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Without Revenue, State’s Unpaid Bills Skyrocketing

After the failure of lawmakers and Governor Rauner to replace revenue lost when income tax rates declined by 25 percent a year ago, Illinois is awash in a sea of red ink. On the current path, according to recently released projections from the Governor’s Office of Management and Budget (GOMB), the state could end the 2019 budget year with nearly $25 billion in unpaid bills.

For the current budget year, which began July 1 and for which there is still no fully enacted budget, GOMB estimates expenditures of $36.6 billion. That leaves a projected general funds deficit of $4.6 billion for this budget year based on estimated revenue. GOMB then projects budget deficits surpassing $5 billion for each of the following three budget years.

On this track, Illinois would need to cut services and other costs by approximately $8.3 billion for each of the next three budget years to eliminate the state’s backlog of unpaid bills by the end of the 2019 budget year. To put that in perspective, that amount exceeds the entire annual K-12 general funds education budget projected for each of the next three budget years. The devastating scale of the potential cuts demonstrates the urgent need for new revenue to avoid dismantling core state services and investments in education, health care, and public safety.

Look at just a few examples of the damage already done from the state’s failure to enact a full budget that raises the urgently needed resources:

  • The State has told some 120,000 college students that there is no tuition assistance via the Monetary Award Program until there’s a budget. As a result, some 1,000 low-income students did not return to school for the second semester. Chicago State University officials have indicated the university may need to shut its doors this spring.
  • An Oak Forest firm that provided home health care assistants for about 300 elderly residents has informed the Illinois Department of Aging it can no longer provide services for the state since the provider has not been paid since July 1, 2015.
  • United Way of Illinois reports 84 percent of 544 human service agencies it surveyed have cut programs due to the state budget stalemate.

These areas are the tip of the iceberg in terms of the ongoing harm the budget impasse is causing. And, without revenue, damaging cuts to services will certainly grow far beyond what we are already experiencing.  It is clear that the State needs significant revenue not just to meet its current projected and anticipated expenditures based on state law but also to return to service levels seen in the last budget year (which had already seen service level cuts from prior years).

On Wednesday, Jan. 27, the governor will provide his State of the State Address. It’s a time to acknowledge our state’s dire situation and lay out a framework to fix it. Let’s hope that the vision presented is one of investing in Illinois, providing educational and work opportunities for all, and lending a helping hand to those in need.

Seven months after the start of the budget year, it is imperative that Governor Rauner and leaders in the General Assembly work together to enact a budget that invests in children, families, and our communities.

 

Undoing Child Care Restrictions Good for Illinois

Voices for Illinois Children joined ten other organizations today in releasing a memo to members of the General Assembly and Governor Rauner on the need to undo the severe child care eligibility restrictions put in place by Governor Rauner. These restrictions have resulted in 9 in 10 families who were previously eligible being shut out of the program. The text of the memo is below.

MEMO

From:    Children’s Home + Aid, Fight Crime: Invest in Kids, Illinois Action for Children, Latino Policy Forum, Metropolitan Family Services, Ounce of Prevention Fund, Sargent Shriver National Center on Poverty Law, ReadyNation, SEIU Healthcare, Voices for Illinois Children, YMCA of Metropolitan Chicago
To:        
  Members of the General Assembly, Office of the Governor
Date:    
November 4, 2015
Re:         Positive Impact of SB570 on Illinois Economy, Working Families

Next week the General Assembly has the opportunity to restore Illinois’ commitment to working families by voting yes on SB570, a bill that reverses dangerous cuts implemented unilaterally by the Rauner Administration on July 1, 2015.

The unprecedented use of the Administration’s emergency rulemaking authority to restrict eligibility for child care assistance has resulted in the denial of 90 percent of applicants who would have otherwise been eligible for child care services through CCAP. That means approximately 20,000 children have been rejected from the program since the drastic restrictions took effect July 1.

Access to affordable, quality child care allows low and middle-income parents to enter and remain in the workforce, and gives them the opportunity to provide for their families.

The Illinois economy benefits from the Child Care Assistance Program in the following ways each year:

  • 80,000 Illinois families are able to enter and remain in the work force
  • 69,000 skilled early childhood education workers are employed in early learning facilities
  • 46,450 employers in Illinois rely on CCAP to ensure their employees have a safe place to leave their children and  are able to come to work every day
  • CCAP generated $2.6 billion in revenue in 2014. For every 100 jobs created in child care, 56 are created in other industries.  For every $100 spent on child care, $213 is spent in the economy

But the Administration’s restrictions mean that a single mom of one child entering the work force can only access child care assistance in Illinois if she makes less than 50% of the federal poverty level, or $664 per month ($8.25 per hour for 20 hours per week.) Before the cuts, a single mom of one who earned up to 185% of the federal poverty level, or $2,456 per month (about $15 an hour working 40 hours per week), had access to child care assistance.

