Illinois Issues blog

Quinn takes his budget to school

Author: Illinois Issues Statehouse bureau

By Jamey Dunn

Gov. Pat Quinn is using his bully pulpit to try to get support for a tax increase that he says is needed to avoid deep cuts to education funding.

Quinn addressed students and teachers at Thomas Jefferson Middle School in Springfield. He also visited James R. Lowell Elementary School in Chicago.

He called on voters to contact their legislators and ask them to support the 1 percentage point tax increase he proposed yesterday. “I think yesterday we made it pretty clear there’s a choice. There’s a fork in the road in Illinois. We’re going to take that particular road that leads to higher learning, better learning and children who succeed,” Quinn said at the Springfield school.

Quinn claims the new revenue is needed to replace about $1 billion in stimulus funds that will not be coming in next fiscal year.

“It was crystal clear that the votes are not there in the [U.S.] Congress to extend the federal stimulus for education. It’s not going to happen. … When I came back to Illinois [from Washington, D. C.], I told our budget people we can’t write that in. We will not have a billion dollars that was very helpful to us in the past fiscal year, the one we’re in now,” he said.

Quinn also called on Republican’s to support pension reforms that he claims will generate $300 million in savings next fiscal year. “We expect [House Minority] Leader [Tom] Cross to help us out there. He said he’s for it. Let’s put the votes on it.”

Quinn spokesperson, Robert Reed said that Quinn plans to fund education at the same levels as the current fiscal year if his proposed tax increase passes. If it doesn’t, he is proposing $1.3 billion in cuts to education.Some of the $2.8 billion that Quinn estimates the increase would produce would also go toward the approximately $850 million in bills the state owes schools, according to the State Board of Education. After education funding is restored and the bills paid off, about $650 million would be left over. Quinn is tight-lipped about where that money would go.

Yesterday Quinn’s budget director, David Vaught, said that all the revenue from the proposed tax increase would go to education. But, some are speculating that at least part of it may be used to avoid the controversial $300 million reduction in funds to local governments that Quinn proposed yesterday.

When asked about this possibility, Quinn would not give a direct answer. “When you look at yesterday’s budget, every entity would have to make sacrifices,” he said.

While Quinn says he is optimistic that his tax proposal can pass, legislators and some providers waiting on late payments from the state are not so sure.

Don Moss, coordinator of the Human Services Coalition, said he is not expecting a tax increase until at least November, and he is not certain that it will come even after the general election. He said the governor's proposed cuts on top of the state’s slow payment cycle would be more than many social services providers could bear.

“They could probably deal with the cuts. But coupled with the late payments, it will probably do a lot of them in,” he said.

He said borrowing is the only solution for now. “If somebody has got to borrow, it should be the state not providers,” Moss said. “It’s 1 percent [interest rate] versus 5 percent or 6 percent and lets the state be responsible.”

Matt Vanover, a spokesman for the State Board of Education, said schools have to start considering the possibility of cuts now. Teachers must be notified of layoffs 60 days before the end of this school year.

“If they’re going to reduce staff, they have to do it by the end of this month,” he said. Vanover added that teachers who have received layoff notices could be called back if the money is there for their jobs next school year.

Dave Comerford, a spokesman for the Illinois Federation of Teachers, said the reality of possible education cuts will hit home for people once the layoff notices go out at the end of the month.

He said that he doesn't think Quinn's proposal is political gamesmanship, as many legislators have characterized it. He said that because education spending makes up such a large portion of the budget, Quinn doesn't have much option but to cut it. “It’s the largest chunk left that I think he could go after.”

He added that stimulus funds did protect schools from large cuts last year. Really the stimulus money did fill that hole."

Comerford said that education cannot bear the proposed cuts without some serious consequences, such as overcrowded classrooms. “The problem isn’t where you can cut. We’ve cut as far as we can cut…We need new revenue,” he said. “Right now instead of talking about what we can improve, we are talking about trying to hold on to what we have.”

Green Party candidate outlines budget plan

Author: Illinois Issues Statehouse bureau

By Rachel Wells

Green Party candidate Rich Whitney today said that if elected governor, he would fix the state’s $13 billion budget problem by creating a new tax – a sort of sin tax on the profits of speculative trading – and by pushing a tax increase plan that stalled in the General Assembly last spring.

