Posts filed under 'Illinois Budget'
June 2nd, 2008
Gov. Rod Blagojevich has scheduled a news conference for 11 a.m. at his Chicago office to comment on the budget approved Saturday night by Democratic legislators.
As you probably know, that budget is out of balance by some $ 2 billion.
There is much speculation that Blago will veto the budget and call lawmakers back to Springfield, were they would start from scratch with a new budget.
Democrats shut Republicans out of negotiations over the budget they sent to Blago Saturday. But any budget approved after May 31 requires a three-fifths majority for passage, and that requires GOP votes.
UPDATE 1
CapFax Blog reports there will be no special session announcement.
UPDATE 2
Blago’s statement:
Gov. Blagojevich announces General Assembly’s Fiscal Year 2009 budget unbalanced, unconstitutional
Governor urges all four leaders to join negotiations on operating and capital budgets
Initial review shows House inaction on new revenue leaves FY09 budget $2.1 billion in the red
CHICAGO – Governor Rod R. Blagojevich announced today that after an initial review, his budget experts have found the Fiscal Year 2009 budget passed by the General Assembly on Saturday to contain $2.1 billion more in spending than anticipated revenue will support, making it unconstitutional. The Illinois State Constitution requires the legislature to pass a balanced budget. The Governor said he will call the four legislative leaders together this week to resume work so the people of Illinois will have a budget that fulfills constitutional requirements and meets the state’s needs by July 1.
“As consumer prices go up and wages stay the same, households across Illinois and across the whole country are making tough decisions. Some people may cut back on expenses, or pick up extra shifts at work – whatever it takes to make ends meet. Our lawmakers should take the same responsible approach when it comes to budgeting the public’s resources. Unfortunately, because the House did not pass new revenue as the Senate did, I have a budget on my desk that jeopardizes the State’s ability to meet its core responsibilities like providing healthcare, educating our youth and protecting the public,” said Gov. Blagojevich.
The new budget lawmakers approved for Fiscal Year 2009, which begins on July 1, includes a $1.2 billion increase in spending over the Governor’s FY2009 introduced budget. The General Assembly’s budget does not include $875 million of new revenue contained in the Governor’s proposed FY09 budget, leaving it $2.1 billion in deficit.
The Illinois Constitution states that the General Assembly “by law shall make appropriations for all expenditures of public funds by the State. Appropriations for a fiscal year shall not exceed funds estimated by the General Assembly to be available during that year.”
While the Illinois State Senate passed two new revenue sources, the House failed to adopt them. Those revenue sources included $530 million through transfers from special purpose funds, and $400 million which would have been freed up through a refinancing of the state’s pension debt.
The Governor warned lawmakers that more work will be required to ensure the state can afford to meet its obligations and serve the public in the fiscal year ahead.
“This budget will not be final until it is balanced. Lawmakers, especially those in the House, have more work to do in order to enact an operating budget that’s balanced and a capital bill that will put people to work and fix our aging infrastructure. I will call a meeting with the four legislative leaders this week to resume the work necessary to make sure we have met our responsibility to the people of Illinois before the new fiscal year begins on July 1. It’s imperative that all four leaders take equal responsibility for ensuring we can pay for new spending, and can meet the state’s most pressing needs. To date this year, that responsibility has not been shared evenly,” the Governor added.
After the state Senate approved new revenue mechanisms in conjunction with the increased spending plan, the House pushed through the spending plan without passing the Senate’s proposals to provide revenue necessary to pay for it.
In early March, Gov. Blagojevich appointed former Republican US House Speaker Dennis Hastert and former Democratic US Congressman Glenn Poshard as co-chairs of the Illinois Works Coalition. The duo focused on crafting and passing an infrastructure and jobs bill that would address pressing capital needs that have built up since the last public works plan was passed nine years ago. The co-chairs facilitated regular meetings with the Governor and four legislative caucuses to draft a capital plan that could be acceptable to all participants. Three of the four leaders participated in those negotiations. In the end, the House Democratic leadership used procedural maneuvers to kill the negotiated capital plan before it could be voted on by the full House.
