Illinois state budget (2008-2009)

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The Illinois state budget is implemented annually for a fiscal term that runs from July 1st to June 31st of the following year. [1] The state budget is drafted by the Governor. [2] The Governor prepares suggestions for the amount of funds that will be appropriated to each department, provides estimates of the incoming revenue that will be derived from sources other than taxation and estimates the amount of revenue that must be raised through taxes. [2]

[edit] Illinois's budget history

As of March 2009, Illinois is expected to face an $11.5 billion shortfall by the end of the fiscal year. [3] [4]

The Illinois state government appropriated $86,401,237,988.00 to be spent in the 2008 fiscal year.[5]

The Illinois state government appropriated $67,693,357,273.26 to be spent in the 2007 fiscal year.[6]

Fiscal Year General Funds Expenditures  % Change from Previous Year
1999 $21,527,000,000[7] 9.4%[7]
2000 $22,976,000,000[7] 6.7%[7]
2001 $24,583,000,000[7] 7.0%[7]
2002 $25,125,000,000[7] 2.2%[7]
2003 $24,861,000,000[8] -1.0%[7]
2004 $26,365,000,000[9] 6.0%[9]
2005 $28,247,000,000[10] 7.1%[10]
2006 $28,452,000,000[11] 0.7%[11]
2007 $30,116,000,000[7] 5.8%[7]

[edit] Budget Status, 2008-2009

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Illinois is currently facing an $11.5 billion deficit. [4] In a letter to lawmakers in Springfield, Gov. Pat Quinn referred to the state's financial crisis as a result of a national recession and poor fiscal discipline by previous administrations. [4]

On March 18, 2009, Gov. Quinn gave his State of the Budget address to legislators in Springfield. [3] Quinn stated that the state of Illinois is facing a crisis on two fronts, one surrounding former Governor Rod Blagojevich and the other concerning the looming financial crisis. [3] Amid decreasing revenue and rising unemployment, Quinn presented his budget for 2010 which he stated would cut costs, provide tax relief and create thousands of jobs. [3]

[edit] Reasons for the budget crisis

There are several reasons for the current budget crisis in Illinois, a deficit which is expected to stand at $11.5 billion by July 1, 2009. [12] The budget already contained a deficit of approximately $2 billion when it was passed, since legislators and Governor Blagojevich could not reach a suitable compromise. Now, not only must Illinois continue to deal with the Governor's scandal, but also the huge budget deficit that will only continue to grow if left unchecked.

As laid out in the $11.6 deficit calculation by Governor Quinn, Illinois’s state spending would increase from $31.487 billion in 2009 to $34.261 billion in 2011, an increase of $2.774 billion or almost 9 percent. Holding spending constant from 2009 would erase $2.774 billion off the deficit, leaving a deficit of just $8.832 billion. [13]

[edit] Prior attempts at solving the budget crisis

Illinois attempted to handle the budget crisis by delaying payments to vendors. As of November 2008, the payment backlog was $4.2 billion according to the Comptroller Dan Hynes.[14]

The Illinois Policy Institute suggested "lower taxes, restraint in spending, and working to create a business-friendly environment that empowers entrepreneurs, investors and workers instead of expanding the government’s role in our lives."[15]

The Illinois Policy Institute also suggested the implementation of a comprehensive transparency program that would inject sunlight into the budget process and open up the books in an online searchable database. The site would provide a complete, itemized and clear description of all the state’s expenditures including, but not limited to, all contracts, vendors, and grants. In addition, all expenditures would have a detailed account of the payment's purpose and who authorized the payment.[16]

[edit] Governor Quinn's Proposed Reforms

On March 18, 2009, Gov. Quinn gave a State of the Budget address before the Illinois Congress where he presented his proposal to address the state deficit through a combination of spending cuts, ethics reforms, and tax and fee increases. [3] According to the Governor's 2010 Executive Budget Overview, the projected $11.6 billion deficit Illinois faces for 2009 and 2010 puts Illinois just behind California and New York for having the largest deficit. [17] If no action is taken, the Governor's office expects unemployment in Illinois to reach 9.7% by fiscal year 2010. [17] The Governor's office also anticipates a $2.5 billion loss in revenue for 2009 with continuing losses to follow. [17] Without budget reforms and spending cuts, increases in spending for Medicaid, social services and other costs would amount to $34.3 billion in 2010. [17] Citing the national economic crisis, the decreases in revenue and increased spending pressures, Gov. Quinn asserted that spending cuts alone would not suffice to address the dire economic situation but that the following proposals, including tax increases and new investments, are necessary to jump start the state's economy. [17]

