The deal made by General Assembly Democrats in January to temporarily hike income and corporate tax rates won't stop the longer-term erosion of state-funded public services.
Fiscal resources available to the four primary areas paid for out of the state government's General Revenue Fund are expected to continue eroding, a new analysis of the Illinois budget situation says.
Such news comes even though General Assembly Democrats temporarily raised $7.25 billion in new, annual revenue in the tax deal reached this past January, and even as the Quinn administration has proposed increasing spending in the FY2012 budget over the current spending plan.
"Despite the one-year upward trend in spending ... after adjusting for inflation and population growth, overall General Fund appropriations proposed for FY2012 will be less than they were over a decade ago, in FY2000, with total appropriations down 15.9 percent," the Center for Tax and Budget Accountability (CTBA) writes in its analysis of the Quinn administration's 2012 budget.
Real-dollar appropriations for pre-K through 12th grade education would be down 2.7 percent between FY00 and FY12, should Quinn's budget plan pass, according to CTBA; health care would be down 13.4 percent; public safety would be down 25.2 percent. The real value of the appropriations for higher education and human services would be off by 35 percent and more than 30 percent, respectively.
This view of inflation- and population-adjusted spending out of the General Revenue Fund over time will no doubt help shape budget negotiations as they resume this spring in the General Assembly, and adds context to the $6.7 billion in cuts senate Republicans put on the table for next year's budget.
While State Senate President John Cullerton (D-Chicago) said at a CTBA symposium in Chicago this morning that he welcomed the Republican ideas after what he said was a two-year "boycott" of budget specifics by the minority caucus, both sides have very different frames of reference when it comes to state finances.
Take education spending. State Sen. Kirk Dillard (R-Hinsdale) said today that General Revenue Fund appropriations on education were up 44 percent between FY03 and the current fiscal year. But the CTBA's Ralph Martire said that was a nominal, rather than adjusted, increase and considered a shorter time frame than the CTBA's own. State Sen. Kimberly Lightford (D-Maywood) said the GOP's proposal to cut spending would be "devastating," saying the state education board had recently cut 34 programs that paid for everything from textbooks to gifted education for a savings of $250 million. Here's a portion of Lightford's remarks:
She went on to say the Senate GOP's proposed cuts would particularly damage school districts that draw on poor property tax bases, and thus need help from the state to try to make up some of the difference.
The state's own Education Funding Advisory Board, meanwhile, says the difference between the ideal "foundation level" for per-pupil education spending and what the state actually provides is now nearly $2,000 per student.
Cullerton said today the GOP's cuts rested on "three Cs -- contracts, court orders, and the constitution" that cannot simply be violated. Here's the senate president today:
So what is on the table from the majority party in the senate? Cullerton mentioned three ideas this morning.
The first is government consolidation; he predicted "real progress" on consolidating school districts and township government. The trick, according to Cullerton, is to figuring how, for example, to merge school districts when some districts carry debt and others do not. He said the state's capital bill could incentivize school consolidations by providing funds for, say, a new high school when two high schools are set to be merged.
Cullerton also argued that suburban and downstate school districts should pitch in for more of the cost of the Teachers Retirement System (the Chicago teachers have their own, separate pension fund). Currently, teachers covered by the TRS pay into it, but state government picks up the vast majority of the employer's side of the equation.
"The suburban and downstate districts pay next to nothing into the system," he said. "I think that ought to be changed.
"When they negotiate their teachers contracts in the suburban and downstate districts, they never have to worry about making their pension payment, into the system," Cullerton went on. "That just is not fair."
Asked for clarification, Cullerton's office sent Progress Illinois this statement this afternoon:
Of the $2.08 billion state contribution to the teacher retirement fund in the 2010 budget year, the normal cost for teacher pensions was $717.5 million. The remaining $1.37 million is to pay down the unfunded liability in the system that exists from decades of the pension funds being shorted. The Senate President's plan would have the state continue to pay down that liability. It's the "real cost" portion that school districts would be asked to contribute to.
Finally, Cullerton said that some state retirees should pay more for their health care. "Our effort is aimed at former, and in many cases high-level state bureaucrats, who took advantage of early retirements," he said. "In many cases they moved on, sometimes to lucrative second careers, while the state's picking up the health care tab." The state spends more than $500 million in health care for retirees, according to Cullerton.
Broader questions about tax reform were discussed at CTBA's event today as well. Recall that Illinois' sales tax does not cover the vast majority of services people purchase; does not tax any retirement income, making it one of just a handful states with such a policy; and does not tax its earners progressively, as states like Wisconsin or New Jersey do. Fixes to all three, CTBA says in its new report, must "remain on the table."
The problem is the politics that accompany any proposal -- or even talk -- of restructuring the tax code.
Crain's political columnist Greg Hinz pointed out at CTBA's event that when Rahm Emanuel said he backed expanding the sales tax in Chicago to cover luxury services, mayoral runner-up Gery Chico immediately attacked.
"That became Gery Chico's entire campaign," he noted.