Illinois Budget Woes Come to a Boil . Great job you Demostupids

Illinois Budget Woes Come to a Boil . Great job you Demostupids

ECONOMYMAY 7, 2010. By AMY MERRICK

Illinois lawmakers were in disarray Thursday as they groped for stopgap measures to address a $13 billion deficit equaling nearly half of the state's general-fund revenue.

The state faces one of the nation's worst budget crises, spilled over in part from the broader national economic crunch, and its current bond ratings lag only California's. But the confusion in the legislature indicates that serious steps to fix state finances won't be taken until after the November elections—if then.

States in the Red

.Most states have addressed or still face gaps in their budgets totaling $196 billion for fiscal year 2010, while tax revenue declined in the final quarter of 2009 in 39 of the states for which data is available.

.Illinois lawmakers have little appetite for drastic spending cuts. An income-tax increase proposed by Democratic Gov. Pat Quinn is going nowhere. Even temporary steps, such as borrowing to make pension payments, have stalled. Illinois is months late on many of its bills and has no plan for catching up.

The legislature may push the problem to the governor's office by granting Mr. Quinn emergency budget powers and adjourning Friday, about three weeks earlier than usual. A bill under consideration in the state House would give Mr. Quinn greater leeway to shift money among state funds and to require agencies to set aside part of their budgets now in case of future cuts.

A state House committee on Thursday passed a cigarette-tax increase that would generate $320 million by raising the state tax from 98 cents a pack to $1.98 a pack over two years. The House also is considering authorizing a sale of expected tobacco-settlement funds, which could bring in $1.2 billion, said State Sen. Donne Trotter, a Democrat.

House Minority Leader Tom Cross called the tobacco-settlement plan "a gimmick" and said he and other Republicans oppose borrowing the pension payment. "We are having the same conversations today that we had a year ago about the need for reform," he said.

Regardless of its final form, the budget will leave the state borrowing for short-term operations and postponing its bills.

"We are lucky in that we still can borrow," Mr. Trotter said, noting that lawmakers responded to rating-agency concerns last month by reducing pension benefits and lifting the retirement age for new state employees to 67 from 60. Lawmakers also are weighing the idea of postponing pension payments for the first half of the fiscal year until January, Mr. Trotter said.

Illinois's problems are an exaggerated version of dynamics playing out across the U.S. All states except Vermont have at least a limited requirement to balance their budgets. In practice, many states rely on one-time revenue windfalls or short-term borrowing to scrape from one fiscal year to the next.

State budgets typically lag the national economy by several years, and the recession has decimated income-tax and sales-tax revenue. Lawmakers often don't want to aggravate voters by raising taxes during an election year.

But legislatures find cutting expenses politically difficult, too. State budgets are dominated by education and health care programs that many voters cherish.

As a result, Illinois, along with other states, routinely has postponed paying its bills, shortchanged pension plans and spent more than it collects in revenue.

It's possible lawmakers will keep working on the budget until they are required to adjourn at the end of the month. Rikeesha Phelon, a spokeswoman for Illinois Senate President John Cullerton, said Friday's deadline was "just a goal."

Mr. Quinn presented a budget in March that would still leave the state with a $10.6 billion deficit. His plan projected a deficit of $4.7 billion for the coming fiscal year beginning July 1—which he planned to cover through borrowing—and a $5.9 billion deficit carried over from the current budget.

The governor also proposed cutting expenses by $1.5 billion and raising the state income tax 1.5 percentage points, to 4.5% from 3%. He said the tax hike would be used to avert tens of thousands of teacher layoffs. A different proposal to raise income-tax rates passed the state Senate last year but has stalled in the House.

Any hopes that the national economic recovery would help the budget discussions were dashed this week when Illinois disclosed that revenue for April —when most citizens pay taxes—fell more than 15% from the same month a year ago, or $501 million, in part because of a $345 million drop in federal aid. Gross personal income-tax receipts, a major revenue source, dropped $103 million, or 8.1%.

Many states are likely to report similar disappointments. California officials said this week that April personal income tax-collections lagged projections by 30%. Federal estimates don't bode well for states, either.