May 31st, 2008
The powers that be of Illinois government do little in moderation, especially when it really counts.
Today, on the last day of spring session, they’re poised to do it all. They’re gearing up to pass not only a spending plan of roughly $60 billion for the next fiscal year, but also a $31 billion multi-year capital construction program.
Oh, and to help raise money to cover that spending, they may also approve a massive expansion of gambling and agree to lease the Illinois lottery to private investors.
The last day of session is a long, long day. Negotiations continue behind closed doors as lawmakers dart from committee to floor debate and back. Staff rush to put into writing conceptual agreements brokered by legislative leaders. Then they rush those budget plans back to rank-and-file lawmakers, who vote on them even as they attempt to read and understand them.
When voting is over — often just minutes before midnight — they party. They head to a nightclub near the Capitol, and dance, drink and eat until sunrise. Then they say goodbye and head home for the summer.
Or not.
The larger a budget agreement, the more complication it can be to move – with all its parts — through the Legislature in a way that satisfies lawmakers highly suspicious of each other.
If they can’t pull it off by midnight, the beast implodes. They need only a simple majority — 50 percent plus one vote — to approve most of the package by midnight. Democrats, who control both chambers of the Legislature, can advance their plan largely without a single Republican vote.
Once midnight strikes, they need a three-fifths majority. The Democrats can’t get that without the help of Republicans — the same Republicans they have, until this point, kept in the dark.
April 14th, 2008
It’s the greatest of perennial questions at the Illinois Capitol: What’s Mike Madigan Up To?
He is the Capitol sage, a man widely regarded for political acumen but difficult if not impossible to read. So it goes that last week when Madigan antagonized House Republicans, Capitol insiders found themselves again asking themselves and each other this question.
The speaker’s strategy over the last week doesn’t make sense on the surface. It doesn’t seem rational. Here we are, less than two months from the formal May 31 end of session, and Madigan and other state leaders have not even a basic framework for the next state budget. Yet Madigan acts to divide the parties in his own chamber — thereby making the prospect of a budget deal even more elusive.
He is already facing off with Gov. Rod Blagojevich and Senate President Emil Jones Jr., his fellow Chicago Democrats, and now he is poised to fight House Republicans too. Is he yearning for a long, ugly summertime session — just like the one last year, only worse? It’s one thing to relish a good fight. It’s quite another to invite additional opponents into the fight against yourself.
Theories on Madigan’s motives abound among political insiders: Perhaps he is trying to supercharge the Democratic base in advance on the Nov. 4 general election. Perhaps he is trying to whip the House Republicans into line. Perhaps, amid a toxic political climate, he is getting paranoid.
It’s not clear when we’ll know what Madigan is up to, or when the mess is Springfield might work itself out. But I’ll do my best to sort through some of the variables at play, and maybe, just maybe, I can put some of this chaos into order:
- The Obama factor. U.S. Sen. Barack Obama may appear light years away from his days in the Illinois Senate, but as a candidate for president he may do much to shape the politics of Illinois this year. If the ultra-popular Obama leads the Democratic ticket in the November general election, he could pull other Democratic candidates upward. In other words, Democratic and independent Illinois voters likely will turn out in droves to vote for Obama, if he is the Democratic presidential nominee, and in doing so they are more likely to support other Dems on the ballot. And that means the Dems controlling Springfield may have substantial wiggle room this year. They may be able to take risks — such as a brutal, intra-party, summer-long fight over the budget — and not suffer losses in the November general election.
- The Rezko Factor. Tony Rezko, a former top fundraiser and adviser to Blagojevich, in on trial for allegedly using his insider clout to shake down firms seeking business with the state. As I noted in my Saturday column, Blagojevich has been MIA for much of the last two years as the feds closed in on his inner circle. (Chris Kelly, another former top Blagojevich fundraiser and adviser, also is under indictment on federal tax-related charges.) If Rezko is convicted, pressure will build on Rezko and Kelly to share with the feds any dirt they have on Blagojevich, who has already been named as “Public Official A” in the Rezko case. I would expect Blagojevich to head even deeper underground; he won’t want exposure to rank-and-file lawmakers, the public or the media. If Rezko is acquitted, Blagojevich could feel emboldened and be much more enthusiastic about a high-profile fight at the Capitol.
