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Voices For Illinois Children Discusses Quinn’s Proposed Budget, Offers Revenue Solutions

April 25, 2013 | By Ellyn Fortino

With a little more than a month remaining in the spring legislative session in Springfield, advocates for Illinois children said it’s important to understand the factors driving the state’s fiscal year 2014 budget debate and what can be done to help avoid damaging cuts to education and other critical programs.

David Lloyd, senior policy analyst with the Fiscal Policy Center at Voices for Illinois Children, told advocates on a web conference call this week that maintaining funding for their priorities depends on a sustainable state budget that raises necessary revenues.

“These are difficult choices, but I think eventually the math wins,” Lloyd said. “Without additional revenues to pay the liabilities such as pensions and Medicaid, Illinois will be forced to cut other programs. There’s just no other way around it.”

On the state’s current fiscal path, which includes the January 2015 expiration of an income tax hike and ballooning pension costs, deeper cuts are likely unavoidable to many programs, Lloyd said. Illinois’ more than $8 billion backlog in unpaid bills to service providers is also expected to increase. Illinois is also grappling with rising health care costs, which squeezes the rest of the budget.

There remains a general resistance to raising additional revenues among Illinois General Assembly members, Lloyd said, and that begs the question of what areas will be cut or underfunded?

Gov. Pat Quinn’s budget proposal for fiscal year 2014, which starts July 1, is expected to bring in $35.6 billion in revenues. House and Senate budget proposals are still in the works, Lloyd said.

“Those of us who have been around for the last couple of years know each year it’s not looking very pretty for the services that are critical to the people of Illinois,” said Paula Corrigan-Halpren, policy advocacy director at Voices for Illinois Children.

Under Quinn’s plan, an additional $257 million from the General Revenue Fund would be set aside to pay for increasing medical costs, Lloyd said. Quinn has also called for increased funding for the Department of Corrections; state employee group insurance plans; the Department of Healthcare and Family Services, mostly for medical expenses like Medicaid; and the Department on Aging for its Community Care Program, among other items.

But the governor has also proposed deep cuts of more than $300 million to the Illinois State Board of Education, which would put the agency $1.1 billion below fiscal year 2009’s funding level.

General state aid for elementary and high schools will see a $150 million cut and transportation reimbursements for regular and vocational schools would also be slashed by $145 million under Quinn’s proposal.

School districts would have to decide whether they want to decrease transportation or if they want to attempt to absorb the decrease in funding into their budget, Lloyd said, “and that’s very difficult when general state aid is being cut at the same time.”

To avoid further harm in the 2014 fiscal year, the General Assembly should look outside of the Illinois General Fund, which makes up about half of the budget, and utilize other available resources, according to Lloyd.

“The cuts over the last few years have mostly focused on the general funds because that is where most of the attention is paid, and that is really, at some level, unfair,” he said. “There are hundreds of other state funds outside of the general funds that are rarely scrutinized, and dozens of these carry balances of over $1 million year after year.”

Voices for Illinois Children also called on lawmakers to authorize transfers of outside funds with large, ongoing surpluses back into the general fund to make them available for appropriation.

The state should also stop automatic transfers out of the general fund to funds that are not in need of additional resources, the group said.
“[The] bottom line is sacrifice needs to be shared,” Lloyd said. “And if not, we should not allow funds to have resources just sit idle when the rest of the budget is struggling and taking cuts.”

Corrigan-Halpren said fund transfers could have more traction among legislators who may be more hesitant to vote for tax increases.
She also added that groups should get out of their “siloed approach” to advocacy when talking with lawmakers, and instead explain the interconnection among various budget cuts.

“In ISBE, if you’re talking about cuts to [the] Early Childhood Block Grant, that can also compound the effects of cuts to general state aid,” she explained.

In an effort to raise more state revenue, Quinn is proposing to close some corporate tax loopholes.

The proposed legislation, SB 1159, sponsored by State Sen. Toi Hutchinson (D-Olympia Fields), includes taxing the foreign dividends of multinational corporations and prohibiting deductions for “production activities” that Illinois-based companies move to another state.

“If we want to incentivize production in the tax code, we should at least make sure that it happens in Illinois,” Lloyd added.

A third measure would make companies with any companion businesses file combined tax returns. The three proposals are estimated to generate some $445 million a year for paying down the state’s backlog of unpaid bills.

Voices for Illinois Children also urged the General Assembly to consider the anticipated $155 million surplus in the income tax refund fund.

The surplus is automatically transferred into the general fund at the end of this fiscal year, but Lloyd said it won’t likely happen until after the budget has been approved.

“We think that the General Assembly should basically count this as money available for appropriation,” he said.

Read the article at Progress Illinois.

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