As of April 30, federal non-withheld income taxes for April fell 17.6% from the same month a year earlier, said a report Tuesday from the Nelson A. Rockefeller Institute of Government at the State University of New York.

Illinois Comptroller Daniel Hynes said in his April report that the state's cash position for the quarter ending June 30 "looks exceedingly difficult." By June 10, Illinois must repay $1.75 billion, plus interest, in short-term borrowing.

Meanwhile, the state still owes billions of dollars to hospitals, universities, social-service providers and others. Mr. Hynes said the state's backlog of unpaid bills probably will exceed $5.5 billion at the end of June.

"Eventually, many providers of essential state services may be unable to continue their operations at current levels, and those vulnerable segments of the population to whom they provide services will suffer the consequences," he wrote

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7 Comments

6 years 15 weeks ago, 6:37 PM

luckybychoice

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they ought to legalize

and tax the hell out of drugs,just kidding(kind of),didn't know they could retire and get a pension at 60,don't think they should be messing with a pension fund,but 60.hmmm,damn.

i tried being reasonable,i didn't like it, NRA LIFE MEMBER,USMC VETERAN
6 years 15 weeks ago, 11:26 PM

ecaman

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LBC

I totally advocate legalizing heretofore "illegal" drugs, but restricting them to be sold in a state store. People are going to buy them anyway, but if they're legalized and sold in a state store, the state will get a great deal of additional tax money.

If you pick up a starving dog and make him prosperous, he will not bite you. This is the principal difference between a dog and a man. (Mark Twain).
6 years 15 weeks ago, 8:14 AM

HampsterW

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Right ecaman,

kinda like the liquor stores in our neck of the woods. I can see this
happening with weed but I don't think legalizing drugs like meth is a
good idea (my ex-wife went down the shitter on that stuff).

Change you can truly believe in comes from the barrel of a gun---------------------------------------------------------------------------------Ron Paul 2012----Vote the bastards out!---------------------------------
6 years 15 weeks ago, 10:26 AM

Pkato

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Well, there is more than one...but when you legalize drugs, you also help to undermine parents authority with their kids...the argument of, well it's illegal, will no longer be able to be used.

Patrolman Kato
Firearms stand next in importance to the Constitution itself.
They are the American people's liberty teeth and keystone
under independence. -- George Washington
6 years 15 weeks ago, 10:39 AM

HampsterW

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Secretary of State
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I don't think

"well it's illegal" is a very powerful argument to kids in the first place.
With my kids, I try to explain all of the other ways drug use can fuck
up their lives and I am always quick to point out what a mess their
mother became because of drugs (that's a powerfull agument).

Change you can truly believe in comes from the barrel of a gun---------------------------------------------------------------------------------Ron Paul 2012----Vote the bastards out!---------------------------------
6 years 14 weeks ago, 10:36 AM

ohioshooter

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dont think

dont think making drugs legal is a good idea .you never see them cutting thier pay or retirement , gas cards , state owned cell phones or doing away with thier state owned work cars, we have to drive our own cars to work and buy the gas we have to buy our own food for lunch at work so it should be pay back time

"I carry a gun cause a cop is too heavy."
6 years 14 weeks ago, 10:51 AM

Pkato

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Back to this subject

Well, Hamp...gotta disagree with you that facing prison is not a good way to help keep your kids from doing drugs...I didn't say it's the only thing, but it is just one other method to use.
Taking that away from parents makes a hard job even harder. When my daughter got caught, I made sure she attended a state run program and she was in the classes with people who did a lot workse things. She was sentenced to community service, 20 hours...I asked the magistrated to triple that penalty, which he did and made it 60 hours community service, etc etc. She saw where that lifestyle might take her and changed her ways. But think of it the opposite way: What do parents say when the kids come to them and say, But Dad, it's legal and everyone is doing it? I think this is the wrong way to go. Besides, Ohioshooter has a good point, one which we harp on constantly. The problem IS NOT lack of money, it's misuse of the money by the government. They only find new ways to spend it when the have more. WE need to force them to spend less!!!

Patrolman Kato
Firearms stand next in importance to the Constitution itself.
They are the American people's liberty teeth and keystone
under independence. -- George Washington
samD's picture
Posted by: samD
6 years 15 weeks ago
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