A financial transactions tax, which the state would levy on securities traded on the Chicago Mercantile Exchange and the Chicago Board of Options Exchange at what Whitney called a “minuscule” rate, “not pennies on the dollar but pennies on the $100,” could potentially bring in enough funds to wipe out Illinois' budget deficit, he said. He added that he would seek only a tax rate high enough to bring in $4.5 billion.

“We should start looking to the financial services sector, and the speculators, and the predatory lenders and the same people who are responsible for this crisis to start paying their fair share to repair the damage,” Whitney said. In his position paper, Whitney said the speculative trading he wants to tax is “another form of gambling, one that is every bit as harmful as the other sin taxes, and far more voluminous.”

Whitney said he would also call on legislators to pass the same “comprehensive” plan outlined in Senate Bill 750, a tax and education funding reform bill previously sponsored by Sen. James Meeks, a Chicago Democrat. The measure called for an income tax increase of 2 percentage points, an expansion of the sales tax base to include some services and property tax relief. Whitney said the income tax plan could generate more than $7.3 billion. A version of Meeks’ bill passed in the Senate last session but was never called in the House.

Whitney said he hasn’t yet read Democratic incumbent Gov. Pat Quinn’s March 10 budget proposal in detail, but he said it wasn’t straightforward enough in calling for a tax increase to reduce the impact on education.

Quinn on Wednesday announced a plan – criticized by Republicans as a game – for $1.3 billion in primary and secondary education cuts, assuming lawmakers would not pass a tax increase this spring. Last year, Quinn actively pursued an 1.5 percentage point income tax increase.

“I think part of the problem is that when Pat Quinn advocated it, he just talked about an income tax increase in a vacuum, not the kind of comprehensive package that we’ve had with [SB] 750,” Whitney said. “I think the people are ready for it, if it’s presented as a complete package.”

Whitney agrees with Quinn that about $2 billion in spending cuts are needed. But Whitney said his plan – akin to former Republican gubernatorial candidate Adam Andrzejewski’s proposal – for a citizen-guided forensic audit would leave education and human services intact. He also wants to redirect proceeds from the capital construction bill, eliminating funding for any “pork” projects.

Whitney, who is alone in calling for an expanded public sector and more state jobs, also opposes Quinn’s call for a two-tiered pension system. Whitney said his own plan for the creation of a state bank would bring in enough revenue to pay down the pension debt at an accelerated pace. Whitney did not provide an estimate of how much revenue a state bank would provide.

“There is no magic wand, let’s be clear about that, for any of this. And I’m not claiming that I have one,” Whitney said. “But what I am saying is that this is a much better proposal that allows us to minimize the immediate pain and the horrible consequences of the budget proposals of the other two candidates.”

Whitney would also like to legalize and tax cannabis, as well as implement a greenhouse gas fee and dividend system under which fees imposed on high pollution energy producers would benefit consumers until more environmentally friendly energy sources become more prevalent and less pricey.

Education cuts or a tax increase

Author: Illinois Issues Statehouse bureau

By Jamey Dunn

Gov. Pat Quinn proposed to increase the state income tax by 1 percentage point during his budget address today, saying the money would be needed to stave off drastic cuts to education.

Quinn said federal stimulus funds protected education from serious cuts this fiscal year, but with the end of about $1 billion of stimulus funds to education, a proposed cut of$1.3 billion will be necessary. Quinn’s logic is that the state does not have the money to shift from some other area to replace the federal funds.

By proposing either drastic cuts or a tax increase, which he called a “surcharge for education,” Quinn appears to be trying to force legislators to make a politically difficult choice between higher taxes or deep cuts to schools.

“I am making this cut [to education] with the greatest of reluctance and only because our current fiscal emergency leaves me no choice. These cuts are unavoidable. They’re the consequence of a bipartisan refusal year after year to confront fiscal reality,” Quinn said.

According to Quinn’s budget director, David Vaught, the increase would raise the personal income tax from 3 percent to 4 percent and the corporate from 4.8 percent to 5.8 percent. He said it would generate an estimated $2.8 billion, which Quinn intends to spend wholly on education. Vaught added it would defer cuts, as well as pay down overdue bills that Illinois owes to schools.

Last year, Quinn proposed an income tax increase that would have raised the rate to 4.5 percent for individuals and 7.2 percent for businesses.