The bottom line is that a vote for SB 570 is a vote to restore self-sufficiency for the hard-working families in Illinois who are doing everything we as a society and as a government have asked them to do as they support their children and better their lives. It is a vote in favor of the economic value that thousands of working parents – able to go to their jobs every day because of child care assistance – contribute to both their family’s economic stability and the state’s fiscal well-being. It is a vote for the future of the more than 150,000 children who will have access to child care if SB 570 is passed and CCAP is restored.

We believe that Illinois needs adequate and sustainable revenue that supports the hard-working families in Illinois with the services and supports they need to thrive.  Advocates stand at the ready to work with Governor Rauner and the members of the ILGA on revenue – but we need leadership to get us across the finish line. Until then, voting for SB 570 is the most responsible policy decision lawmakers can make.

Illinois Worst in Nation for Access to Quality, Affordable Child Care

Illinois comes in last place when it comes to working families’ access to child care, according to Voices’ analysis of a new report released by the National Women’s Law Center. As the report notes, in 2015, Illinois was the only state to freeze child care intake and has the most restrictive income eligibility requirements, turning away most families with incomes above 50% of the federal poverty level.

NWLC Report Infographic Facebook-02

 

The lack of access to child care in Illinois, and the resulting last place finish, is the consequence of Governor Rauner’s unilateral decision to cut the Child Care Assistance Program beginning on July 1 of this year.

Before the Rauner cuts, a single mom of two who earned up to 185% of the federal poverty level, or $3,098 per month (about $15 an hour working 40 hours per week), had access to child care assistance. Due to the governor’s cuts, a single mom of two children entering the workforce can only access child care assistance in Illinois now if she makes less than 50% of the federal poverty level, or $838 per month (only about 23 hours per week at the state minimum wage).

By the end of September, these cuts so far have resulted in turning away at least 15,000 children from child care assistance, based on historic data. For every month Governor Rauner fails to rescind his cuts, thousands of more children will be denied access to affordable, quality child care, leaving working families across the state in the horrible position of having to choose between work and child care.

Lawmakers have the opportunity to reverse these harmful cuts by voting for Senate Bill 570 in November when they return to Springfield.

Posted to Blog, Child Care

Governor’s Rules Severely Restrict Assistance, Put Quality Child Care Out of Reach

Beginning on July 1, Governor Rauner severely cut child care eligibility, which is shutting out 9 in 10 new applicants who would have previously qualified for assistance. With limits on how long the Governor’s “emergency” rule restricting access to child care can be in place, Governor Rauner has filed a “regular” rule to extend the current restrictions indefinitely. The Department of Human Services is holding required hearings about the rule — one yesterday in Springfield and another today in Chicago. Voices’ Policy and Advocacy Director Emily Miller is providing the testimony on the detrimental impact of Governor Rauner’s child care cuts, which are putting child care out of reach for working Illinois families.

Governor’s Rules Severely Restrict Assistance and Put High Quality Child Care Out of Reach for Many Families

Governor Rauner’s child care cuts shut out 9 in 10 new applicants who would have previously qualified for child care assistance, making quality child care increasingly out of reach in Illinois, even for middle-class families.

Without access to the Child Care Assistance Program, too many Illinois parents simply cannot afford the child care that enables them to balance work and family.

Before Governor Rauner’s cuts, a parent with one child could earn up to $2,456 per month (about $14 an hour working 40 hours per week) and still be eligible for child care assistance. Now, a parent re-entering the workforce with one child loses child care assistance if she makes more than $664 per month, only about 20 hours per week at the state’s minimum wage.

According to a report released this week by the Economic Policy Institute in Washington DC, in Illinois:

  • A parent working full time at the state minimum wage needs to spend more than half of her income for quality child care for a 4-year-old.
  • For an infant, that parent needs to spend nearly $4 out of every $5 earned.
  • Annual child care for an infant is now more expensive than full-time, in-state public college tuition.
  • In the Chicago area, a family squarely in the middle class with an infant and 4-year-old will spend 29% of its income on child care.

These conclusions are based on the U.S. Department of Health and Human Services’ estimate that child care costing more than 10% of a family’s income is not affordable. On top of stagnant hourly pay and the failure of economic growth to trickle down to most Illinoisans, the governor’s cuts are worsening the situation.

Before Governor Rauner’s cuts, a parent with one child could earn up to $2,456 per month (about $14 an hour working 40 hours per week) and still be eligible for child care assistance. Now, a parent re-entering the workforce with one child loses child care assistance if she makes more than $664 per month, only about 20 hours per week at the state’s minimum wage.