[edit] Spending Cuts and Increases

Quinn proposed a $1.3 billion cut in spending that will be accomplished by:

  • ordering state employees to take furloughs of 4 days; [3]
  • requiring across the board reductions in grant programs; [3] and
  • making targeted cost-reductions at every state agency. [3]

Governor Quinn proposed increasing the Fiscal Year 2010 budgets of certain departments by $980 million over their 2009 enacted appropriations. [18]

[edit] Pension Reform

According to Gov. Quinn, Illinois has $55 billion in unfunded pension obligations. [3] In an effort to avoid a further deficit, Quinn proposed restructuring state pensions for new hires. [3] [19] This restructuring involves increasing the retirement age for new workers and capping cost-of-living increases that are in line with other public retirement systems. [3] Quinn believes that taking these steps will reduce taxpayers' tax liabilities for te state pension by $162 billion over the next 36 years. [3]

In May 2009, Quinn abandoned his proposal to require public employees pay 2 percent more of their salary into their pensions after public employees protested.[20]

[edit] Ethics Reform

In his first act as Governor, Pat Quinn enacted the Illinois Reform Commission. [3] [21] The board will examine ethics in state government and make recommendations to continue to keep government open and transparent. [21]

Gov. Quinn also announced the creation of a Taxpayer Action Board that will evaluate all state spending and taxes in an effort to "root out all waste and inefficiency". [3] [21]

[edit] Transparency Reform

On February 25, 2009, Gov. Quinn sent a letter to state agencies stating that requests under the Freedom of Information Act must be considered valid unless the law clearly requires the relevant information remain secret. [22] In his State of the Budget address, Quinn emphasized that his government is focused on making government more responsive to the people of Illinois. [3] He also stated that "sunshine is the best disinfectant" and referred to his implementation of the Illinois Sunshine Project, which will make Illinois government more open by providing information about government online. [3]

[edit] State Sales Tax Holiday

Gov. Quinn proposed a state sales tax holiday effective for 10 days during the month of August in an effort to give a break to families shopping for back-to-school items such as school supplies, clothing and footwear. [3] [21]

The sales tax holiday would be"paid for" by reducing the amount given to retailers to help them process and remit sales taxes back to the state.[23]

[edit] Increasing Taxes

The Illinois Economic Recovery and Tax Reform Act of 2009 proposes to increase the individual income tax rate from 3% to 4.5% while tripling the amount of income shielded from income taxes for lower-income individuals. [19] Even with a higher personal exemption, a single taxpayer making $14,000 would see a tax hike. Couples making more than $28,000 also would have to pay more in taxes, as would families of three earning in excess of $42,000. A family of four making more than $56,000 would pay higher taxes under Governor Quinn's plan. [24]

It would also increase the corporate tax rate from 4.8% to 7.2%. [19] The Tax Foundation reports that Governor Quinn's corporate income tax increase would result in Illinois having the 4th highest combined corporate tax rate in the nation: "Currently, Illinois imposes a 4.8% corporate income tax, plus a 2.5% "replacement tax" also levied on corporate income. Quinn's plan would raise the 4.8% rate to 7.2%, while retaining the replacement tax, for a total rate of 9.7%."[25]

The Tax Foundation also noted that the plan from Governor Quinn would sharply reduce the ranking of the state's business tax climate, moving it from the top half to the bottom half in the nation when it comes to "business-friendliness."[26]

Tax economist Scott Moody estimates that the long-term loss associated with the personal income tax hike, in present value terms, will cost the Illinois economy $8.6 billion in lost economic output. To put this massive sum into perspective, the hidden cost of Governor Quinn's tax hike is the economic equivalent of taking all the tax revenue, for FY 2008, from the sales tax ($7.2 billion), cigarette tax ($350 million), liquor tax ($158 million), inheritance tax ($373 million), corporate franchise tax and fees ($225 million) and insurance taxes and fees ($298 million) and dumping that money into Lake Michigan.[27]

[edit] Increasing Various Taxes and Fees

In addition to raising individual and corporate tax rates, the Illinois Economic Recovery and Tax Reform Act of 2009 would include the following measures:

  • doubling the cost of a 4-year driver's license to $20; [19]
  • increasing the $79 cost for license plates by $20; [19]
  • increasing vehicle title fees; and [19]
  • increasing the .98 cent sales tax on cigarettes by .50 cents. [19]

[edit] Job Creation

As of March, 2009, the Illinois unemployment rate is 7.9%. [3] Gov. Quinn proposed the "Illinois Jobs Now" plan, a $26 billion plan through which he hopes to create 340,000 jobs statewide [3]. The plan includes:

