"The change and reform we began last
year has to continue," Blagojevich said. "And like last year, there
are no easy answers. We're going to make tough decisions. We're
going to make painful cuts. We're going to ask those who, for a long
time, have benefited from the system, to give something back and to
lead in the shared sacrifice. That's what we will do. What we won't
do is balance the budget on the backs of the hardworking people of
this state."
Speaking to a joint session of the
Illinois General Assembly, Blagojevich presented a general
operations budget for all funds of $43.5 billion. The governor's
proposal allocates an additional $400 million for K-12 education and
puts new Illinois State Police officers on the streets. His budget
proposal solves the $1.7 billion structural deficit caused by major
expenses, including Medicaid and employee health insurance, growing
faster than revenues.
Overall, Blagojevich proposed balancing
the upcoming year's budget by reducing operational costs by $840
million and by adding $945 million in new revenue to the state's
coffers. New revenue would be added by taking a number of steps,
including maximizing the amount the state receives from the federal
government and closing loopholes that allow wealthy corporations to
avoid paying their fair share in state taxes. The governor also
projected a modest 1 percent, or $280 million, growth in base
revenue.
With his comprehensive efforts to cut
waste and even out the tax burden, the governor again fulfilled his
goal of investing more in education, public safety and health care.

Education
funding
--Increase state spending for K-12
education by $400 million: Despite facing a second year of historic
budget deficits, the governor proposed an additional $400 million to
elementary and secondary education. If the legislature accepts the
governor's proposal, it will mean that during two years of fiscal
crisis, the state will have increased education spending by $800
million. The governor urged lawmakers to work with him to identify
the most important areas in education that require additional
funding. Blagojevich will also urge the General Assembly to pass
legislation to create a new Department of Education. The new
department will provide significant opportunities to help local
schools save money on supplies and services; it will also streamline
the long list of rules and regulations that demand time and energy
from teachers and administrators.
--Improve the MAP grants: Blagojevich
will push to change the formula by which Monetary Award Program
grants are distributed, in order to assist 1,000 more students and
award higher grants. His changes will level the playing field by
allowing more of the MAP funding to go to the neediest students,
regardless of whether or not they attend the most expensive
institutions.
Public
safety
--Increase front-line positions: Over
the next four years, 400 more state police officers will be put on
the front lines, by moving current officers from desk jobs back out
onto the streets and by hiring at least two new classes of cadets.
In addition, cost-savings from a reorganization of the Illinois
State Police and consolidation of Central Management Services and
Illinois Commerce Commission police forces under the state police
will be used to equip Illinois State Police officers with 600
state-of-the-art mobile data computers and 425 new vehicles to
replace outdated squad cars.
--Eliminate the existing DNA case
backlog: An additional $3.3 million will be dedicated to training
new forensic scientists and outsourcing a portion of the existing
DNA backlog so that the current backlog will be eliminated by Dec.
31. In addition, the funds will allow the state crime labs to
continue processing 105,000 DNA samples from convicted felons
annually and add the results to a centralized database.
--Expand programs that deter crime: The
governor built on last year's increase for Operation Spotlight, his
long-term effort to double the number of parole officers. This year
he will add 102 new parole agents, seven supervisors and six
casework supervisors who will help parolees find employment and
other services that will keep them out of jail. In addition, the
newly reopened Sheridan drug rehabilitation facility that offers
comprehensive substance abuse treatment services to nonviolent
offenders will be expanded.

Health
care and human services
--Expand health coverage for working
parents: The governor's budget proposal includes $66 million to
expand the FamilyCare initiative to an additional 56,000 parents of
KidCare-eligible children.
--Improve services for developmentally
disabled: Blagojevich proposed increasing funding for community
services for the developmentally disabled by $76 million. Another
$47.5 million will allow 200 more developmentally disabled
individuals to receive in-home care and will provide a wage increase
for personal assistants who help developmentally disabled
individuals continue living at home. In addition, $30 million will
fully fund existing services and shorten the amount of time it takes
the state to pay its providers.
--Boost funding for HIV and AIDS
prevention: The governor plans to increase funding for the
Department of Public Health's AIDS Drug Assistance Program by more
than $3 million to make lifesaving medications available to more HIV
clients, and an additional $2 million will significantly improve the
department's outreach to minority populations that have seen the
most dramatic increases in HIV and AIDS cases.
--Maximize federal Medicaid funds:
Blagojevich announced that the state will make changes to get the
maximum benefit from the federal Medicaid program. Currently, when
the state gives a grant to a human service provider, it generally
does not collect enough information about the services being
provided to determine if, in some cases, they may be eligible for
federal Medicaid reimbursements. By switching to a fee-for-service
model, Illinois is expected to receive approximately $60 million
more in federal funds.
--Bring accountability to the process
of awarding contracts to social service providers: The governor
proposed requiring agencies that do business with the state to
submit competitive proposals. Social service providers who receive
state grants would also be required to account for how they spend
state money.
[to top of second column in
this article]
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While he was pleased to make more
resources available for critical services that directly benefit the
public, Blagojevich emphasized that it's time to take aim at past
spending and budget practices that caused the deficit. The governor
proposed a series of fiscal reforms to bring accountability and
restraint to the state budget process.