- Madigan v. Jones. The intensity and sincerity of the animosity between Madigan and Jones cannot be exaggerated. These two men are locked in a political battle of the titans — a brawl dominating state government matters large and small.
- Jones & Blagojevich. At least until further notice, Jones is in lockstep with Blagojevich.
- More cash to spend. If Madigan and Jones agree on anything, it’s that they both have expressed support for income tax hike to generate more state revenue. Jones is a longstanding proponent of a tax hike to help public schools with more state money. Last spring, Madigan kicked off the spring session by saying it was time for the state to take responsibility for its pension debt and other fiscal problems (you can’t pay off this debt without raising more money). Last summer, he went a step further by actually suggesting an income tax hike.
- Blago’s tax-hike pledge. Blagojevich continues to insist he won’t raise taxes on “people.” His no-tax-hike pledge, in fact, is the pledge from his races in 2002 and 2006 that he has most often repeated. Only, he violated that pledge by approving a sales tax hike for the Chicago-area early this spring, as part of an effort to bail out mass transit systems. Will he now support an income tax hike?
- Supermajority after May 31. The formal end of spring session is May 31. After that, lawmakers must produce a three-fifths majority to approve any bill with an effective date prior to the following June 1. A budget for the upcoming fiscal year, beginning July 1, obviously must be effective before then. Passing a budget after May 31, therefore requires a three-fifths majority. It is not possible to achieve a supermajority in the House without at least four Republican votes, and that’s assuming every one of the 67 Democrats in the chamber sticks together. Jones does have a supermajority in the Senate, but he failed repeatedly to keep his own members together last year. Even with his supermajority, Jones failed to steamroll Senate Republicans when it really mattered.
Now, back to the question of what Madigan is up to. What if he is three steps ahead of everybody else at the Capitol, as he is so often said to be? What if he is acting in accordance with a rational plan to advance his political objectives?
All of the conventional theories of Madigan’s motives assume he will continue his fight with Blagojevich and Jones. They discount the possibility of the three Democrats making a deal.
Is it possible that Madigan is trying to signal to Jones that he is prepared to make a deal, perhaps on a tax hike, by pushing the Republicans away? It’s a radical theory, but I’ve certainly crazier ones.
Madigan, Jones and Blagojevich could make a budget deal by May 31, and approve it without a single Republican vote. Come June 1, they do need Republican support, and it’s anybody’s guess what that might mean — particularly if the parties are divided in both chambers.
Then again, the lines of communication between Madigan and Jones, just as between Madigan and Blagojevich, and now between Madigan and House GOP Leader Tom Cross, are dead, sources say. Any deal among the Dems appears a long way off, at best.
And the summer fast approaches.
Last summer, work at the Capitol resembled the scene near the end of “Animal House”where frat guy Stork wanders into a parade, shoves aside a drum major, and then leads the marching band into a dead-end alley. The band members, still playing their instruments, march themselves into a wall, crushing each other.
Last summer, Blagojevich and lawmakers repeated this scene twice daily.
March 4th, 2008
For the second year in a row, House Speaker Michael Madigan, D-Chicago, is sponsoring hearings around Illinois regarding the budget for the next fiscal year.
Rockford’s hearing is at 6 p.m. Tuesday, March 25 at the Zeke Giorgi Center. Citizens are invited to attend and sound off about their state’s spending priorities.
Madigan’s news release and accompanying schedule of hearings are here.
Background on the governor’s budget plan for the next fiscal year, which begins July 1, is here.
March 4th, 2008
State officials every couple years find new and creative ways to put off paying public pension debt, causing a greater financial burden for future taxpayers.
At any given time, the state’s backlog of unpaid bills tops more than $1 billion, causing doctors and other health care providers to wait months for reimbursement from the state when they care for Medicaid patients.
For the last five years, the governor and lawmakers postured over the details of a capital construction plan, failing to ever implement a new one necessary for road and school construction.
That governor, Rod Blagojevich, is as likely to fill out top-tier positions in his administration with political hacks as opposed to professionals with meaningful, relevant experience.
