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Speaking to a joint
session of the House and Senate, the governor presented his first
budget, one that solves a $5 billion budget crisis without an
increase in the income or sales tax. Overall spending is down $345
million from the current fiscal year -- the first time since 1981
that state expenditures will have declined.
"We could have used
this crisis as an excuse to take the easy way out and resort to the
tired old approaches of raising taxes and slashing critical
programs," Blagojevich said. "We did not do that. We protected the
people of Illinois. We found ways to do more with less."
Conceding the budget
calls for a great deal of shared sacrifice, the governor, however,
pointed out that the cuts he proposed and the revenue his plan
generates are "reasonable, wise and prudent" and something the
people of Illinois will embrace.
Blagojevich said the
nearly $5 billion budget deficit he inherited was the result of
rising health care costs, a tax structure based on industrial
economy that has become a service economy and an economic downturn
to which state government did not react quickly enough. These
problems were made worse by shady accounting, rampant overspending
and a pension fund obligation larger than that of any other state in
the nation.
While the deficit was
seen by some as an insurmountable hurdle in the absence of higher
taxes and critical spending cuts, the governor saw it as an
opportunity to bring about fundamental changes that the people of
Illinois demanded when he was elected last November and "shake up a
system in desperate need of reform."
"If we do this right,
we will do more than just balance the budget," the governor said.
"We will regain the trust and confidence of the people with fiscally
responsible and honest management."
Blagojevich said the
only way the state can work its way out of the current fiscal mess
is through bipartisanship.
"The problems we
confront are way too big for us to be mired in petty partisan
politics," the governor said. "Turning this fiscal crisis into an
opportunity to regain the public confidence means all of us working
together -- both chambers of the legislature, both sides of the
aisle. The stakes are too high to do anything else."
A clear sign of a
new, bipartisan spirit came last week with the passage of one of the
cornerstones of Blagojevich's strategy to balance the budget. The
$10 billion pension bond financing plan, which will save an
estimated $1.9 billion in this fiscal year and next, won
super-majority support in both the House and Senate. It increases
the state's general obligation bonds authority and grants permission
to use those proceeds to make pension payments to five state
retirement systems that cover 590,000 current and retired employees.
Blagojevich proposed
a budget of $52.4 billion for the fiscal year that begins July 1,
compared with an estimated $52.8 billion in appropriations for the
current fiscal year, which ends June 30. The governor is proposing
an increase to $23.1 billion from $22.4 billion in General Revenue
Fund appropriations.
Other budget
highlights follow:
Education
The governor proposed
boosting the general state aid per student by $250, to $4,810, an
increase larger than those in the prior three years combined and the
highest since 1999, at a cost of $235 million. He also pledged to
keep increasing funding until it reaches $5,665, the level
recommended by the Education Funding Advisory Board. As outlined in
his State of the State speech last month, Blagojevich included $29.9
million for early childhood programs to allow schools and
community-based centers to provide services to an additional 8,230
at-risk children. This is the first installment of a three-year plan
to bring early childhood services to an estimated 25,000 at-risk
children who come from poor families or who have disabilities.
The budget includes
an $87.5 million increase for school programs mandated by state law,
such as special education. The increase includes $42 million to
replace cuts from last year, and $45 million will go to new
spending. The budget makes good on a promise to make prompt payment
on the final state aid payments to schools in June, calls for
development of a technology system to allow parents to monitor their
child's progress in school, provides school districts with more
flexibility to cope with financial issues by consolidating 24 grant
program and service lines, and proposes eliminating the regional
offices of education at a savings of $20.2 million. School
construction is funded at $500 million, the same amount as this
fiscal year.
Higher education
Plans for higher
education are threefold: Cut administrative costs, protect financial
aid, and implement a strategy to curb tuition costs. Reductions
totaling $112 million, identified by working with universities, will
go toward deficit reduction. The governor also promised not to
repeat the previous administration's mistake in slashing the
Monetary Award Program, a need-based award for college students. The
governor will seek legislation to stop tuition increases at any
public university for students who complete their degree in four
years. The tuition plan calls for a 5 percent increase for incoming
freshmen; the resulting tuition amount would not change during their
four years in school. Base subsidies to private schools would be
ended, saving $21 million, and tuition costs for out-of-state
students would be hiked to the same level as universities in other
states, to generate $20 million. Capital expenditures on university
facilities will be limited to $48 million in repair and maintenance
work, less than one-fourth of last year's spending.
