I am pleased to report that last week, after two painful years, Illinois state government passed a bi-partisan budget into law. The budget is balanced and includes cuts and new revenue as well as reforms requested by the Governor. The Governor vetoed the bills that included many of his requests, but the legislature acted in a responsible manner and overrode his vetoes to enact the budget. This will begin to put Illinois on a stable path.
As many of you called or emailed about the budget, I want to provide my analysis and links to the appropriations, revenue, and implementation bills. These three bills represent where the money goes, what money the state collects via taxes and fees to pay for it, and then exactly how the money gets from one account into the places it needs to be. There were reforms and changes made to all three bills during the process.
This budget reflects our state’s and our district’s values. It includes:
- $350 million additional funding for K-12 education
- $50 million increase for early childhood education
- Increases MAP grants by 10%
- Includes human service programs the Governor had eliminated
- Provides payment for human services and universities from last fiscal year
The budget enacted spends $800 million less than the budget the Governor proposed in February 2017. It includes billions in cuts mostly from a 5% reduction to state operations and a 10% cut to higher education as agreed to by the universities.
By reinstating the individual and corporate income tax to almost the level they were in 2014, an additional $5 billion will be generated to pay our current bills and begin to dig us out of the $15 billion backlog of bills accumulated since 2015. The increase in income tax to 4.95% was bipartisan and present in both the Democrat and Republican budget drafts, contrary to what you may have heard in the media.
Our bipartisan revenue bill:
- Immediately generates over $2 billion in cash to pay past due bills
- Allows for $6 billion in bond authorization to continue to pay down our bill backlog
- Closes abused corporate tax loopholes
- Raises additional revenue through modernizing the State Tax Lien Act and Revised Uniform Unclaimed Property Tax Act
Pension reform was addressed in the budget bill that includes a Tier 3 plan for Tier 2 members (if they elect) and future non-covered hires in state government and teachers. The optional Tier 3 retirement plan has two parts – a defined benefit pension and a defined contribution plan similar to a 401(k). This plan is estimated to save the state roughly $800 million when the pension plans begin to implement the choice of Tier 3.
A similar pension reform bill, Senate Bill 42, was passed by the legislature to what was proposed by Governor Rauner this spring but he vetoed it.
A worker’s compensation reform bill was passed by the House that would give the Illinois Department of Insurance the ability to control the rates charged by insurance companies to businesses. Soon after the 2011 Worker’s Compensation Act reform bill was passed, the national workers compensation board said that the rates in Illinois should be 18% lower. Due to the fact that the Illinois Department of Insurance has no regulatory authority, the savings were not passed down to the employers. HB 200 would fix this.
Also on the Governor’s desk, per his request, are:
- Changes to the Illinois state government purchasing laws
- Authorization for the Governor to sell the James R. Thompson State of Illinois building
- Elimination of the Abraham Lincoln Museum agency
Thank you for your patience, your emails, your calls, and your advocacy. Your support and ideas are much appreciated. We will all have to give a little more with this budget, but it will help the whole state.