  • $14 billion will be used to build new roads and bridges; [3]
  • $5 billion will go to improving transportation; [3]
  • $4 billion will be used to repair schools; [3]
  • $2 billion will be used for environmental, energy and technology projects; [3]
  • $1 billion will be used for "economic development efforts"; [3] and
  • will ensure that a third airport is built in the suburbs of Chicago. [3]

The plan will be funded through a combination of state and federal funds. [21] Funding for construction of roads and bridges will come from increases in motor vehicle registration fees and driver's license fees. [21]

[edit] Increase Funding for Education

  • Gov. Quinn's proposed budget would increase early childhood education by $171 million. [3]
  • The proposal also calls for $40 million for community colleges and higer education iniatives. [3]

[edit] Increase Funding for Veterans

  • Opening an 80-bed expansion in the LaSalle Veteran's Home; [3] and
  • Allocating $70 million to be used in expanding veterans' healthcare and opening a new 200-bed Chicago veterans home. [3]

[edit] Future Deficits

Quinn's proposal does not balance the budget. His plan rolls a $334 million deficit into the Fiscal Year 2011.[28]

[edit] News

3/18/09: Shortly after his State of the Budget address, Gov. Pat Quinn launched the website www.budget.illinois.gov detailing the proposals contained in the Illinois State Budget Fiscal Year 2010. [29]

2/25/09: Gov. Quinn ordered state agencies to respond to Freedom of Information Act requests quickly. [22] Quinn hopes to make information more easily and readily available through the newly announced Illinois Sunshine Project. [21]

1/16/09: Gov. Quinn created the Illinois Reform Commission via executive order. [30] The commission will evaluate state government ethics rules and recommend reforms. [30]

2/23 to 2/27/09: Illinois Policy Institute is hosting Open Illinois Week. Read more about Open Illinois Week by clicking here.

10/08/08: The work of the Illinois Policy Institute has been mentioned before in www.showmethespending.org news updates, and last week highlighted the efforts of the Illinois chapter of Americans for Prosperity, directed by Joe Calomino. To stay abreast of the latest developments in Illinois, be sure to visit the Institute's new transparency website, www.openillinois.org. According to the Institute's Transparency Director, Kate Campaigne, the site will track the spread of transparency throughout Illinois. It will also focus on the efforts of other proponents of transparency, both individual Liberty Leaders and also organizations such as For the Good of Illinois, Americans for Prosperity, Americans for Tax Reform, and, of course, the National Taxpayers Union.

09/10/08: As a strong voice for economic liberty and government accountability since 2002, the Illinois Policy Institute (IPI) has a center devoted to government transparency and accountability. Under the oversight of Kate Campaigne, Director of Transparency Policy, the center uses a variety of tools to foster state-wide and local transparency. One is a transparency pledge for elected officials. Another is a list of local governments which have some level of transparency. And in the many regions which have no transparency, IPI encourages volunteers to join the Liberty Leaders, a network which seeks to revitalize citizen involvement in local government and raise transparency and accountability throughout the state. Have questions about the transparency center or the Liberty Leaders? Contact Kate Campaigne or Richard Lorenc to find out more.

Sign up for the Show Me The Spending weekly transparency e-updates. As transparency news about Illinois becomes available, it will be sent out by email and also posted on this page.

[edit] State budget websites and analysis

As of May 2009, the Illinois Office of Management and Budget website does not post copies of the budget proposals from previous fiscal years. This is unusual, given that many other states' budget offices to keep up archived copies of past budgets.[31]

The Illinois Policy Institute posted the PDF budget books from 2005, 2006, 2007, 2008, 2009, and 2010.

According to the Illinois Policy Institute, Illinois ranks 48th in economic performance, doing better than Michigan and Ohio[32]:

  • 42nd in economic outlook. Neighboring Indiana and Missouri rank well ahead in terms of future opportunity, at 12th and 17th respectively.
  • 44th in GDP growth, averaging only 3.83% over the last decade. Illinois GDP growth has declined since 1977 at a rate from 7.6% to 5.9%.
  • 46th in debt burden. Illinois continues to spend government revenue growth on government expansion rather than funding past debt obligations, including pensions.
  • 44th in personal income growth over the past decade, averaging at 3.83% while the U.S. average is 4.19%.
  • 47th in employment growth from 1977 till 2006, ranking ahead of only Michigan, Ohio and Louisiana.
  • 37th in improving its standard of living, growing at only 1.13% per year over the past decade. While Illinois ranks relatively high in standard of living (18th), the state continues to fall farther down the ranks.
  • 48th in net migration, with over 727,150 people having left the state from 1997-2006.
  • 7th highest in median property taxes paid.
  • 14th highest overall tax burden in the nation.
  • 9th highest in property tax burden.
  • 4th highest gas tax burden (approximately 40 cents per gallon).
  • 1st in sales tax burden (Chicago & Cook County).
  • Illinois is shrinking in wealth, once ranking as high as 6th in per capita personal income and dropping to 18th today.
  • The growth of the Illinois economy has lagged the rest of the country for each of the last three decades.