That same governor has no qualms with putting the full force of this taxpayer-paid staff behind his latest feel-good, politically charged initiative, yet he seldom puts even a fraction of this emphasis behind follow-through and completion of such projects.
Yet the Pew Center on the States awarded Illinois a perfectly acceptable “C” grade in a report covering how well the 50 states manage their money, people, information and infrastructure. A summary of the group’s report, showing how Illinois compares to other states, is here.
A detailed look at Illinois is here.
The Blagojevich administration has been troubled from the start, and the consequences for Illinois government have been serious. The administration began with high hopes: Blagojevich’s election victory in 2002, bringing his party control over all three branches and replacing a Republican regime tainted by corruption, generated widespread interest in bringing the state’s shaky management into good shape. But intraparty battles have continually stymied progress. Political disagreements have been delaying a new infrastructure-spending plan for years, to cite just one example, and the state may soon lose federal matching funds intended for roads and bridges.
Then, the report cuts the governor some slack:
It can’t be easy to manage a state such as Illinois, with huge outstanding bills and troubled revenue streams. But when the state’s leaders are effectively stuck in the mud, the difficult becomes all but impossible. Last year, the governor proposed a major expansion of health care supported by a gross receipts tax on business. The House rejected the plan 107-0. “We weren’t even talking about coming to some resolution,” says state Senator Christine Radagno. Months later, the legislature passed its own budget, Blagojevich vetoed about $500 million of it to make room for his health care expansion and the whole mess wound up in the courts.
Still, as the Post-Dispatch notes, this state’s grade fell:
Illinois fell from a C+ to a C, ranking it among the bottom nine states. Researchers blamed a dysfunctional relationship between Gov. Rod Blagojevich and the state Legislature.
“The Blagojevich administration has been troubled from the start, and the consequences for Illinois government have been serious,” the report says.
The administration’s response:
Blagojevich’s office released a statement saying the report didn’t acknowledge Illinois’ success at improving efficiency while reducing debt and budget deficits.
“Unfortunately, the Pew Center chose to focus on politics instead of fiscal facts,” the statement said. “The report does not accurately reflect the progress we’ve made.”
That’s classic Blagojevich.
First of all, this administration is notorious for skewing financial figures. Rather than stating the amount of new money the state sends to schools each, for instance, this administration prefers to state the sum of all the increases occurring since Blagojevich took office in 2003. Obviously, that’s a much bigger, more dramatic, number.
Oh, and when the state ran the biggest deficit in the nation, Blagojevich — who happened to be campaigning for re-election at the time, in 2006 — insisted that simply wasn’t possible. The “fiscal facts” in Illinois are sad indeed.
Second of all, as I already alluded to above, this administration also is notorious for putting politics before policy. And that’s not to say they even do well at that. Look no further than today’s headlines.
Illinois should be thrilled with its passing grade. I’m wondering how it did so well.
March 3rd, 2008
State and local governments routinely borrow money to support long-term infrastructure programs. They borrow by selling bonds — notes purchased by lenders, guaranteeing them a fixed interest rate on their investment.
But do governments pay more than they should interest to secure such loans? This story, by the New York Times, says that maybe they do. Taxpayers, of course, get the bill.
The Times reports:
A complex system of credit ratings and insurance policies that Wall Street uses to set prices for municipal bonds makes borrowing needlessly expensive for many localities, some officials say. States and cities have begun to fight back, saying they can no longer afford the status quo given the slackening economy and recent market turmoil.
Municipal bonds, often considered among the safest investments, sank along with stocks last week, darkening the already grim mood in the markets. Several big hedge funds unloaded bonds as banks further tightened credit to contain the damage from mounting losses on home mortgages and other loans.
States and cities rarely dishonor their debts. The bonds they sell to investors are generally tax-free and much safer than those issued by corporations. But some officials complain that ratings firms assign municipal borrowers low credit scores compared with corporations. Taxpayers ultimately pay the price, the officials say, in the form of higher fees and interest costs on public debt.