A minimum-wage working man or woman in Illinois simply cannot afford child care without assistance. When welfare reform was passed in the 1990s, there was bipartisan consensus that families struggling to get by needed assistance to afford the child care essential to parents being able to work. Governor Rauner’s decision to limit eligibility for CCAP has made getting by just about impossible for many hardworking families.

Voices for Illinois Children opposes restrictions in CCAP eligibility proposed in the regular rule. The restrictions, which were already put in place through the emergency rulemaking process outside of the state budget process, are already damaging families and small businesses.

The full report referenced in this testimony is available here: “High Quality Child Care Is Out of Reach for Working Families.”

 

Download (PDF, 141KB)

ICYMI: FPC’s Report on the Dismantling of Critical State Services

Two weeks ago, the Fiscal Policy Center released a report — “Lack of Budget Is Dismantling Critical State Services” — that captured the ongoing, and worsening, consequences of lawmakers and Governor Rauner’s failure to restore revenue needed to support essential services. This failure is resulting in widespread damage to Illinois, with children, seniors, and those with disabilities hardest hit.

The state is about to enter its fourth month without a budget, and while some services are being partially funded as a result of court orders or the availability of federal dollars, the lack of state appropriations has resulted in the deterioration — and in a growing number of cases, the elimination — of critical services for children, families, and communities.

Who is left standing at the end of this ongoing crisis is completely in the hands of the General Assembly and Governor Rauner. To prevent further damage, lawmakers and the governor must take responsibility for funding our state’s priorities by restoring the revenue we need to fully fund a year-long budget. Read the full report, authored by FPC Policy Analyst Lisa Christensen Gee, here. You can also watch our appearance on CLTV’s Politics Tonight below.

New Legislation Would Close Many Unjustifiable Tax Breaks

Provisions in State Rep. Jack Franks’ new bill that close numerous corporate loopholes are a positive first step toward supporting  essential services for Illinois families and communities that today are threatened by the failure to replace lost revenues. The bill includes overdue reforms that end unjustifiable tax breaks for businesses, analysis by the Fiscal Policy Center at Voices for Illinois Children shows. These reforms include:

  • Not rewarding businesses for investments they make outside Illinois. Illinois now gives tax breaks to businesses when they make certain investments anywhere in the U.S. Neighboring Wisconsin and Indiana are among 22 states to close this unjustifiable loophole. By closing this loophole, Illinois could raise as much as $100 million for vital services.
  • Closing accounting loophole for corporations avoiding state taxes. Currently, most corporations must report income from both parent and subsidiaries in a single, combined tax return, which makes it harder to shift income to lower tax jurisdictions. But Illinois has a large loophole that exempts financial, transportation, and insurance corporations from this requirement. By closing this loophole, Illinois could raise about $25 million.
  • Reducing the amount retailers receive for collecting Illinois sales tax. Illinois allows retailers to keep 1.75% of the sales tax they collect from consumers. This was intended to help offset what it costs businesses to calculate the sales tax they must remit to the state. But in today’s electronic age, this bears little relationship to the actual cost of collection. Frank’s bill would reduce the amount to 0.75%, about the same percentage Indiana collects. By reducing this “discount,” Illinois could raise well over $50 million.
  • Curtailing the use of offshore tax havens. Frank’s bill includes provisions to restrict corporations’ ability to artificially shift profits offshore to known tax havens such as the Cayman Islands. By preventing the abuse of tax havens, Illinois could raise over $100 million.
  • Treating corporate income from drilling in U.S. waters on the outer continental shelf as U.S. income. Currently, when companies gain income from drilling in U.S.-controlled waters, it is not treated as domestic income. By closing this loophole, Illinois could raise tens of millions of dollars.
  • Tax hotel rooms booked online the same as rooms booked directly by a guest or through a travel agent. Illinois loses millions of dollars each year by allowing online travel companies (like Orbitz and Priceline) to pay less in lodging taxes on bookings than the hotels themselves must pay when the same room is booked directly with them or through a travel agent. By updating the hotel tax to reflect new methods for booking hotels, Illinois could raise about $9 million.
  • End the special tax treatment for newspapers and magazines. News ink is exempt from Illinois’ sales tax. There’s no good reason for this exemption. By ending it, Illinois would prevent about $32 million in cuts. Governor Rauner has also called for closing this loophole.
  • Phase out ineffective economic development programs. While Enterprise Zones promise jobs and reducing poverty in exchange for giving businesses a variety of tax breaks, they’ve been repeatedly shown to have little, if any, impact. By phasing out this program, Illinois could have over $100 million each year to invest in economic development tools known to work.

