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A Line Drawn In The Sand – The 2016 State Budget Proposal     

Governor Rauner laid out his first proposed state budget for FY 2016 today.  As he promised, it was not the traditional approach.  The budget can be best summed by the Governor when he stated; “The budget outlined today is the budget Illinois can afford, and that in itself is an example of “thinking anew.”  Because for far too long we have been living beyond our means – spending money that Illinois taxpayers could not afford.”

The budget calls for no tax increases or new borrowing.  It proposes to spend down the unpaid bill backlog by $500 million and increases elementary and secondary education by $300 million.  However, this is where the spending stops and the cuts start.  Governor Rauner called for approximately $6.1 billion in reductions from all funds for the FY 2016 budget.  The total proposed budget is $61.8 billion which includes General Revenue Funds (GRF), other and special funds, and federal funds.  Total GRF will be $28.4 billion, representing a 6.1% reduction from the current Fiscal Year GRF appropriations.

One of the major areas of reduction will come in reduced pension costs by moving all state employees, except for police and firefighter, to some type of a 401(k) plan for future time earned.  The Governor stated he believed this will save the state more than $2 billion in the first year.  This will undoubtedly face significant opposition from the employee unions, who are likely fight the proposed changes through legislation and in the courts.  This is becomes even more contentious this year because a major portion of the AFSCME contracts are up for renegotiation.

Since the election, the Governor has made it clear that he would not be very popular, and with his proposed budget that premonition is going to come to fruition quickly.  His budget proposes cuts to a host of programs including:  cuts to municipalities and counties who see their part of the State Income Tax receipts reduced, hospitals and nursing homes who see cuts in reimbursement rates for Medicaid, higher education cuts, human services program cuts like the Alcohol and Substance Abuse program, cuts to funeral and burial services through Family and Community Services, and cuts to other programs for developmental disabilities.

This clearly marks the beginning, but not the beginning of the end.  The budget proposal will now be vetted through appropriations committees in both chambers.  The hardest part will be securing the votes to pass a final budget.  If an agreed, bi-partisan compromise cannot be reached there will either be no budget passed or a budget that the Governor would most likely veto.  Under either scenario, it is looking more likely this will be a long, drawn out battle.  The General Assembly and the Governor may have to make plans to spend their summer at the State House.  Stay tuned.
 
STATE BUDGET OVERVIEW

Other highlights included in the Governor’s proposed budget are as follows:

Pension Reform Summary

  • No changes to benefits for current retirees or for police or firefighters
  • Enables pension reform saving the state approximately $2.2 billion in the first year.
  • Lowers Cost of Living Adjustments (COLA) for benefits earned after July 1, 2015 to 3% or half of inflation, whichever is lower
  • Payment of benefits earned after July 1, 2015 would not begin until age 67. Benefits earned before July 1, 2015 can be paid based on retirement ages now in law.
  • End-of-year salary cap for teachers would be lowered from its current 6% to prior year’s increase in the CPI to prevent late career salary spikes. Any pension costs caused by salary increases over the rate of inflation would be paid by local employers.
  • Overtime pay going forward would not be counted in final average salary.
  • Provides an optional buyout plan for employees starting before 2011. Employees would receive a lump sum payment for a starting balance in a defined contribution plan, similar to a 401K, in exchange for agreeing to a reduced COLA on benefits earned before July 1, 2015.

Employee Group Health Care

  • Saves $700 million by bringing costs more in line with the taxpayers who pay for the state employee benefits
  • The per employee premium cost of the program has more than doubled over the past 15 years, and the per employee premium cost is currently 23 percent higher than the national average.

PK-12 Education

  • Adds $300 million for K-12 classrooms
  • Increases early childhood education by $25 million

Higher Education

  • Reduces funding for universities by approximately $387 million
  • Preserves funding for community colleges and MAP grants

Local Government

  • Reduces the amount of transfer to local governments by approximately $600 million

Medicaid

  • Re-institutes SMART Act reforms to save $320 million
  • Reportedly saves $75 million by reinstating aggressive review of eligibility

Criminal Justice

  • Increases Dept. of Corrections staffing by 473 positions
  • Increases funding for the Mental Health Programs in the Dept. of Corrections and increases funding for Adult Redeploy by more than 50%

Transportation

  • The annual road construction element supported by the road and state construction fund is $1.85 billion, over a $120 million increase.