Streamlining government
Through the
consolidation of agencies and of administrative and management
functions, the state will be able to streamline government services,
eliminate unnecessary positions, do a better job of delivering
services and save $40 million. Included in the plan is the
consolidation of 11 agencies into five, as well as combining eight
bonding authorities. The operations of the Department of Lottery,
Liquor Control Commission and Racing Board are to be merged into the
Department of Revenue, the Department of Nuclear Safety will be
moved to the Illinois Emergency Management Agency, and the Pollution
Control Board will be merged into the Illinois Environmental
Protection Agency. In addition, legal services, internal auditing,
information technology, facilities management, procurement, and the
collection and administration of fees will be moved from state
agencies, saving $132 million. The governor also proposed creating
shared office service centers to provide eight smaller state
agencies with shared office space, equipment and administrative
staff, including accounting and payroll.
In addition,
Blagojevich said that state vehicles will be used only for state
business. The governor plans to reduce the state's vehicle fleet by
more than 1,700 this fiscal year and next. The state will save $11.4
million by canceling auto purchases, auctioning surplus cars,
reducing vehicle operating costs and eliminating the Department of
Corrections' plane.
In February,
Blagojevich had legislation introduced to streamline the number of
boards and commissions and to cut back their spending by 60 percent,
saving $5 million. The budget eliminates 11 boards that had
redundant functions, reduces the number of members on many others,
slashes member per diems and requires full-time work from those who
hold full-time positions.
Revenue
The state currently
collects non-consumer fees to cover costs for relevant services.
Many have not been adjusted for decades and, consequently, they do
not reflect the current cost of services they support and are well
below similar fees in neighboring states. The governor's budget
begins to address that imbalance by identifying the largest
non-consumer revenue generating fees that need to be changed to
reflect the impact of inflation on fee-supported programs as well as
other cost increases over time. Non-consumer fee increases will net
an additional $342 million in state revenue. Blagojevich said more
corporations that violate pollution codes can be fined to fund the
Illinois Environmental Protection Agency. The governor proposed that
polluters pay $21 million to clean up the hundreds of Illinois lakes
and rivers they contaminate with their dumped garbage and industrial
waste. Secretary of state fee increases are expected to generate
$103 million and include lobbyist registrations, personalized plates
and filing of annual reports.
The budget also
assumes $350 million from the sale of the 10th riverboat gambling
license. Admission prices for gambling boats would increase from $3
to $5, raising $38 million.
The governor
recommended closing a dozen loopholes in various tax codes,
including the exemptions for buying and selling private planes,
graphic arts equipment, and out-of-state purchases of natural gas by
large in-state users, saving the state more than $320 million.
This budget places a
reoccurring service charge on about 350 special interest funds such
as the Illinois Tourism Fund, the Illinois Beach Marina Fund, and
the Grape and Wine Resource Fund to cover state services such as
processing warrants, accounting, budgeting, billing and investing.
The governor also suggested that $144 million in unobligated
balances in these funds be transferred to the General Revenue Fund.
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State employees
Blagojevich said the
state would not be able to offer raises to managers, and the 12-year
practice of the state picking up nonunion employee contributions to
the pension fund system would be ended, saving $42.6 million. The
total number of state employees under the governor is set at fewer
than 63,000, compared with 69,000 who were on the payroll in fiscal
2003. By limiting agencies to replacing just one in three of the
employees lost to early retirement, the state will save $60 million
in fiscal 2003 alone. Another 4,000 employees are expected to retire
this year. The governor also ended a system that allowed state
employees to stockpile vacation days that eventually cost the state
hundreds of millions of dollars.
Public safety
The governor's
proposal provides funding for a variety of public safety efforts. To
strengthen the state's ability to respond to the threat of
terrorism, the budget includes $1 million for the creation of a
24-hour, seven-day-a-week Terrorism Intelligence Center in
Springfield, which will be operated by the Illinois State Police,
and the merger of the Department of Nuclear Safety into the Illinois
Emergency Management Agency to better coordinate monitoring of
nuclear power reactors.