The state’s financial crisis stems from the 25% cut to income tax rates that went into effect in January. To stop cuts that are damaging families and communities across Illinois, lawmakers and Governor Rauner must raise the resources our state needs. As good a step as Rep. Frank’s bill is, much more is needed, including at least a partial restoration of the income tax cuts that went into effect in January.

To learn more about the revenue options lawmakers and Governor Rauner have to stop harmful cuts, read the Fiscal Policy Center’s report “Policymakers Can Choose to Avoid Cuts to Essential Services.”

Posted to Blog, Revenue, Taxes

Tuition Assistance Halted Without State Budget

Without a state budget, students in financial need will not receive the Monetary Award Program (MAP) grants that help them attend college. Nearly 130,000 students received MAP grants last school year, according to a data recently released by Voices. The news segment below describes what is at stake for students who may be forced to take on more debt or even withdraw from school.

[ABC-7 news segment will play after embedded advertisement.]

The Dismantling of Illinois’ Child Care System

Child-care-minimum-wage-graphic

More media coverage on the devastating effects of Governor Rauner’s “emergency” rule that severely restricts access to the state’s Child Care Assistance Program. Under the rule, about 90 percent of low-income working parents who used to qualify now are ineligible. In fact, according to the Governor’s new rules, a parent working a full-time minimum wage now makes far too much to qualify for assistance. As a result, working parents are essentially ineligible for the assistance that enables them to work.

Eliminated MAP Grants Help Students in Every IL Legislative District Afford College

Voices released today an analysis of Monetary Award Program (MAP) grants in fiscal year 2015 by state legislative district. Without a state budget, MAP grants will not be awarded this school year.

Here’s the press release:

FOR IMMEDIATE RELEASE: AUGUST 27, 2015

Contact: Emily Miller, Policy and Advocacy Director, Voices for Illinois Children, 773-203-9654, emiller@voices4kids.org

Joanna Klonsky, 312-307-0840, joanna@joannaklonsky.com

CHICAGO, IL—Today, a new analysis released by Voices for Illinois Children and Women Employed shows that Illinois’ budget impasse has a new face: college students who were counting on the state’s Monetary Award Program, or MAP, so they could afford to go to college this fall.

Voices for Illinois Children and Women Employed requested the data from the Illinois Student Assistance Commission to shed light on the statewide impact of the budget impasse on students planning to return to higher education this fall.

“Every lawmaker has hundreds, if not thousands, of constituents whose dreams to pursue higher education will be destroyed as a result of the state’s failure to pass a fully funded, year-long budget that protects vital services for children and families,” said Emily Miller, Director of Policy and Advocacy at Voices for Illinois Children.

MAP grants provide tuition assistance to students who demonstrate financial need, enabling them to attend one of the more than 130 colleges and universities in Illinois.  When Governor Rauner vetoed the spending bill containing appropriations for higher education, the MAP grants, along with all payments for public colleges and universities, were left unfunded.

“This year, unless a budget funds MAP, as many as 130,000 students whose college plans are dependent on MAP funding will not have the financial assistance they need to pay for college,” said Sarah Labadie, a Senior Policy Associate with Women Employed. “Two-thirds of adult students who drop out of college do so because they do not have the money to continue.”

During the 2014-2015 school year, MAP grants provided $357,158,718 to 128,399 students across Illinois who enrolled in an Illinois college or university. That number does not include the 160,097 students who met MAP’s eligibility criteria but did not receive MAP assistance due to inadequate funding during the last fiscal year.

“With MAP, more Illinois students can afford college, increasing their chances of finding good-paying jobs and strengthening our economy by creating a stronger workforce,” said Miller. “Lawmakers and the Governor must increase revenue so that Illinois can continue to invest in both families and a working economy.”

The data is available here: https://docs.google.com/spreadsheets/d/1TlDo_PLjRbW4P5rJxm2olbaIN4E0kRx1AwGV5tbrZwA/edit#gid=788727079

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Budget Crisis Shuts Down Rauner Family YMCA’s Afterschool Program

Illinois’ budget crisis is causing Teen REACH afterschool programs around the state to shut down. One of the latest casualties has been the afterschool program at the Rauner Family YMCA in Chicago’s Little Village neighborhood.

The video from ABC-7 Chicago below highlights the families who are being harmed by the shutdown of the Rauner Family YMCA’s afterschool program.

While the Rauner Administration blamed the shutdown on the General Assembly’s failure to pass budget bills that were supported by adequate revenue, Teen REACH would do no better under Governor’s Rauner’s proposed budget, which called for the elimination of Teen REACH.

[News story will appear after ABC-7’s embedded advertisement.]