This would be a smaller increase, and Quinn has given legislators some political cover: They could claim they were supporting education with a “yes” vote. However, this tax increase does not appear to be starting off with any more support than last year’s proposal.

Republicans said the differences between the governor’s budget this year and last year are not big enough.

“What’s disappointing is, he essentially proposes to do the same things as he did last year. Proposed cuts that we know he’s not going to make … record borrowing or a tax increase and no reform to the system … to the government that is fundamentally broken,” Sen. Matt Murphy, a Palatine Republican.

Senate President John Cullerton said he would support Quinn’s tax increase, but because the Senate passed a tax increase last session, the effort would have to start in the House.

“The Republicans in the House … along with the Democrats have to take this issue up and lead the way, and the Senate will certainly follow. … It’s clearly now focused on education and avoiding draconian cuts to education,” he said.

Cullerton added he would support a temporary income tax increase, “so we can address this crisis that we have right now, the worst economic crisis in our lifetime.” But, he reiterated that the details would have to be mapped out in the House.

House Speaker Michael Madigan does not appear optimistic about the increase passing in his chamber. “[Quinn] called upon every member of the General Assembly to help him solve a severe budgetary problem. I sincerely hope that every member is prepared to cooperate; every member is prepared to do some heavy lifting. I have my doubts,” Madigan said today on the Illinois Lawmakers television program.

Cullerton said he plans to sponsor legislation to reform the state’s pension system, something that Republicans have been demanding before they would consider a tax increase. House Minority Leader Tom Cross said it will take more than that to get Republican votes on a tax increase.

Cross said he wants to see “fundamental reforms” to state government. He added that Republicans will have to invited to the bargaining table. He said they were cut out of the budget process last year.

“We’ve gone down this road with this guy before. A year ago, we were going to decimate the human services budget and the developmentally disabled community. It didn’t happen. Six months ago, we were going to take away and annihilate the map program for college kids. It didn’t happen,” Cross said.“This is a fellow and an individual and a politician that likes to hold people hostage. Last year, it was college kids and the developmentally disabled community. This year, it is K-12.”

Cross characterized Quinn’s proposal as purely political threats. “I would suggest to you at the end of the day this isn’t going to happen. … This is a scare tactic.”

Quinn’s Republican opponent for governor, Sen. Bill Brady, continues to stand by his plan to cut spending by 10 percent across the board. Brady, a Bloomington Republican, was critical of Quinn for proposing such a large cut to education. "It was ironic to me that Quinn didn't think 17 percent cuts to education were draconian," he said.

Brady added that his plan would more fairly spread cuts over all areas of government.

"I wouldn’t attack one area of state spending, like education. He attacked education, leaving other areas, in fact increasing Medicaid funding by over $500 million at the expense of our school children. I’ve said there has to be a shared responsibility in this solution.”

In his address, Quinn called across-the-board cuts, such as those Brady is proposing, “heartless and naïve.”

"Don't count on that"

Author: Illinois Issues Statehouse bureau

By Jamey Dunn

Budget numbers that Gov. Pat Quinn’s staff presented at a media briefing this evening do not assume an income tax increase.

“The General Assembly has not acted on a tax increase and has given symbols that they don’t want to act on a tax increase,” said Jerry Stermer, Quinn’s chief staff.

However, Quinn’s budget is based on the assumption that Congress will extend an elevated Medicaid match of 65 percent instead of the usual 50 percent that was part of the stimulus package and that the General Assembly will pass a controversial two-tiered pension system proposal.

The budget is built on five “pillars of recovery” to try to solve the state’s estimated $13 billion deficit. The pillars are cuts, job creation, federal assistance, “strategic” borrowing and revenue increases. However, the final pillar was conspicuously missing from the briefing, and Stermer acknowledged that the problem can’t be solved in the next fiscal year.

“No observer — no economist — assumes we’ll be able to solve this horrific puzzle in a single year,” Stermer said.

Cuts

Quinn is again proposing furlough days for state employees and reducing pension benefits for newly hired state workers. The total savings for next year is estimated at more than $500 million. The assumption is that money from a pension reform would come in the form of borrowing, since the savings would not be immediate.

Income tax revenues that are sent to local government would be cut from 10 percent to 7 percent, which would total $300 million.

