Illinois governor reverses $26 million in cuts to social programs

[May 01, 2015]  By Karen Pierog and Fiona Ortiz
 
 CHICAGO (Reuters) - Illinois Governor Bruce Rauner on Thursday reversed $26 million in surprise spending cuts that had forced the shutdown of a stop-smoking hotline and ended funding for some autism programs and indigent funerals.

Officials at the governor's office said higher-than-expected personal income tax revenue allowed the Republican governor to restore the grants for social services, in the budget that ends on June 30.

The cuts, announced on April 3, came as a surprise after Rauner and the Democratic-controlled legislature had agreed to a 2.25 percent across-the-board spending cut and a cash infusion from other state funds to plug a $1.6 billion gap.

Social service providers said they were pleased that grants were restored.

"The decision caused a sigh of relief on behalf of many parents who are concerned about their children's future," said Mark Schmidt, spokesman for the Autism Program of Illinois, or TAP, which had lost $1 million in a grant after the April 3 announcement.

Programs funded through TAP would be able to rehire a handful of people laid off earlier this month, Schmidt said."We're pleased and grateful the decision was made and the resources were found. Now we have to work on funding for fiscal year 2016," Schmidt said.

More pain from austerity looms for Illinois, which has the lowest credit rating of all U.S. states.

The state's credit rating, which play a big role in determining the cost of borrowing funds, could tip closer to the junk-bond status assigned to the riskiest debt if Illinois does not address its chronic unbalanced budget.

Rauner took office in January pledging to plug a huge structural deficit without relying on higher taxes or borrowing. In the fiscal year beginning July 1, Rauner has proposed a budget he says will eliminate a $6.2 billion deficit.

There was some good news this week for the current budget, and Rauner's office said there would be no more spending reductions.

Personal income taxes were higher than expected in April, likely fueled by capital gains and dividend income, said Jim Muschinske, revenue manager at the Illinois legislature's Commission on Government Forecasting and Accountability. He added that could help boost state revenue for the current fiscal year by $300 million to $500 million.

(Editing by Peter Cooney)

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