[edit] Legislation

  • House Bill 4765 (introduced April 2, 2008) would require the state to create and maintain a Web site on state employees’ salaries, state contracts, state expenditures, state tax credits and revocations and suspensions of state professional licenses. Rep. Michael Tryon is the lead House sponsor of House Bill 4765, and Sen. Pamela Althoff is the lead Senate sponsor. Various groups and organizations have promoted this bill.[34] HB 4765 was approved unanimously last year by the House of Representatives as House Bill 4765. However, it was never called for a vote in the Senate.

[edit] Government tools

As of March 2009, Gov. Pat Quinn launched Budget Illinois which summarizes the proposed budget for 2010, offers budget figures and also details a capital projects list including information on the recommended and actual appropriations and expenditures going forward. [21]

According to Joe Calomino, Illinois State Director of Americans for Prosperity, Illinois's
"current opaque spending process creates the perception, or possible reality, of legislators or bureaucrats using the state budget to fund unnecessary, wasteful, or even corrupt programs, confident that most Illinoisans will never know about it. Giving taxpayers the tools to understand where and how their money is being spent will make state government more accountable and reduce waste, fraud, and abuse."[35]

However, thanks to leaders on the local level, transparency is spreading.[36]

"Open Book" is a searchable database of state contracts and campaign contributions that is hosted by the Illinois State Comptroller. Also available from the Comptroller's Office is aggregate expenditure information that can be sorted in a variety of ways. Line-item information is not available.

House Bill 35 is a 2009 reintroduction of Rep. Michael Tryon's 2008 transparency bill House Bill 4765, and would require the state to create and maintain a Web site on state employees’ salaries, state contracts, state expenditures, state tax credits and revocations and suspensions of state professional licenses. HB 35 was sent to Governor Pat Quinn on June 12, 2009.[37]

Some cities and school districts have put expenditures up online; a list of these transparent entities can be found here.

The following table is helpful in evaluating the level of transparency provided by "Open Book"andthe Comptroller's aggregate expenditure website.

Criteria for evaluating spending databases
State DatabaseSearchabilityGrantsContractsLine Item ExpendituresDept/Agency BudgetsPublic Employee SalaryExemption Level
Open Books
n/a
Comptroller's aggregate expenditure website
n/a

[edit] Limitations and Suggestions for Improvements

[edit] Support for creation of the database

Kate Campaigne with Illinois Policy Institute wrote a policy brief entitled "Illinois Government Needs An X-Ray Machine." She argued "educating both the public and legislators about how government spends tax dollars makes it easier to expose corruption and pay-to-play politics. Transparency allows people to connect the dots and see who is asking for money, who authorizes what spending, and who benefits from the funding. Unless government implements transparency and stops the waste, it cannot perform its core functions as well as it could."

Joe Calomino with Americans for Prosperity authored a pro-transparency opinion piece in the State Journal-Register.

[edit] Economic Stimulus Transparency

  • The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.[38]
  • It is estimated that Illinois will receive at least $6.3 billion in federal funding.[39]

[edit] Independent transparency sites

[edit] Public employee salary information

The Chicago Sun Times offers this database of Cook County, Chicago and Illinois state employee salaries.

The Better Government Association offers this searchable database of selected public payrolls. The BGA database includes salaries of employees of the states of Illinois, Indiana, and Missouri, as well as several city and counties in northeastern Illinois.

This is a look at the Top 100 Paid Teachers in 2007. From Champion News.net.

A list of the salaries of employees of the University of Illinois is posted here.

Click here to find out information on salaries and pensions as provided by illinoisloop.org, an education website.