Education funding would be cut by $1.3 billion from higher education and K-12, with the bulk coming from K-12.

Health care would be cut by $325 million, including slashing funding for a drug assistance program for seniors in half, and starting a Medicaid managed-care pilot program.

Human services would take a $276 million hit, which would come from in-home care for the elderly, childcare and community mental health services

Stermer said that Quinn’s administration sought cooperation from legislators to make more cuts that would require changes in the law and got nowhere. “Every meeting that we have with legislators, they say: ‘Oh we don’t think our members will vote for that. Don’t count on that. Don’t count on that. Don’t count on that,’” he said.

Job creation

A $2,500 tax credit would go to companies with fewer than 50 employees for each new job they create. This plan would be capped at a total of $50 million. Quinn estimates that would create 20,000 jobs.

Federal support

The budget is based on the hope that Congress will extend a 62 percent match on Medicaid funds, up from the regular 5o percent as part of the stimulus plan and due to expire at the end of December, through the next fiscal year.

Borrowing

Quinn’s plan calls for $4.7 billion in borrowing.

Quinn's budget director, David Vaught said borrowing makes people nervous because they compare it to their own borrowing on credit cards with double-digit interest. However, he said the last time the state borrowed money, it was at a rate of just over 1 percent.“Sovereign states don’t borrow on a credit card.”

Revenue increases

This evening’s presentation did not include any proposed revenue increase, and all the numbers presented, which Stermer said Quinn would present tomorrow, are based on no income tax increase.

“This budget that we are presenting shows the consequences of inaction last year. Had we raised taxes last year, as the governor called for, we wouldn’t be seeing deficits of this scope,” Vaught said.

As to whether Quinn would propose a specific revenue increase in his budget address, or divulge what he plans to do with the money that would come from one, no one in the room would answer that question.

“Quinn’s not included a tax increase in this budget, and that’s a conversation that has to happen,” Stermer said. When pressed on the issue, Stermer said, “The governor will talk about that tomorrow — noon sharp.”

So check back tomorrow for the details on Quinn’s budget address, set to take place before the General Assembly tomorrow — noon sharp.

Brady accepts Republican nomination

Author: Illinois Issues Statehouse bureau

By Jamey Dunn


Sen. Bill Brady from Bloomington accepted the Republican nomination for governor today.

Sen. Kirk Dillard, a Hinsdale Republican, conceded and endorsed Brady earlier today. “It was a hard-fought race, and it was close ...,” Dillard said in a news release. “But it is now clear to me that my friend and colleague Bill Brady has won the Illinois Republican primary for governor.”

The final totals certified today by the State Board of Elections showed Brady with a 193-vote victory. He received 20.6 percent of the GOP votes for governor, compared with 20.4 percent for Dillard.

Brady said he plans to make job creation a priority of his campaign. “You know you’re going to get tired of hearing me talk about what I’m going to talk about in this campaign because for me this campaign is about two things: jobs, jobs, jobs; and reform, reform, reform,” Brady said in the acceptance speech he delivered in Chicago.

Gov. Pat Quinn's campaign is already criticizing Brady's voting record in the Illinois Senate.
From the Quinn for Illinois reaction statement to Brady's nomination:

Brady wins Republican governor nomination

Author: Illinois Issues Statehouse bureau

Bloomington Sen. Bill Brady beat out his opponent Sen. Kirk Dillard from Hinsdale by 193 votes for the Republican nomination for governor.

Illinois moves ahead in Race to the Top

Author: Illinois Issues Statehouse bureau

By Rachel Wells

Illinois, along with 15 other states and the District of Columbia, is still in the running to secure $510 million in federal Race to the Top funding, the State Board of Education learned today.

“It’s dollars for reform when we would not be getting it from the state otherwise. This is still a competition. It doesn’t mean we get them, but it just means that we’re in the running, that we are going to have to go [to Washington, D.C.] and make a case for why we need the [dollars],” state Superintendent Christopher Koch said.

Race to the Top is a $4.35 billion education reform program that aims to improve standards and assessments, develop student growth data systems, reward quality teachers and improve underachieving schools.

Illinois won’t know whether it will receive a Race to the Top grant until April 1, following the interviews with federal officials in Washington D.C. If Illinois is not chosen to receive a grant at that time, it can still apply by June 1 for consideration in a second phase of awards.

