Weekly Review
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March 31,
2009
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FY 2010 Budget Proposal
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Illinois
faced with $11.6 Billion Deficit for FY 2009
and FY 2010
Read CTBA's analysis of Governor Quinn's FY 2010
Proposed Budget here
or visit
www.ctbaonline.org
The failing economy combined with the state's
ongoing structural deficit has created an
aggregate budget gap of $11.6 billion for Fiscal
Years (FY) 2009 and 2010. As a result, Governor
Quinn faced budgetary challenges unlike ever
before when preparing his Fiscal Year (FY) 2010
State budget proposal, including:
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A
structural long standing deficit;
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One of the
worst economic downturns in history;
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Final FY
2009 revenues that are projected to be $2.35
billion less than FY 2008 revenues;
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FY 2010
revenue that is projected to be almost $200
million less than FY 2009;
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A $4.3
billion budget deficit for the current FY
2009;
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A projected
$7.3 billion budget deficit for FY 2010;
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A combined
$11.6 billion deficit for FY 2009 and FY
2010; and
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A $73.4
billion unfunded pension liability for the
five state retirement systems.
Governor Quinn's proposal to address these
budgetary challenges facing Illinois
incorporates a combination of spending cuts,
revenue increases, debt restructuring, pension
underfunding and reductions in public employee
pension benefits.
Governor Quinn will also receive some, one-time,
non-recurring financial help from the Federal
Government. President Obama signed the stimulus
package, known as the "American Recovery and
Reinvestment Act" (ARRA) of 2009, this February.
ARRA will infuse over $6 billion to Illinois
state government in funding for education, human
services, health care, economic development and
other programs over the next two years.
FY 2010
GOVERNOR'S PROPOSED GENERAL FUND BUDGET
HIGHLIGHTS
- Overall spending on
public services in FY2010 is scheduled to
increase in nominal terms by $693 million
from FY2009 General Fund expenditures. After
adjusting for inflation, real spending under
the proposed FY2010 budget will increase by
2.4percent, or $665 million.
- FY2010 base revenue
growth, however, is projected to decrease by
$198 million over FY2009 base revenues (this
projection excludes federal funds from the
ARRA). This comes on the heels of FY2009,
during which revenues are now projected to
come in at $2.35 billion less than FY2008.
- In FY2009, the General
Assembly appropriated and Governor Quinn
signed off on a $31.5 billion General Fund
budget.
- The FY2009 General Fund
budget was based on projected revenues of
$31.5 billion. However, the FY2009 revenue
forecast was recently reduced and now stands
at $27.2 billion, a result of the economy
weakening throughout the fiscal year. This
leaves a projected $4.3 billion shortfall
between FY2009 appropriations and FY2009
revenues.
- Declining revenues and
expected cost increases in mandatory
expenditures such as Medicaid and employee
benefits, leave a projected FY2010 budget
deficit of $7.3 billion.
- To reduce the budget
deficit, the Governor proposes several
initiatives, the most substantial of which
are:
- Increasing the individual
and corporate income tax rates from 3
percent to 4.5 percent and 4.8 percent to
7.2 percent, respectively;
- Eliminating certain tax
expenditures that benefit businesses;
- Reducing benefits under
the state's five retirement systems;
- Restructuring state debt
to save an estimated $530 million;
- Using federal stimulus
funding received under ARRA to replace,
dollar-for-dollar, state revenue that would
have funded K- 12 and higher education;
- Underfunding the state
retirement systems by $2.296 billion in
FY2010;
- Underfunding the state
retirement systems by $550 million in FY
2009;
- Cutting or flat funding
various services.
- The FY2010 budget
proposal includes increasing the per pupil
education foundation level from $5,959 to
$6,089.
- The FY2010 budget
proposal includes: an 80 bed expansion at
LaSalle Veterans' Home and a new 200 bed
Chicago veterans home; $1 million to fund
food banks across the state; creating 2,000
slots for the Illinois Summer Jobs programs
for teens; and keeping state parks open.