[edit] See Also

Illinois taxpayer-funded lobbying

[edit] External Links

[edit] Helpful budget links

[edit] References

  1. ↑ Center for Budget and Tax Accountability, Citizen's Guide to the Illinois State Budget & Tax System, January, 2008
  2. ↑ 2.0 2.1 Illinois General Assembly, 15 ILCS 20/Civil Administrative Code of Illinois, Article 50. State Budget
  3. ↑ 3.00 3.01 3.02 3.03 3.04 3.05 3.06 3.07 3.08 3.09 3.10 3.11 3.12 3.13 3.14 3.15 3.16 3.17 3.18 3.19 3.20 3.21 3.22 3.23 3.24 3.25 3.26 3.27 3.28 Office of Governor Pat Quinn, Illinois Budget Address, March 18, 2009
  4. ↑ 4.0 4.1 4.2 Chicago Tribune, Quinn making most of his opportunity, March 18, 2009
  5. ↑ [http://www.wh1.ioc.state.il.us/Expert/Exp/EESummary.cfm Illinois Comptroller Office, "In-Depth Analysis of Expenditures."
  6. ↑ [http://www.wh1.ioc.state.il.us/Expert/Exp/EESummary.cfm Illinois Comptroller Office, "In-Depth Analysis of Expenditures."
  7. ↑ 7.00 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10 Executive Summary FY2007
  8. ↑ Executive Summary FY2003
  9. ↑ 9.0 9.1 Executive Summary FY2004
  10. ↑ 10.0 10.1 Executive Summary FY2005
  11. ↑ 11.0 11.1 Executive Summary FY2006
  12. ↑ Chicago Tribune, FACTCHECK: Quinn pushes tax hike to balance budget, March 18, 2009
  13. ↑ [1] Governor Pat Quinn FY2010 Budget PowerPoint Presentation.
  14. ↑ St. Louis Business Journal, "Comptroller: Ill. bill backlog now $4.2 billion," November 21, 2008
  15. ↑ Illinois Policy Institute, "Illinois Fast Facts."
  16. ↑ Illinois Policy Institute, "Operating Without Looking At An X-Ray: Illinois Government Needs An X-Ray Machine."
  17. ↑ 17.0 17.1 17.2 17.3 17.4 Fiscal Year 2010 Budget, March 18, 2009
  18. ↑ [2] Governor Pat Quinn FY2010 Budget PowerPoint Presentation.
  19. ↑ 19.0 19.1 19.2 19.3 19.4 19.5 19.6 Chicago Tribune, What Quinn's Budget May Cost You, March 18, 2009
  20. ↑ Illinois Policy Institute "Quinn Caves on Pension Reforms; Will He Cave on Tax Hikes?" May 8, 2009.
  21. ↑ 21.0 21.1 21.2 21.3 21.4 21.5 21.6 21.7 State of Illinois - Budget, March 19, 2009
  22. ↑ 22.0 22.1 NBC5 Chicago, Quinn: Follow the FoIA, February 25, 2009
  23. ↑ [3] The Pantagraph. "Quinn's plan for sales tax breaks not unique" April 15, 2009
  24. ↑ [4] "National Review Online," "If Blago Wasn’t Bad Enough" March 26, 2009.
  25. ↑ [5] Tax Foundation, "Illinois’s “Business-Friendliness” Ranking Would Decline Sharply Under Governor’s Plan." March 18, 2009
  26. ↑ [6] Tax Foundation, "Illinois’s “Business-Friendliness” Ranking Would Decline Sharply Under Governor’s Plan." March 18, 2009
  27. ↑ [7] Illinois Policy Institute, "The Tax That Keeps on Taking", March 24, 2009.
  28. ↑ [8] Governor Pat Quinn FY2010 Budget PowerPoint Presentation.
  29. ↑ Budget Illinois, Illinois State Budget Fiscal Year 2010, March, 2009
  30. ↑ 30.0 30.1 Chicago Breaking News, Illinois Reform Commission to Meet in Chicago, January 22, 2009
  31. ↑ Illinois Policy Institute, "Where can I find past copies of the Illinois state budget?," May 11, 2009
  32. ↑ Illinois Policy Institute, "Illinois Fast Facts."
  33. ↑ Bill Status, Illinois House Bill 35 (2009)
  34. ↑ Reuters, "Taxpayer Advocates Rally for Transparency in Illinois Government Spending," April 3, 2008
  35. ↑ Helium.com, "Should the salaries of all Illinois state employees be available for public viewing on a Web site, as suggested in a bill in the General Assembly?"
  36. ↑ Illinois Policy Institute, "Compass Online: 'Citizen Action: A Growing Movement,'" January 22, 2009
  37. ↑ Bill Status, Illinois House Bill 35 (2009)
  38. ↑ National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
  39. ↑ Wall Street Journal, "Stimulus Spending by State"
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