In preparation for the application process, the Illinois General Assembly and Gov. Pat Quinn enacted measures for tying student growth to teacher evaluations, expanding alternative teacher certification programs, developing a data system to trace student performance and career or college success, and doubling the state’s limit on charter schools.

Considering cuts - Part 2

Author: Illinois Issues Statehouse bureau

By Jamey Dunn and Rachel Wells


A Senate committee held its second round of hearings today on the impact of possible 10 percent cuts to the budget in the last four months of the current fiscal year.

Senate Democrats have been accused of using the hearings as a political stage to criticize budgets suggestions made by Sen. Bill Brady, a Republican candidate for governor from Bloomington, during the primary election campaign.

Sen. Matt Murphy, a Palatine Republican, said he does get the sense that the hearings are motivated by politics. However, he said he is willing to work with Democrats on cutting the current budget. He echoed a statement that Democrat budget point man Sen. Donne Trotter made yesterday that 10 percent cuts are just a starting point and may not be necessary.

“We’re starting at 10 percent trying to solve this problem. We’ll see where we end up. If there’s a constructive effort at trying to minimize this [fiscal] year’s deficit to make next [fiscal] year’s budget process that much easier, we’re on board,” Murphy said.

State Superintendent Christopher Koch said in his testimony before the committee that he expects more than 13,000 layoffs in K-12 in the next fiscal year even without budget cuts. Those layoffs, he said, would include:

• Tenured teachers 457
• Non-tenured teachers 5,826
• Administrators 505
• Service employees, such as counselors and social workers 402
• Non-certified employees 5,194

Koch said those numbers represent the about 75 percent of schools that the numbers could go higher.

He added that cuts at the state level during the current fiscal year will just “pass the burden” off onto local governments that will have to try to increase taxes or borrow to meet their obligations.

Schools have already entered into contracts with employees, so they cannot make any layoffs during this fiscal year. One way or another, they have to make payroll.

The same goes for the Department of Corrections, which employs about 11,000 people to watch over about 46,300 prisoners and 33,000 parolees. “Any time our department attempts to go through a layoff process, it is a long drawn out process that sometimes takes six months to accomplish,” Corrections Director Michael Randle said. “We would have to approach the legislature and tell them the reality of our situation as an agency and seek additional appropriations to cover payroll.”

Trotter, a Chicago Democrat, suggested borrowing as the only solution.

Randle said cuts to food, utilities and education programs would be needed to make payroll.

“What we would be looking at is strictly a lock-and-key operation,” Randle said.

Randle under fire

Brady called for Randle to step down today.

He made the demand at a news conference held to announce a measure he introduced that would create an Internet database with information on any prisoners that are released early. The Web page would include photos and descriptions of the prisoners. Brady’s bill passed through a Senate committee with unanimous support. Brady said he also plans to create a “strike” force to investigate Gov. Pat Quinn's controversial “Meritorious Good Time Push" early-release program.

Brady sputtered when questioned about what sort of early release scenarios he would support and had difficulty giving a concrete example of which prisoners the state would be required to include on the Web site. In the end, he said he does not support the early release of any prisoners.

When asked about the security of his job, Randle said, "I think we all serve at the pleasure of the governor. … We’ll continue to do our job."

Senate moves borrowing plan

Author: Illinois Issues Statehouse bureau

By Jamey Dunn

Senate approves borrowing for universities

Author: Illinois Issues Statehouse bureau

By Jamey Dunn

The Senate passed a measure today that would allow public universities to borrow money to keep their doors open and pay faculty and staff.

"If these universities cannot receive the cash flow they need to operate, they will close their doors,” said bill sponsor Sen. William Haine, an Alton Democrat.

The money would be borrowed in anticipation of payments from the state, which owes more than $900 million to the universities. Each school could borrow up to 75 percent of what the state owes it.

The bill puts the decision to borrow in the hands of the universities’ boards of trustees. State government will not be on the hook for the debt, which must be repaid within a year.

“[It’s] a stopgap measure, but by no means does it solve the financial crisis or the chronic under funding of our public universities,” Southern Illinois University President Glenn Poshard said.

Republican critics said there is no clear plan for repayment of the loans and that borrowing is just pushing the problem off to a later date. “We cannot continue to borrow,” said Sen. Dan Duffy, a Lake Barrington Republican.