Understanding Government

The budget battles in Wisconsin, Ohio and Indiana are really about the future of public employee unions, not fiscal austerity in the face of a crippling recession. However: the budget battle in Illinois, with its Democratic, pro-union governor and legislature, really is about painful cuts because of a fiscal crisis. And the grim debate in Illinois on how much the state should cut from its Dept. of Human Services budget has a lot to do with reduced federal funding. (more…)

Monique Garcia of the Chicago Tribune reports that the Illinois Senate voted 58-0 to enact a series of reforms to the state Medicaid system. As the vote indicates, the reforms are hard to argue with. Unfortunately, as I’ve reported, they do very little to resolve the state’s Medicaid financing crisis — a crisis that can only be solved through some combination of drastic cuts in Medicaid, major state tax increases, and greater federal assistance to Illinois, which unlike the federal government, must balance its budget.

Most of the reforms boil down to good-government and anti-fraud measures such as ensuring that people who receive Medicaid are actually who they say they are and qualify for the program. (more…)

The Illinois General Assembly had to pass — and Gov. Pat Quinn needed to sign — a state budget yesterday, the 15th of July, or else state employees, government contractors and community groups wouldn’t get their monthly paychecks. And they did pass a $26 billion general funds budget for the upcoming budget year, reports Christopher Willis of the Associated Press, albeit a budget with a lot of holes. Understanding Goverment will have more later on what this budget means for Illinois and what it says about state budget crises across the country when, um, I actually read the budget (the governor’s Office of Management and Budget Office says its computers are slow this morning but a copy will be delivered into my e-mail anytime now). But here are some interesting facts Willis reports from yesterday’s negotiations in the scenic state capital of Springfield:

-The budget is $4 billion less than the FY2009 budget and $2 billion less than the FY2010 budget Quinn originally proposed. Yet this overall spending decrease doesn’t come close to covering the $7-9 billion debt the state faces. The money to cover the debt apparently comes from borrowing $3.5 billion to help pay state worker pensions and not paying $3.2 billion to businesses that provide state services.

-Quinn wanted a 50 percent income tax increase and a boost in the corporate income tax rate to help cover the deficit. But while these taxes would have generated about $4 billion in annual revenue, they were taken off the table early in negotiations. Members of the Illinois of House of Representatives seem certain there is nothing that will make them more prone to lose an election than having voted for a tax increase.

-The General Assembly not only punted on the tax increase but abdicated responsibility for painful budget cuts to Quinn. The Governor has to make $2.1 billion in cuts. Maybe he’ll layoff 2,600 employees and cut some services to children and the elderly. Maybe he’ll make state employees take even more days off. Maybe he’ll release every non-violent offender from state prisons. The point is Quinn must make these tough choices — the General Assembly apparently has little interest in making tough choices in a time of economic crisis.

Finally, the 2010 budget might not last through the fiscal-year (July 2009-June 2010). Lawmakers may vote for a tax increase in the fall or after their primary elections in the winter.  This is not only a little spineless but assumes that Illinois voters will be upset with a tax increase (yet at the same time oblivious to said increase transpiring right after the election) but won’t mind cuts in social services and public employee layoffs.-MB