This is just one more point to watch when Illinois finally gets around to approving a long-awaited capital construction plan. The state has not implemented a major capital plan since 1999, the first year of former Gov. George Ryan’s administration. There is much talk about approving another capital plan this year, just as there has been each year since Rod Blagojevich became governor in 2003.
There’s also the obscure but potentially significant matter of reinsurance associated with government bonds — an issue that’s driving up the cost of borrowing.
The state has also inflated its costs just by waiting so long to implement another infrastructure plan. The longer the state waits, the more expensive construction becomes. A road or bridge in a greater state of disrepair obviously costs more to fix. Plus, inflation each year drives up the cost of labor and materials.
February 29th, 2008
The New York Times editorial page recently took note of New Jersey’s fiscal crisis, and in doing so issued this warning to other states:
It is hard to remember when any governor used the sort of desperate language that New Jersey Gov. Jon Corzine chose this week to describe his state’s fiscal crisis. His words should be a sober warning to other states to get their fiscal houses in order before they face a crisis of Trenton’s magnitude.
The editorial went on to describe what it called a “self-destructive gimmick”:
… the state seriously underfunded its pension plan and used the money to pay for current spending programs.
And it concluded:
The Garden State’s woes should serve as a warning to other states, whose lawmakers might be inclined to use budget gimmickry to deal with shortfalls in revenue and get through immediate fiscal troubles. As New Jerseyans are learning the hard way, that is likely to lead to much bigger trouble in the years ahead.
Illinois should take note. As far as I can tell, this state is the capital of “budget gimmickry.”
Illinois for decades blew off its public pension systems, and future taxpayers will pay — big time. Believe it or not, state leaders didn’t even have a long-term plan for paying down pension debt until 1995, when they finally got around to instituting one.
No longer would the state take a “pay as you go” approach to financing public pensions — putting aside just enough each year to cover annual pension and benefit payments to retirees. Instead, the state would, once and for all, start putting aside enough money each year to cover long-term pension liability.
And by putting more money away into its public pension funds, those funds would ultimately earn enough interest — dollars going back into the funds — that the state’s annual obligation would become minimal.
Or at least that was the idea behind the 1995 plan, which established in Illinois law a formula under which the state would get its pension systems 90 percent funded by 2045 — over 50 years.
But state leaders just can’t help themselves from putting off those payments each year in order to free up cash for all their favorite projects. In 2005, they took their policy of procrastination all the way by wholesale restructuring the 50-year plan. Rod and the gang called their move a “pension holiday.”
Then there was that clever pension maneuver during Rod’s first year in office, 2003. The state borrowed $10 billion to bolster the pension systems. But rather than dumping the entire $10 billion straight into the pension funds, the state skimmed more than $2 billion off the top and used those dollars to offset the state’s mandatory annual pension contribution.
In doing so, Rod and the gang freed up more than $2 billion they could spend on other stuff.
How cool is that! Pretty cool if you’re Rod, and you’re eager to spend some taxpayer money. Not so cool, if you’re a future taxpayer.
As I explained at the time, in a previous job:
Imagine getting a home equity loan for $100,000, spending $27,000 of it on a new car and investing the rest — then counting on the interest earned to cover the interest paid, as well as the cost of the car. That’s the essence of Gov. Rod Blagojevich’s $10 billion pension bonding plan, which became law in April.
This isn’t a new idea. Buying and selling in separate financial markets in order to profit from the difference in rates is called an arbitrage. It’s commonly used by banks, which invest their customers’ money for a higher rate of return than they pay on, say, checking or savings accounts. …
But counting on the performance of any investment is risky. When the market slumps, as it did during the last two years, an arbitrage can fail; there’s a chance the rate of return on the investment could be less than the cost of the loan. Pension bonding plans can put governments on the hook for additional, unforeseen contributions to their systems — while they continue to pay the debt service on the bonds.
This state’s pension bonding plan, which doubles the state’s total bonded indebtedness and constitutes the largest such scheme to date, is no exception to the rule. And there’s an additional twist that heightens the risk. Rather than realize gains as they occur, the administration is realizing, and spending, the projected 30-year gain in the first year of the plan. Like the homeowner who spent 27 percent of an equity loan for a car, the plan dictates that some 27 percent of the bond proceeds be spent immediately.
