

As it stands, severe cuts would devastate institutions such as hospitals, municipalities and school districts, but the 2013 fiscal year budget proposal contains 5.3 percent cuts in discretionary spending, which includes human services.
"These cuts are going to be difficult," Haine said.

Beiser, chairman of the House Transportation Committee, followed Haine's cues and talked expansively about Illinois' fiscal year 2013 budget, which he said the Legislature is doing in a similar if not identical bipartisan fashion for the second year in a row.

Beiser emphasized that the budget process has been a bipartisan effort, thorough and open, for the second consecutive year; he said it was not like that during his first five of seven years as a legislator.

"It was dominated by leadership on both sides," he said.

Beiser sponsored a resolution that passed last year to pay unpaid bills with any revenue received that comes in over what the state budgeted. Two more resolutions were passed this year to start with the new budget. One adds a category of non-discretionary spending and another adds a line item to the budget for unpaid bills for fiscal year 2013, including a provision that will be dedicated to paying a portion of unpaid bills.

Both branches of the Illinois Legislature adopted these resolutions, Beiser said.

For fiscal year 2013's general fund, $33.719 billion is available, which includes more than $18 billion for non-discretionary, or "have to, no discretion," spending and approximately $16 billion for discretionary spending.

Non-discretionary spending includes pensions, group insurance, debt services, Medicaid and the newly added line item "unpaid bills."

"Because of bipartisan support, this bill passed to add that item, to create a line item in the budget for unpaid bills," Beiser said to leaders of hospitals, municipalities, nonprofit organizations and providers. "It's an item everyone in this room can relate to."

To take it a step further, in the fiscal year 2013 budget, any revenue beyond what is budgeted also will go toward unpaid bills.

Although a resolution passed to do this for this year's budget, which is entering the fourth quarter, very little extra revenue came in.

"Too bad it didn't happen last year, but for two years in a row, bipartisan support has said we have to pay unpaid bills," Beiser said. "If we continue like that, Illinois will become stable."

The five categories of discretionary spending include:

Elementary and secondary education at $6.6 billion, or 39.83 percent of the general fund.

Human services at $5.1 billion, or 31.2 percent of the general fund.

Higher education at $2 billion, or 12.14 percent of the general fund.

Public safety at $1.6 billion, or 9.7 percent of the general fund.

General services for the state of Illinois at $1.2 billion, or 7.2 percent of the general fund.

“It's traditionally percentage allocated, so we went ahead and dedicated those percentages in some manner, but we haven't met yet, so there could be some change," Beiser said.

Beiser said higher education spending is close to his heart because he is on the Higher Education Appropriations Committee, largely because of the Southern Illinois University School of Dental Medicine in Alton and Southwestern Illinois College.

"In discretionary spending, this still represents 5.3 percent less than last year and less than the year before," he said. "We can't take it off the top of the general fund, because it would devastate human services; it is a reduction in a systematic, fair way to work over the years to get us out of this situation."

He also noted that for the second consecutive year, the state of Illinois will make a full payment of more than $5.1 billion toward pensions.

Beiser vowed that he would speak on the level to his constituents and honor his commitments to them.

"Even though times are bad and times could be better, if we continue to talk and communicate, one thing binds us together, and that is that we love this community," he said.

The main question asked by audience members after both Haine and Beiser spoke was whether the income tax increase indeed would be temporary. Beiser said "yes," and Haine expanded on the answer.

"I don't see the votes there to extend it," Haine said. "I've never campaigned one way or the other on the tax, because I assume the votes are not there. I won't vote to extend it; I voted for it just to save us from insolvency."