Illinois Budget Questions Answered

Illinois Budget Questions Answered

Illinois government faces a budget crisis. A big one. The deficit is growing, bills are piling up, state services are being cut and officials have no easy ways of cleaning up the mess.

Here's a look at what the state faces and what it means for taxpayers:

Q: What's the problem?

A: Illinois will owe far more at the end of the fiscal year than it can afford to pay. Already, the state is closing parks and historic sites to save money. Other cutbacks are almost certain. Officials could also consider raising taxes and fees or simply not paying the state's bills.

Q: How big is the deficit?

A: Gov. Rod Blagojevich's office puts it at roughly $2 billion. The Legislature's economic forecasting commission thinks the gap is more like $2.3 billion. Few people would be surprised to see it climb higher - for instance, the budget assumes the state will get $575 million from selling a casino license but that may not happen this year.

And these deficit numbers come after Blagojevich has already made about $1.4 billion in cuts.

Q: How big is that compared to the entire budget?

A: The cuts Blagojevich made earlier and the deficit he forecasts for the rest of the year add up to roughly 5.7 percent of the entire budget. But much of the budget involves federal money and other revenues outside state control. Looking just at the part decided by state officials, they were off by about 11.5 percent - or more than $1 in every $10.

Q: Why is it so bad?

A: Partly because lawmakers passed a budget that called for spending far more money than the state would take in. The budget they approved had a roughly $2 billion deficit from the very beginning. Since then, the economy has slumped and state revenues are slowing down, making the hole even bigger.

Q: Why did they pass a budget with a built-in deficit?

A: Because the governor and legislators couldn't agree on anything else. There was no consensus on any revenue measures, from raising taxes to privatizing the state lottery to dipping into special funds.

Rather than repeat the months of fruitless bickering that dominated 2007, legislative leaders decided to pass a budget that spent too much and then let Blagojevich figure out how to handle the problem.

Q: Did Blagojevich handle it?

A: He used his veto powers to make budget cuts. He slowed down payments to Medicaid providers, reduced services to veterans and the elderly, trimmed education spending and cut some jobs.

Q: Then why has the deficit jumped back up to $2 billion or more?

A: The economy. Tax revenues are coming in at much lower levels than expected. In fact, Illinois government could end up taking in less money this year than it did last year - an extremely rare event. Even in bad times, state revenues usually climb a little bit.

The problem isn't just taxes. The lottery and riverboat casinos are producing less than expected, and the state is getting less interest money on its investments.

Q: What's going to happen next?

A: That's the big mystery. Blagojevich surprised lawmakers by asking for authority to slash spending up to 8 percent practically anywhere in the budget, but he quickly backed away from the idea. He has also talked about somehow getting aid from the federal government, although that seems unlikely.

Ultimately, more budget cuts seem likely even if Blagojevich isn't given authority to make them on his own.

Q: What kind of cuts?

A: The easiest thing to do is delay payments to the hospitals, nursing homes and pharmacies that serve Medicaid clients. But that's unfair to businesses that have spent money serving the poor and then must wait month after month to be reimbursed by the state. More providers would close their doors or stop seeing Medicaid patients.

Blagojevich is also closing seven state parks and a variety of historic sites, against the wishes of the Legislature. More such closings, accompanied by layoffs of state workers, would be a natural next step. The administration already says it plans some kind of "reorganization" at the Department of Children and Family Services.

Q: Can't the state come up with more money?

A: One option is to dip into various special funds supported by fees on particular activities - for instance, polluters paying into an environmental clean-up fund. But that's already been done several times and officials are divided over how much more can be taken.

Q: What about higher taxes or more gambling?

A: The fiscal year is almost half over. Even if officials agreed on those controversial ideas, it would take months to put them in motion and collect money. That would help with the next budget but not this one.

Q: Will next year's budget need help?

A: Yes. The state will owe more money to its pension systems next year. It will have a backlog of unpaid bills. The costs of labor, health care and even basic supplies are likely to keep rising. At the same time, experts think the economy will continue to slump, meaning no sudden turnaround in revenues.

The Legislature's Commission on Government Forecasting and Accountability, a group not known for a sense of humor, looked at next year's budget picture and came to this conclusion:

"Keep your seatbelts buckled - it's going to stay bumpy."

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