What’s the bottom line? The state is in lousy shape financially, particularly with regard to pensions. As the state comptroller noted in a recent report:
The funding level of the state’s five retirement
systems remains among the nation’s lowest.
The five state systems — the State Employees’
Retirement System (SERS), the State Universities
Retirement System (SURS), the Teachers’ Retirement
System (for teachers outside of Chicago –
TRS), Judges’ Retirement System (JRS), and General
Assembly Retirement System (GARS) – were
funded at a 62.6% ratio at the end of fiscal year
2007 (assets vs. liabilities). Even with the infusion
of the $10 billion pension funding bond proceeds
into the system in July 2003, the funded
ratio has failed to reach the highs seen prior to the
last recession, where the systems’ funded ratio
reached 74.7%.
UPDATE 1
The Legislature’s fiscal forecasting agency has compiled a chart showing the state’s future pension liability and how it changes based on the payments made each year. I posted it here.
February 20th, 2008
Gov. Blagojevich today put aside his big-spending vision and proposed something of a maintenance budget for the fiscal year beginning July 1. Here is a copy of the governor’s budget plan.
But while the governor’s budget plan lacks the huge spending and tax increases he sought last year, it nonetheless rests of several tenuous assumptions and no doubt will meet stiff resistance from lawmakers.
For instance, Blagojevich is again seeking to privatize the state lottery to generate cash necessary to support his spending priorities. But this year, he wants to lease just 80 percent of the lottery — allowing the state to keep 20 percent — rather than part with the entire asset.
His budget assumes this 80/20 lottery lease would raise $7 billion for the state over the long term. Still, the governor’s lease/sale plan last year won little traction — if any at all — among lawmakers. These dollars would be the central revenue support for a capital construction plan the governor also proposed on Wednesday.
Here is the capital budget. Here are the highlights:
The governor’s plan provides $1.9 billion in state funds and $1.9
billion in local matching funds for construction and maintenance of
schools, including $1.75 billion in school construction projects and
$150 million for school construction maintenance projects, plus $30
million to fund a new early childhood facilities program. The program
proposes $642 million to expand and make capital improvements
and repairs at the state’s public universities, $200 million to support
the capital needs of the state’s private colleges and universities and
$250 million for the state’s community college system to construct
new buildings, repair existing facilities, and replace temporary
facilities.
The $14.4 billion highway portion of the Capital Budget funds bridge
repair needs, maintenance and improvements to the state’s system
of roads, highways and interstates, and provides for new system
expansion projects; $250 million of this will provide direct assistance
to local communities to make improvements to transportation
infrastructure. Funding for rail totals $160 million, which will be used
to improve rail tracks and signals, enhance Amtrak stations,
purchase new rail passenger equipment, and make improvements to
rail freight facilities. Capital funding for airport projects total more
than $300 million for airport improvements throughout Illinois.
Illinois Works Capital Program invests $2.7 billion in funding for mass
transit agencies to purchase buses and rail cars, build train stations,
bus garages and rail yards, and reconstruct commuter rail bridges
and elevated rail structures, among other projects.
Over $1.0 billion will provide access to capital in communities
throughout Illinois to stimulate job growth, provide affordable
housing, improve community healthcare centers, make investments
in energy, improve infrastructure, develop new industries and
technologies, and attract new businesses to Illinois.
The governor’s energy plan, a component of Illinois Works, will
reduce Illinois’ dependence on foreign oil and gas, stabilize gasoline
and home heating prices, create jobs, and reduce energy use while
protecting the environment. The energy plan includes the
development and construction of ethanol, cellulosic and biodiesel
production facilities, construction assistance for up to 10 new coal
gasification plants, and the addition of 900 more E-85 pumps at
fueling stations statewide by 2010.
The governor is not seeking an increase in the income or sales tax rate, but he does propose raising a series of user fees. For instance, the Department of Natural Resources would charge “a consultation fee … for performing threatened and endangered species or natural area reviews, which are currently done for free,” under his budget. “Another example will be charging for work done on processing floodway permits, which will allow the Water Resources Program to recover its direct costs.”
