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YEARS OF ‘DEADBEAT
ILLINOIS’: STATE HAS HISTORY OF SHORTCHANGING SOCIAL SERVICE PROVIDERS
Illinois Policy Institute
For years,
Illinois lawmakers have prioritized government-worker pay and benefits
over social services. Between 2000 and 2015, contributions to Illinois
state-worker pension funds shot up 586 percent, while state payments for
human services increased by only 10 percent.
The budget crisis is wreaking havoc on Illinois’ social service
providers:
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“[T]he Community Crisis Center in Elgin, a domestic abuse program that relies on
Illinois for half of its funding….[has] maxed out a line of credit this year
while waiting for funding, leaving employees to take four weeks of unpaid
furlough days …” – Daily Herald
“The shortfall will force some smaller nonprofit home healthcare agencies to
close, trigger layoffs at others and leave thousands of elderly people
scrambling for alternatives to in-home care…” – HuffPost Chicago
“[I]t’s ‘preposterous’ that funding is being cut from the students who are most
in need of support. Not only is it inhumane, it’s also economically
irresponsible …” – Progress Illinois
While the above headlines might read like something ripped from today’s
newspapers, they’re not. The first headline is from late 2011, while the second
two are from 2013.
The 2016 budget crisis has made it easy to forget just how poorly Illinois’
state government has treated social service providers over the past decade, even
when Illinois had yearly budgets, billions more in tax revenues and relative
harmony under one-party rule.
Funding for social services isn’t a problem that arose in 2016 just because
Illinois doesn’t have a budget. People dependent on social services have been
harmed for more than a decade because the state’s spending priorities haven’t
included them. The state’s real priority has been to keep increasing spending on
government-worker salaries, benefits and pensions at the expense of nearly
everything else.
History lesson: Illinois has been a bad partner for social service agencies for
years
In 2009, an Urban Institute study ranked Illinois worst in the nation in paying
its nonprofit vendors on a timely basis, according to the (suburban Chicago)
Daily Herald. “Eighty-three percent [of nonprofits] said late payments from
state and local governments were a problem in Illinois, compared to a nationwide
average of 53 percent,” the Daily Herald reported.
Part of the problem is that, even though Illinois was passing annual budgets,
politicians were using gimmicks to underfund programs and push off debt into the
future, rather than being honest about how much the state could afford.
Beginning in 2002 – a year after Illinois’ last balanced budget – Illinois
started the habit of not paying all of its bills the year they were incurred.
Since then, the problem has only worsened.
By 2010, the state’s unpaid bill backlog reached $8 billion, affecting not only
social service agencies, but many different providers of state services. The
Daily Herald chronicled how social service agencies were being affected in an
article titled “Deadbeat state: Illinois owes billions in unpaid bills.”
To attempt to remedy the problem in 2011, then-Gov. Pat Quinn and proponents of
more revenue passed a record state income-tax hike that brought Illinois more
than $31 billion in extra revenues. They promised that Illinois’ unpaid bills,
totaling $8.5 billion at the time of the tax hike, would be paid down by the end
of 2015 when the temporary tax would partially sunset.
Predictably, the state’s unpaid bills were not paid down.
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In fact, the unpaid bill problem in 2013 got so bad that
private-sector companies tried to come to the rescue. A company
called Vendor Assistance Program offered to step in and advance
money to social service agencies and other vendors waiting for
payment from the state.
The unpaid bill balance totaled more than $6 billion as of December
2014. Social service agencies were still going unpaid.
Illinois’ misplaced spending priorities
There’s a reason the state has racked up a backlog of unpaid bills
and why even $31 billion in additional tax dollars – the new
revenues generated from the state’s record income-tax hike from 2011
through 2014 – didn’t improve the situation for social service
agencies and other vendors. It’s because the General Assembly, under
House Speaker Mike Madigan, has done nothing to change the state’s
funding priorities. And those priorities favor government-worker pay
and benefits over nearly everything else.
Lawmakers didn’t enact comprehensive reforms of state-worker
pensions or health care benefits. Instead, they kept growing those
expenditures at rates that ensured everything else would be crowded
out.
A comparison of spending growth from 2000, one of that last years
Illinois had a balanced budget, with 2015 gives the picture of who’s
been first in line when it comes to getting state funds:
Contributions to state-worker pension funds: up 586 percent, or $6.6
billion
State-worker health insurance costs: up 166 percent, or $1 billion
Compare that growth with the items that have been crowded out:
Higher education: down 8 percent, or $175 million
Human services: up 10 percent, or $498 million
K-12 education: up 35 percent, or $1.7 billion
The state’s total revenues grew 57 percent during that time period,
faster than the 38 percent total growth in inflation.
illinois budget prioritizing spending on government workers
For further proof of legislators’ favoring state employees, look at
workers’ current pay and benefits. Illinois state workers are now
the highest-paid in the nation when adjusted for cost of living.
Career workers also receive Cadillac health insurance benefits, free
retiree health insurance, and an average of $1.6 million in pension
benefits over the course of their retirement.
The bottom line is, unless the state significantly changes the way
it operates, funding social services will always be a struggle.
Total expenses will outpace the incomes of Illinois taxpayers, while
core spending drivers such as state-employee compensation will crowd
out funding for other services.
But tax hikes aren’t the solution. Any tax increases will only put
additional pressure on overburdened taxpayers and encourage more
residents to seek opportunities in other states.’
Lawmakers concerned about the needy should reprioritize spending and
enact economic reforms to bring back jobs and growth to Illinois.
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