The budget includes
$24 million to reopen Sheridan Correctional Center as a national
model to deter drug crime; $2 million for Project X, which would use
a statewide tracking system to identify where the club drug Ecstasy
is being sold and to crack down on its use; and $6 million for
Operation Spotlight, which will increase the number of parole
officers by 14 percent, thereby tightening supervision of people
recently released from the state's correctional system.
The governor also has
made $5 million available to aid families of National Guard members
and reservists who have been activated to support military efforts
in Iraq and to combat terrorism and $37 million for personal
protective equipment for first responders.
Capital expenditures and asset
management
The capital budget of
$10.7 billion in state funds is down $1.6 billion, a 13 percent
decrease from fiscal 2003. School construction received $500 million
in the governor's proposal, the same amount dedicated this fiscal
year, and capital expenditures for public universities is $57
million. The governor proposed a "sales-leaseback" of the James R.
Thompson Center in Chicago, which will generate $200 million in
cash. In a typical sales-leaseback arrangement, state-owned property
is sold to a new owner at its fair market value and immediately
leased back to the state for as long as it needs that facility. The
governor also said that if a buyer wanted to make an outright
purchase of the JRTC, he would be willing to relocate state offices
to less expensive office space. Also suggested is the sale of the
Illinois State Toll Highway Authority administrative building in
Downers Grove to generate about $30 million. The governor's road
program, with a price tag of $1.7 billion, is $50 million less in
transportation bonds than what is being spent this fiscal year. The
governor's pension bond financing plan involves selling $10 billion
in general obligation bonds at low interest rates and using a
portion of the proceeds to pay the state's $1.6 billion pension
contributions in fiscal 2004.
Health care
The governor's plan
strengthens the state's commitment to providing health care for
uninsured working families and their children, expands seniors'
access to prescription drugs, and doubles funding for breast and
cervical cancer screening. Through the creation of a special drug
advocate, Blagojevich estimates the state can save $120 million by
finding better prices for the nearly $2 billion in prescription
drugs purchased annually by state agencies and $49 million by
purchasing generic substitutes for brand-name drugs. As outlined in
the State of State speech, the governor called for spending $23
million to expand FamilyCare eligibility to 65,000 working parents
and an additional $4 million to expand KidCare eligibility to 20,000
more children. The budget also includes money to allow nearly
195,000 children from low-income families to access child care at
affordable prices. Funding for the Home Services Program is
increased by $56 million to help 24,000 individuals with physical
disabilities, developmental disabilities, mental illness, AIDS and
traumatic brain injury remain at home rather than be
institutionalized. Medicaid funding will increase by $689 million to
allow payments to hospitals and nursing homes within 60 days of when
care was provided.
Economic development
Blagojevich wants the
state to be proactive in developing opportunities for small
business, creating jobs and keeping Illinois competitive in the
global economy. Creating and promoting ideas to strengthen existing
industries, investing in technology development, and raising the
minimum wage to help struggling families are all instrumental if the
governor is to move the state forward. Central to his plans are
creation of the $200 million Illinois Opportunity Fund that uses
private investments to bring much-needed venture capital to the
state; development of six new Centers for Entrepreneurship to
provide, training, tools and resources to help businesses get
started; $800 million in financial incentives to encourage power
companies to use advanced technology so they can burn Illinois coal;
and the consolidation of 30 economic development and job training
programs within the Department of Commerce and Economic Opportunity,
saving $16 million.
Budget process reforms
The governor pledged
to initiate a "truth in budgeting" philosophy to establish a
simpler, more straightforward budget process and a budget document
that will be more understandable to the public and to legislators.
Leading the way will be the Governor's Office of Management and
Budget, formerly called the Bureau of the Budget, which will serve
as the state's internal management advisory staff to assist agencies
in delivering services at a lower cost. GOMB will build upon the
state's current performance review system, which links strategic
planning, quality improvement and measures to produce better budget
management decisions. A management corps of pro bono private sector
consultants will assist GOMB and the governor's Council of Economic
Advisors, who were appointed in January, to oversee the state's
revenue forecasting. The new budget process will encompass multiyear
projections of revenues, expenditures and debt, and all agencies
under the governor's control will be required to set aside a 2
percent reserve of their general funds as a cushion for revenue
shortfalls.
Links to more budget information
[Illinois
Government News Network
press release] |