Blagojevich aides said during a morning briefing that they could not immediately produce a list of all fee increases in the governor’s budget plan.
The budget does not call for entrance fees at state parks, despite published reports indicating his budget might include them.
Blagojevich also proposes selling $16 billion in bonds to bolster public pension systems — another plan that failed to gain traction last year.
The governor proposed another $300 million in spending on Illinois public schools, but he did not specify how exactly he would like the state to allocate those dollars.
The governor’s plan acknowledges that the current budget, which runs through June 30, has a $750 million deficit. Blagojevich’s budget director went out of her way to blame lawmakers for this budget hole, saying their revenue forecast was too optimistic when they approved the budget last summer. The budget plan says this hole could be filled through “fund transfers and loophole closures.” Otherwise, said Blagojevich budget aide John Filan, the state will need to cut spending.
Nonetheless, the governor’s budget plan assumes new revenue totaling $1.7 billion in the next fiscal year, which begins July 1. Blagojevich aides could not provide an exact accounting of this figure, but said it includes $300 million in new revenue from higher taxes on riverboat casinos and $575 million from the sale of the state’s 10th casino license, which has long been mired in litigation. It also includes $140 million from closing corporate tax “loopholes” and $40 million from the sale of unspecified state assets.
UPDATE 1
There are two basis prongs of Blagojevich’s budget plan: tax breaks for families and businesses, and a capital plan for Illinois infrastructure. His plan for universal health care apparently is on hold; he offered no specific plan in this budget.
The address he just delivered was as modest as his actual budget proposal. It was the most conciliatory State of the State/budget address of his administration.
Gone was the super-charged rhetoric that defined his previous speeches. He did not vilify businesses for “not paying their fair share” in taxes, as he did last year. He did not attack the State Board of Education as a “Soviet-style bureaucracy,” as he did in a previous year.
Instead, he said he looked forward to working with lawmakers and highlighted the resounding defeat last year of his own legislative agenda. He joked that he now understands the meaning of the Hank Williams tune, “I’m So Lonesome I Could Cry.”
He told lawmakers, referring to his failed plan last year for a gross receipts tax, “Needless to say, I’m not asking you to do that again.”
At one point, the famously self-centered and single-minded governor had to this to say about how best to pay for a capital plan: “I’m flexible.”
He challenged lawmakers directly at just one point, saying it’s their responsibility to send him a capital plan he can sign.
UPDATE 2
Blagojevich’s critics are not impressed. Local Republicans called the governor’s budget more of the same — feel-good programs the state can’t afford (tax credits), borrowing (bonding to bolster public pension systems) and selling assets (the lottery).
Doug Whitley, president of the Illinois Chamber of Commerce, noted that the budget plan includes a new tax on business payroll — a tax Blagojevich unsuccessfully sought last year. Whitley said businesses would rather not pay the payroll tax than get the proposed tax credits.
The payroll tax is designed to fund the expanded health care, a program the governor calls Illinois Covered. From the governor’s budget:
Illinois Employer Assessment – The costs of
Illinois Covered will be fully funded in fiscal year
2009 and thereafter, entirely through its own
revenue sources including the enactment of an
employer healthcare assessment. The proposed
employer assessment, to commence January 1,
2009, will require that all employers of more than
10 employees who spend less than 4 percent of
their payroll costs providing healthcare to
employees pay an assessment of 3 percent each
pay period. The Employer Assessment is
estimated to generate $417 million in fiscal year
2009 and nearly $1 billion per year when fully
annualized.
February 19th, 2008
The Capitol used to have a reliable rhythm.
Early each spring, the governor would announce his budget plan. Lawmakers would spend the spring debating the governor’s plan, as well as their own myriad plans. And by May 31, the official end of spring session, they all would either have a deal or be close to one. Once they finalized the deal, they would all go home for the summer. The budget they approved generally contained most of what the governor sought when the session began.
That rhythm is gone.
