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A New Year, Same Problems for Illinois’ Budget

Revenue CollapseSPRINGFIELD, Ill. – A deal on Illinois’ pension crisis was reached, but there is another problem on the horizon: the state’s looming fiscal cliff. According to policy experts, Illinois will lose a combined $7 billion in revenue in fiscal years 2015 and 2016, if current income tax rates expire as scheduled next January. The director of the Fiscal Policy Center at Voices for Illinois Children, Larry Joseph, said damaging cuts already have been made over the past five years to programs that affect children and families. He pointed to cuts to state preschool funding, which resulted in about 20,000 fewer children participating in 2013, compared with 2009.

“We know that investments in early childhood education are cost-effective investments,” Joseph stated. “And kids get only one shot at preschool: you’re only four years old once. And when state funding is cut, for most of them the door is closed.”

Joseph said non-mandatory programs would have to be cut by 25 to 30 percent the first full fiscal year after the rate expiration. He said the fiscal cliff also would halt the progress the state has made in reducing its backlog of unpaid bills. Joseph and others are encouraging the General Assembly to extend the current tax rates during the spring session to avoid cuts in the coming fiscal year that begins July 1.

He said he’s concerned lawmakers will enact a six-month budget and wait until after the November election to address the fiscal crisis. He declared that would create huge difficulties for school districts, state universities, human-service providers and others that receive funding from the state.

“If the state is going to have stable finances, that can support education, child care, child welfare services, we need to get out of this habit of kicking the can down the road,” Joseph said. “We need to confront this challenge now.”

He added that state leaders need to approve the proposed constitutional amendment which would allow voters to consider a graduated income tax. Those opposed say it would lead to more government spending, but supporters say it would make for a fairer tax structure and would generate more revenue over the long term.

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