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FY 05 Budget Settled One area of spending affected by the extra-innings is education. The budget includes a $154 increase in the state’s minimum per-pupil spending level, not the $250 hike the governor desired. The shift freed up $95 million for transportation, special education and other grants suburban schools can tap regardless of local wealth.
To help balance the ledger, lawmakers approved nearly $1.3 billion in cuts, or about $400 million more than the governor had originally sought. That means most agency budgets were trimmed by as much as 4 percent. Consequently, state employee unions fear hundreds of layoffs, but the administration hopes a severance package for middle management will pare the payroll by 3,000 jobs. State universities, which have sustained two years of cuts, managed to remain on level ground. Blagojevich originally called for additional cuts for higher education, but most state colleges are located in GOP legislative districts. Republicans also represent prison workers in Pontiac, St. Charles and Vandalia. Those facilities will remain open under the budget agreement, a reversal for Blagojevich, who had said the state should not operate old prisons just to provide jobs.
Pledges not to close those prisons were among more than 50 agreements legislators forced Blagojevich to put in writing. “It brought a level of comfort to the participants of this negotiation,” Madigan says of the unprecedented memorandums of agreement. Last year, the governor used his veto power to slash the budgets of the secretary of state and other elected officers just weeks after the leaders agreed on the budget. This year, most of the state’s new construction projects were put on hold, including those outlined in Blagojevich’s Opportunity Returns program. Blagojevich began promising projects under the regional economic development plan last fall, several months before asking legislators to approve $2 billion in bonds to fund it. The governor’s four-year $2.2 billion school construction program also is on hold until fall. Madigan says those efforts will need a new financing source, something Blagojevich did not attempt to identify. Madigan also sided with Republicans in forcing the governor to adopt reforms limiting the size and scope of state borrowing. The governor can no longer put off principal payments for several years and must make level payments each year. Excluding money reappropriated for ongoing construction projects, the FY05 budget is $437 million smaller than the governor’s original proposal, according to Madigan. The spending is financed, in part, by skimming $260 million from dedicated funds. Another $151 million comes from what Blagojevich calls corporate tax loopholes. Another $35 million will be generated by new or increased fees, including a mandatory $500 fine for first-time DUI convictions, late fees for vehicle registration stickers and a $16 hike in state I.D. cards, which had been $4. Meanwhile, truckers who lost a sales tax exemption and were saddled with a 36 percent hike in registration fees will get relief under legislation the governor plans to sign. Smaller communities also will get a break on a wastewater fee imposed last year. And the surcharge employers pay on workers compensation insurance was cut by one-third. In addition, the budget agreement ends the administration’s ability to siphon $140 million a year from a state road fund financed by gasoline taxes and vehicles fees. That frees up money for road construction.
“It’s still an issue that I think at some point in time is going to be felt all over this state, maybe it isn’t now,” says Watson, who had considered withholding Republican votes on the budget to force action, but ultimately did not. Watson has asked Blagojevich to call a special session on the issue. Without elaborating, the governor says he will publicly address the issue in early August. * Blagojevich backed away from a plan to free up cash by crediting $215 million already in the pension system toward this year’s obligation. The administration argued that the success of last year’s pension bond sale made the move possible, but actuaries warned it would create an enormous future liability (see “Risky Math,” May 2004, page 23). The pension system will be short $310 million this year while lawmakers discuss ways to shoulder the burden created by an early retirement offered in 2002. The program was supposed to cost $70 million annually for 10 years. The cost ballooned to $380 million a year. Blagojevich put up $70 million now and wants to review options, including stretching out the 10-year repayment window. * Retired downstate teachers who rely on the state for health insurance received a temporary reprieve via a stopgap measure signed by Blagojevich. It caps annual premium rate hikes at 9 percent or less while requiring working teachers, school districts and the state to pay more into the fund. In addition, the state will establish a commission to further study the program’s financial future. * Fourth-year teachers across Illinois now have another year to complete recertification requirements under legislation enacted in late June. The move came in response to a muddled and often frustrating renewal process the state will now streamline (see “Certified Mess,” June 2004, page 20). Pat Guinane can be reached at capitolbureau@aol.com. Illinois Issues, July 29, 2004 For information about how to subcribe to Illinois Issues go to: Go to Illinois Issues blog at http://illinoisissuesblog.blogspot.com/
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