Gov. Blagojevich and lawmakers spent last year in a bitter fight over the budget and other matters that dragged session from the spring straight into this year. There were many firsts, from the governor suing the House speaker over procedural matters, to the Senate president violating an agreement he made with other legislative leaders to stick with them even if it meant overriding the governor’s wishes on the state budget, to the governor cutting more than $400 million in spending from that budget and claiming he could somehow unilaterally re-appropriate the spending on his own priorities.
This year promises to be yet another step toward the chaos of last year. The governor’s annual State of the State/budget address, the spring session’s formal kickoff, is Wednesday. But House Speaker Michael Madigan and Comptroller Dan Hynes, two of his fellow Chicago Democrats, have already moved to put the governor’s back against a wall — before he has a chance to get both feet on the ground.
Madigan and Hynes have attempted to redefine, or at least reframe, the spring session. Read more about Madigan’s strategy here, and about Hynes’ move here.
By the time state officials settled on a new state budget last fall, it little resembled the one Blagojevich introduced last spring. The governor’s ambitious plan for universal health care did not pass. Neither did his plan for a gross receipts tax on Illinois businesses (it would have been the largest tax hike in state history). Lawmakers took the budget in another direction. Blagojevich retaliated by cutting more than $400 million of their earmarks and other spending.
When Blagojevich announces his next budget plan on Wednesday, the question will be: How much does his budget plan even matter?
UPDATE 1
So much for keeping lawmakers in the loop on his budget plans. In a befuddling break from tradition, the governor’s office has not scheduled briefings for the staff of any legislative caucus.
Spokespersons for the four legislative caucuses — Senate Democrats, Senate Republicans, House Democrats and House Republicans — say the governor’s office has not alerted their budget staff to any briefing before the governor’s budget address on Wednesday.
In past years, budget staff for each of the four caucuses were briefed before the address. The staff are responsible for analyzing and explaining the governor’s budget plans to their respective lawmakers. Without a briefing, and the budget documents that come with a briefing, the staff obviously cannot do this.
Fascinating.
UPDATE 2
Cap Fax Blog weighed in on the no-budget-briefings fiasco, adding:
Reporters, legislators and a whole lot of others are pretty upset today because the governor will not hold any budget briefings tonight. Historically, off-the-record briefings are held the evening before a budget address, which allows reporters to get their stories ready (or simply break the embargo altogether) and allow appropriations staffs to prepare analyses for their respective caucuses.
So, no briefing means no analyses tomorrow, and no analyses means seriously grouchy legislators. I’ve talked to several today (in the House and the Senate in both parties) who all had about the same response: “This is not a good way to start off the session.”
Indeed.
February 18th, 2008
As Gov. Blagojevich prepares to announce his budget plan on Wednesday, business groups are convinced he will propose a tax on carbon emissions to generate more dollars for state coffers. The State Journal-Register reports:
The (Illinois) chamber fears that Blagojevich will ask lawmakers to approve a tax on carbon emissions from power plants and other industries. While acknowledging it has no details about what Blagojevich plans to propose, the chamber thinks a “carbon tax” could be imposed to generate more than $2.6 billion for cash-strapped state government.
“We are planning as though this will be a major initiative,” Todd Maisch, vice president of the chamber, said Friday. “His (financial) needs are substantial.”
Blagojevich aides refused to confirm — but also did not flatly deny — the plan.
Since taking office in 2003, Blagojevich has looked to Illinois businesses as a source for the revenue he needs to support expanded state spending. That approach topped out last year when he proposed a multi-billion-dollar gross receipts tax on Illinois businesses to cover the cost of a universal health care plan and other spending priorities.
In the SJ-R story, the Illinois Chamber notes that the suspected plan for a carbon tax would be just the latest incarnation of Blagojevich’s desire to more heavily tax businesses:
Maisch said a carbon tax would have the same effect as the ill-fated tax on businesses’ gross receipts that was proposed by Blagojevich last year.
It’s difficult to imagine big-spending Blagojevich going a year without a big-spending initiative. Yet, before state officials consider one dime of new spending, they first must deal with a revenue hole in the existing budget. Crain’s Chicago Business has more.
In other words, the pressure is on Blagojevich, et al., to raise more money — and fast. Hold on to your wallets.
Previous Posts
