The Morrison Memo: June 3, 2015

Session May 31 Deadline Passes with No Budget Agreement
The May 31 session adjournment date came and went on Sunday with no consensus on a 2016 budget. A Democrat spending package that was nearly $4 billion out of balance was approved earlier in the week, even though Governor Bruce Rauner has said emphatically that he will not look at new revenue sources until Democrats pass some of his fiscal and business reform initiatives.

At the start of the session day on Sunday, Speaker Mike Madigan announced that the House will be in “continuous session” throughout the summer. Members of the House were told to be back in Springfield this week on Thursday, June 4 and that members could be called back to Springfield throughout the summer with as little as 48 hours’ notice. The Speaker also said that the Representatives would not be receiving mileage reimbursement or per diem pay for the summer session days.

House, Senate Democrats Pass Unbalanced State Budget

Ignoring their constitutional responsibility to enact a balanced budget, the Speaker of the House and President of the Senate rammed through spending bills in the final days of May that they readily admitted they could not pay for, while at the same time walking away from the reform negotiation groups put together by Governor Rauner.

Illinois is estimated to bring in $32 billion next year, and the Democrats proposed budget would spend over $36 billion. The proposed spending is 12% higher than projected revenue and would push the state’s backlog of bills to over $10 billion, equaling 30% of our total revenue. The Democrats budget gives false hope to those who rely on state services and is an outright lie to schools, service providers and the state’s most vulnerable.

With locked-in increases intended to cover higher costs for Medicaid expenses, pension contributions, and other mandated and constitutional responsibilities, the House Democrats’ FY16 budget calls for spending more than $36 billion. House Republican members rejected the unconstitutional budget; calling upon the majority to change course and come back to the negotiating table so that a responsible, bipartisan budget with structural reforms can be agreed to. On party-line votes, the Democrats’ spending bills were approved by the Illinois House and Senate.

Rauner Administration Initiates Budget Management Steps in Preparation of Madigan-Cullerton Budget
In the final days of May, House Speaker Mike Madigan, Senate President John Cullerton and their allies in the General Assembly pushed through a FY16 budget that is close to $4 billion out of balance.

Think about that. The FY15 budget was between $1.4 billion and $1.5 billion out of balance, and that shortfall created a mid-year funding crisis for important state services, like court reporters, prison guards, and key human and social services for our state’s most vulnerable citizens. When he took office on January 12, 2015, Governor Rauner inherited that unbalanced budget and he worked diligently with House and Senate Republicans to eliminate the deficit without raising taxes. Because of this action, Illinois is projected to end FY15 on June 30th with a balanced year-end budget.

With the upcoming Madigan-Cullerton budget deficit, which is more than double that of last year, a mid-year solution is not a possibility at this time. The Rauner administration announced yesterday that they will begin taking the necessary steps to manage state spending. Unfortunately, the Democrats refused to even consider reforms that would save the state money, so the Administration’s budget management options are limited due to the crisis.

While additional measures are still being finalized, budget management steps announced yesterday include:

Department of Commerce and Economic Opportunity (DCEO)
Effective Immediately

  • Immediately suspend of all future incentive offers to companies for business attraction and retention, including EDGE Tax Credits, Large Business Attraction Grants, Employer Training Investment Program Incentive Grants and Prime Sites Grants.
  • Immediately defer all application approvals for film tax credits and High Impact Business designations. 
  • All commitments previously made in any of these programs will be honored.

Action Initiated

  • Prepare and provide notice for the July 1, 2015 suspension of the State Low Income Home energy Assistance Program (SLIHEAP).
  • The federal portion of the program, funded at about $170 million, will continue.

Department of Transportation (IDOT)
Effective Immediately 

  • The Illiana Expressway will not move forward at this time. As a result, IDOT will remove the project from its current multi-year plan. It is the determination of IDOT that the project costs exceed currently available resources. The Department will begin the process of suspending all existing project contracts and procurements.

Action Initiated

  • Beginning July 1, 2015, IDOT will “ground” all state plane passenger service. Planes will be maintained and will be available for emergency purposes only.

Department of Juvenile Justice (DJJ)
Action Initiated

  • Begin the process of identifying one or two juvenile correctional facilities for closure.
    • The juvenile justice system has a surplus of capacity.
    • Capacity currently includes approximately 1,200 beds with 700 beds occupied.

Department of Corrections (DOC)
Action Initiated

  • Begin the process of closing the Hardin County Work Camp.
    • Approximately 180 inmates will be moved.
    • Approximately 60 Work Camp staff will be affected.

Department of Healthcare and Family Services (DHFS)
Action Initiated

  • Implement an audit review of nursing home reimbursements to ensure payments comply with the recently implemented new rate structure.
  • Recover overpayments to nursing homes and implement financial penalties for improper billings.

Illinois State Police
Action Initiated

  • Immediately freeze all vehicle purchases.

Department on Aging
Action Initiated

  • File emergency rules to enact means testing to Aging’s Community Care Program (no income limit currently exists).
  • Increase the Determination of Need (DON) Score required to obtain services through the Department’s Community Care Program.

Department of Human Services (DHS)
Action Initiated

  • DHS will pursue cost control strategies through emergency rules for the Childcare Program.
    • Increase co-pays for parents using the program.
    • Freeze intake and create waiting lists.
  • DHS will also begin background checks for relatives providing child care. Background checks are currently required for child care licensed centers, group homes and non-relatives who provide care.

Department of Natural Resources (DNR)
Action Initiated

  • The Department will not award Open Space Land Acquisition Development Grants in FY16.
  • The Department will begin the process to suspend operations and close the five state museums to visitors. The state will continue to maintain and secure the museums to protect the artifacts and exhibits.

This list is disturbing but represents a necessary step which will allow State Government to remain operational in the event that the budget impasse is not resolved very soon. I will continue to keep you up to date on this very important issue as any additional decisions are made.