- The Governor has also
proposed a $26 billion capital program,
funded partially through an increase in
vehicle license fees and a portion of the
new revenue from his proposed income tax
increase.
- To the extent any of the
Governor's proposed revenue initiatives do
not pass, there will be revenue shortfalls
that necessitate either passage of other
revenue initiatives, incurring more debt or
cutting existing or newly proposed programs.
This is because Illinois, unlike the federal
government, operates under a balanced budget
requisite.
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CTBA Fiscal Symposium
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CTBA's
8th Annual Fiscal Symposium:
How the Economic Downturn is Affecting
the State's Fiscal Condition
Illinois Senate
President John Cullerton opened
CTBA's 8th Annual Fiscal Symposium
by saying that the budget is tight
and the state agencies have already
been cut to the bare bones.
Cullerton said that the state must
pass a budget bill and a capital
bill and there is a $3 billion gap.
That gap must be filled either
through a temporary or permanent tax
increase or other methods but the
money must be found to move forward.
Ralph Martire, CTBA's
Executive Director, said, "Given the
recession and fiscal challenges
facing us today it is time for
Illinois Government to grow up and
level with the voters. We can't
invest in tomorrow without fixing
our regressive tax system today.
Fixing the tax system is the best
way to fix the budget and the best
way to get the economy moving."
The Symposium,
moderated by Beyond the Beltway's
Bruce DuMont, heard from panelists
Illinois Representative William
Davis, 30th District; Illinois
Representative David E. Miller, 29th
District; Jesse Ruiz, Chairman of
the Illinois State Board of
Education; Daniel Schwick, Assistant
to the President of Lutheran Social
Services of Illinois and Matthew
Gardner, Policy Analyst for the
Citizens for Tax Justice.
Miller talked about
the need for taxes to be raised
progressively to safeguard education
and other necessary funding. Ruiz
talked about the fact that we need
to unhook education funding from
property taxes to create a more
equitable funding mechanism, today's
system is hurting education.
Schwick emphasized the fact there
are many reasons for people to be in
need and that one part of the
problem, for example, education,
cannot be fixed at the expense of
other human care needs i.e.
healthcare, housing, etc. and that
there needs to be strengthening of
the safety net by public and private
sources. Gardner emphasized that
Illinois tax policy has the least
exemptions and credits for families
with low income and has the most
regressive tax policies in the
nation. Taxes need to be raised, but
not without safeguards for low
income families.
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Calendar
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WHAT:
Rally for the Common Good
WHEN:
May 6, 2009
WHERE:
Capital Rotunda - Springfield 1:00pm to 3:30 pm
INFO:
If you or your organization would like to
participate please fill out
a form here and submit to Jennifer
DeLeon at stephen.taylor@lssi.org or fax
(847-635-6764) before Friday, Apr. 3rd
WHAT: Dupage Federation on Human Services
Reform, Making the Connection: Accessing Public
Benefits for Low Income Persons
WHEN:
October 1, 8, 15, 22, 29
February 18, 25
March 4, 11, 18
June
3, 10, 17, 24
July
1
WHERE: All trainings held at NIU
Naperville, 1120 Diehl Road, Naperville, IL
INFO: Making the Connection training
sessions contain information in an
easy-to-understand format regarding many
programs available to assist low income persons.
Individuals who register for a Making the
Connection training session now receive
membership access to the Federation's newly
developed Making the Connection Illinois
website, www.mtcil.org.
To register and for more information please
visit www.dupagefederation.org.
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Do you have something to add to the
Weekly Review?
email Chrissy Mancini @
cmancini@ctbaonline.org
___________________________________________________________________________
Center
for Tax and Budget Accountability
70 East Lake Street, Suite 1700
Chicago, IL 60601
312-332-1041
www.ctbaonline.org
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