Improving the public’s understanding of how the Illinois state budget works will contribute to better policy decisions by elected officials, according to a new policy brief from the Fiscal Policy Center at Voices For Illinois Children.
While a recent poll by Southern Illinois University’s Paul Simon Public Policy Institute shows that 54 percent of state residents would like to see the state's skyrocketing budget deficit solved through cuts only, this will likely be insufficient to balance the budget.
“There is a lot of misinformation about the budget,” Larry Joseph, director of the Fiscal Policy Center told Progress Illinois. “There is still a widespread belief that we can get out of the fiscal crisis by cutting out bureaucracy, waste or mismanagement, but that is just not realistic.”
The same poll showed 63 percent of state residents are against extending the state's temporary income tax increase, despite the devastating impact rescinding that tax increase would have on the state budget.
“If we let the income tax rollback go ahead, we will be in a much worse position,” Joseph added.
Over half of the revenue for the state budget's General Funds, which provide the majority of support for public services such as education, health care, human services and public safety, comes from the state income tax. In January 2011, the individual rate was raised from 3 percent to 5 percent and the corporate rate was raised from 4.8 percent to 7 percent.
“I don’t think people really understand how out of whack the state of Illinois is out of funding and revenue,” Prof. David Merriman, associate director of the Institute of Government and Public Affairs at the University of Illinois, told Progress Illinois. “For balancing the state budget, the first thing that should be done is to ensure the income tax increase is not phased out.”
Part of what makes understanding how the state budget process works is the number of funds from which appropriations are made. The “Understanding the State Budget Trail” brief from the Fiscal Policy Center notes that the total state budget comprises over 700 funds. Merriman argues that simplifying this would make the budget process more transparent.
“Shuffling around the funds in the short-term won’t do any good. Long-term, being more transparent about how our money is spent will be good. That means not creating a lot of funds willy-nilly. Simplifying them would bring transparency,” Merriman said. “We have been camouflaging the deficit by focusing on the deficit in the General Funds, rather than the special funds that are being drained to pay current operating expenses.”
The policy brief notes that 25.7 percent of the General Funds expenditures is for education, while 19.9 percent covers medical assistance. The latter portion will soon be strongly affected by Obamacare. While it may help the state budget in the short-term, the long-term impact is hard to predict.
“It will get some people that are uninsured on public insurance, and federal government will pick up 100 percent of cost. People getting uncompensated care and the hospitals have to get reimbursed in one way and some of that goes onto Medicare and some goes onto private insurance,” Merriman said. “I think it is a huge experiment, we don’t really know.”
Gov. Pat Quinn made his state budget address today. Check back with Progress Illinois for our full report on his statements.