"If we are smart and don't squander
this opportunity, we can use the next few months to not only solve
this year's budget deficit but to finally begin budgeting in a way
that recognizes that the decisions we make today impact our budgets
and our plans for tomorrow," the governor said.
Fiscal
reforms
--Balanced Budget Act: In order to keep
state spending in check, Gov. Blagojevich presented legislation that
would require every spending increase considered by the General
Assembly to identify corresponding revenues or spending cuts.
--Responsible Spending Act: This bill
makes permanent the fiscal reforms implemented by the Blagojevich
administration during its first year. First, for every
billion-dollar increase in the budget, it would require the state to
deposit another $50 million in the Rainy Day Fund. Second, all state
agencies would be legally required to set aside 2 percent of all
funds within their budgets. Third, all state agencies would be
legally required to allocate their budgets quarterly and to prepare
and execute a monthly spending plan.
--On-Time Bill Payment Act: This
legislation gives the governor the resources he needs to make sure
hospitals, nursing homes and pharmacies that provide services for
the state get paid on time. It sets the goal of paying all bills
within 30 days, but never longer than 60 days. It
also would create a revolving line of credit to reduce interest
costs.
In addition to better budget practices,
Blagojevich proposed reducing operational costs by $840 million. To
achieve that savings, the governor proposed consolidating government
agencies and streamlining departments to reduce administrative
costs, decreasing the number of non-front-line state employees,
closing some state facilities, and reducing or eliminating some
grants. Reductions in operational costs include:
Streamlining government
--Mergers: Governor Blagojevich
announced plans to merge various agencies and functions for a total
estimated savings of $15.3 million. The departments of Professional
Regulation, Financial Institutions, Insurance, and the Office of
Banks and Real Estate are to be merged into the new Department of
Financial and Professional Regulation. The governor is also merging
the Department of Agriculture's Land Division into the Department of
Natural Resources. He plans to merge the Circuit Breaker program and
the Low-Income Energy Assistance Program into the Department of
Public Aid, the Medical District into the Illinois Finance
Authority, the Child Health Insurance Program into the Department of
Revenue, the Illinois Building Commission into the Capital
Development Board, and the Illinois Commerce Commission's Railroad
Commission into the Illinois Department of Transportation. Finally,
the governor will consolidate the press offices of nearly 25
different state agencies and boards into one, at a savings of $1
million.
--State employee head count reduction:
Gov. Blagojevich's budget includes a new early retirement incentive
limited to 2,000 employees, targeting only non-front-line positions
and titles. The limited early retirement incentive is expected to
save a conservatively estimated $25 million. Overall, the budgeted
head count for fiscal 2005 is about 61,000 full-time employees,
which is the lowest level since 1972, the earliest period for which
data is available. The fiscal '05 head count does not reflect early
retirement reductions and represents a decrease of 2,000 funded
positions from the budgeted level for fiscal '04. The majority of
the reduction will be achieved by eliminating currently vacant
positions.
--Illinois State Police reorganization
and consolidation: Reorganization will be achieved through the
limited early retirement incentive, moving desk officers to
front-line positions, civilianization initiative and reduction in
administrative staffing. It's estimated the reorganization will save
$10 million. The governor also proposed consolidating Central
Management Services police and Illinois Commerce Commission special
agents into the Illinois State Police force, at an estimated savings
of $1 million.
--Facility closings: For a total
savings of $50 million, the governor proposed closing some of the
state's oldest, most outdated facilities. Vandalia Correctional
Center will be closed and inmates moved to the new Lawrence
facility. The Illinois Youth Center in St. Charles will be closed
and detainees moved to Kewanee.
Revenue:
corporate tax loopholes
In an effort to balance the state tax
code for both businesses and individuals, the governor's budget
proposal includes closing various tax loopholes associated with the
corporate income tax and business sales taxes. In 1980, corporations
paid $1 for every $4 paid by individuals. By 2003, for every $1 paid
by corporations, Illinois taxpayers paid $8. Income tax revenues
forecast for fiscal 2005 shows that ratio increasing to $1 to $9.
It's estimated that closing various corporate income tax loopholes
will generate an estimated $223 million, closing various business
tax loopholes will net $98 million, and other tax adjustments will
generate another $80 million. Among the various tax changes the
governor proposed and the estimated amount generated:
--Tax all corporate income as business
income: $29 million
--Eliminate the foreign tax haven: $40
million
--End exemption to unitary reporting by
domestic subsidiaries: $21 million
--Use straight-line instead of
accelerated depreciation: $74 million
--Limit the farm chemicals tax
exemption to include only small farms: $27 million
--Collect sales tax on software
packages, currently paid by consumers but not by businesses: $64
million
--Eliminate luxury watercraft use tax
loophole: $7 million
Union
negotiations
All employee bargaining unit contracts
expire on June 30. As the state continues to negotiate with each of
the unions representing state employees, the governor expressed
willingness to discuss wages and all benefits.
"As
governor, my job is to present a balanced budget," Blagojevich said.
"That's what I just did. I presented spending cuts, head count
reductions, loophole closings, and I told the unions they'd have to
sacrifice. In other words, these are the real options, and I think
that considering the priorities of the people, not paying more in
income and sales taxes, and having more money for education, health
care and public safety, it's a tough budget, but it reflects the
people's priorities."
[News release from the
governor's office] |