AGRICULTURAL BUDGET LINE ITEMS

The Governors FY16 recommended budget for the Department of Agriculture includes a total recommended appropriation of $97,709,600, which represents a decrease of $4,037,700 when compared to the FY15 enacted budget. When broken down, the FY16 recommended appropriation includes: $19,184,400 in General Revenue Funding, $65,535,200 in Other State Funding, and $12,990,000 in Federal Funding. The most significant reductions in the proposed budget plan come from line item reductions to Horse Racing (-$2,794,400) and State Cooperative Extension (-$2,198,900). The proposed FY16 headcount is projected to be 393, an increase of 18 employees.

(In $ Thousands)

FY 2014 Actual Appropriation

FY 2015 Enacted Appropriation

FY 2016 Projected Appropriation

% Change FY15-FY16

General Revenue Funds

$21,558.3

$22,508.3

$19,184.4

-14.8%

Other State Funds

$65,108.0

$66,296.7

$65,535.2

-1.1%

Federal Funds

$13,139.3

$12,942.3

$12,990.0

0.4%

Total

$99,805.6

$101,747.3

$97,709.6

-4.0%

The following are major agricultural related budget line items and their proposed levels for the FY 2016 budget:

 

Line Item

FY 2014 Actual

FY 2015 Enacted

FY 2016

Projected

Cook County Extension

$2,449,200

$2,449,200

$1,959,400

State Cooperative Extension Service Trust Fund

$10,994,700

$10,994,700

$8,795,800

Ag Extension - 4-H

$786,400

$786,400

$786,400

SWCD Cost Share

$3,000,000

$3,000,000

$3,000,000

SWCD District Operations

$4,500,000

$4,500,000

$4,500,000

Co. Fair and Exposition Authorities

$900,000

$900,000

$900,000

Co. Fair Rehabilitation

$1,301,000

$1,301,000

$1,301,000

Co. Fair & Agriculture Societies

$1,798,600

$1,798,600

$1,798,600

Viticulture/Enologist

$150,000

$150,000

$150,000

Administration of the Pesticide Act

$6,325,00

$6,500,000

$7,000,000

Pesticide Control Act

$650,000

$650,000

$650,000

Animal Disease Labs Act

$1,250,000

$1,000,000

$700,000

Livestock Management Facilities Act Administration

$30,000

$30,000

$50,000

Inspection of Agricultural Products

$1,000,000

$1,000,000

$1,000,000

Agricultural Education

$1,250,000

$1,800,000

$ 0

Food Safety Modernization Initiative

$200,000

$200,000

$200,000

 *Some funds in this year’s proposed budget were lumped into a GRF line item.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A Line Drawn In The Sand – The 2016 State Budget Proposal     

Governor Rauner laid out his first proposed state budget for FY 2016 today.  As he promised, it was not the traditional approach.  The budget can be best summed by the Governor when he stated; “The budget outlined today is the budget Illinois can afford, and that in itself is an example of “thinking anew.”  Because for far too long we have been living beyond our means – spending money that Illinois taxpayers could not afford.”

The budget calls for no tax increases or new borrowing.  It proposes to spend down the unpaid bill backlog by $500 million and increases elementary and secondary education by $300 million.  However, this is where the spending stops and the cuts start.  Governor Rauner called for approximately $6.1 billion in reductions from all funds for the FY 2016 budget.  The total proposed budget is $61.8 billion which includes General Revenue Funds (GRF), other and special funds, and federal funds.  Total GRF will be $28.4 billion, representing a 6.1% reduction from the current Fiscal Year GRF appropriations.

One of the major areas of reduction will come in reduced pension costs by moving all state employees, except for police and firefighter, to some type of a 401(k) plan for future time earned.  The Governor stated he believed this will save the state more than $2 billion in the first year.  This will undoubtedly face significant opposition from the employee unions, who are likely fight the proposed changes through legislation and in the courts.  This is becomes even more contentious this year because a major portion of the AFSCME contracts are up for renegotiation. 

Since the election, the Governor has made it clear that he would not be very popular, and with his proposed budget that premonition is going to come to fruition quickly.  His budget proposes cuts to a host of programs including:  cuts to municipalities and counties who see their part of the State Income Tax receipts reduced, hospitals and nursing homes who see cuts in reimbursement rates for Medicaid, higher education cuts, human services program cuts like the Alcohol and Substance Abuse program, cuts to funeral and burial services through Family and Community Services, and cuts to other programs for developmental disabilities. 

This clearly marks the beginning, but not the beginning of the end.  The budget proposal will now be vetted through appropriations committees in both chambers.  The hardest part will be securing the votes to pass a final budget.  If an agreed, bi-partisan compromise cannot be reached there will either be no budget passed or a budget that the Governor would most likely veto.  Under either scenario, it is looking more likely this will be a long, drawn out battle.  The General Assembly and the Governor may have to make plans to spend their summer at the State House.  Stay tuned. 

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