State Budget Update

I haven't given a report on life in Springfield for some time, so I thought I would share what I know in terms of the Governor's budget speech yesterday.

All reports coming from the Capital indicate that the collegiality and atmosphere is much improved with the absence of Rod Blagojevich. There is access to the Governor and other officials which has not existed for several years.

In terms of the budget, we know that Governor Quinn has proposed raising the state income tax as well as corporate taxes, license fees and cigarette taxes. There will be a great deal of discussion among legislators regarding any tax increases, but I am certain we will have some sort of tax increase. The State of Illinois will receive $2 billion in stimulus money of which 80% was to go to public education unless it has been adequately funded. In the definition of adequately funded schools, Illinois K-12 schools are listed as being adequately funded so the Governor is able to use the $1.8 billion in the general fund to help offset the state deficit. This is probably not a bad idea! Pension issues are still at the forefront of attention and the Governor has proposed a two-tiered system for new employees that would help improve the debt cycle caused by state pensions. It is also possible that there will be a capital program to create jobs and allow Illinois to access federal funds for road construction. Former Legislator Gary Hannig has been appointed to head IDOT and will apparently manage millions of dollars of work that is shovel ready.

In terms of school funding, the Governor is following the budget request of the Illinois State Board of Education (ISBE) which contained modest increases, found mainly in the Foundation Level, by $130 per student and fully funding mandated categoricals such as special education costs and student transportation costs. In terms of payments from the State of Illinois we are running 63 days behind with the State now processing bills from November of 2008. We are hoping to receive all of these funds although some payments may reach into FY 10. The impact of any federal stimulus money is still unknown and will be saddled with excessive rules and regulations that will make it difficult to use effectively. The famous SB 750 has appeared again in a new format, this time relying on property tax relief instead of tax swap. Needless to say, everyone appears to be unhappy with this budget proposal including legislators and representatives of the many special interests groups. Let the fun begin...