Ill. Dems say $35B budget will help bill backlog
SPRINGFIELD – Illinois lawmakers call it the "April Surprise" – an unanticipated $1.2 billion increase in revenues that provided a rare bright spot in the state's otherwise dreary financial outlook.
But the one-time spike also has become a point of contention for Republicans as the Democratic-controlled Legislature moves forward with a new $35.4 billion general fund budget the GOP says "continues down a path of tax, spend, borrow."
The House and Senate each have passed pieces of the budget package and sent them to the opposite chamber. Final votes are expected to occur Thursday and Friday.
The April increase comes from tax payments from people and corporations that sold assets in 2012 to avoid higher tax rates that took effect in 2013. The influx of cash has surprised states across the nation, including California and Utah. But while other states' legislatures are debating whether to spend the money to restore previously cut programs or to set it aside as a rainy-day fund, Illinois lawmakers are dealing with a multibillion-debt to the state's vendors and service providers.
Democrats say they're putting the $1.2 billion toward the state's backlog of bills, allowing Illinois to completely pay off what it owes to human services organizations – such as those that serve the homeless and elderly – and to allocate the full amount of what state agencies expect they will spend next year.
In prior years, the Legislature approved budgets that lawmakers knew wouldn't cover the state's costs. That led to deficits being carried over from year to year and to the massive backlog of bills.
According to the Governor's Office of Management and Budget, the "April Surprise" will help decrease the backlog by $2.3 billion in the current fiscal year. By the end of the fiscal year that begins July 1, the total amount due would be $5.9 billion.
"We still believe it's very conservative," said Sen. Heather Steans, a Chicago Democrat and one of the Legislature's top budget negotiators.
Steans said the total budget will increase by about $1.9 billion, or 3 percent, over the current fiscal year. That jump is funded almost entirely from an increase in fees. Spending from the general revenue fund – or from income and sales taxes – will remain flat.
The budget avoids cuts to education for the first time in at least four years, and includes money for raises negotiated by the state's largest public employee union.
Republicans say they're worried the budget is going in the wrong direction. With a temporary income tax reduction scheduled to begin in 2015, they say Democrats should be cutting spending, not increasing it.
They also contend the state could have paid more toward its debt with vendors and service providers this year had the Legislature not approved additional spending for various agencies throughout the fiscal year that ends June 30.
Sen. Kyle McCarter, a Republican from Lebanon, said the state should put the $1.3 billion in such a fund and use it in two years, when the state will lose about $7 billion in annual revenue with the income tax phase out.
"It's much more predictable than the weather, it's not even right to call it a rainy day because we know it is going to rain," McCarter said. "We know the reason we have the windfall and we know it is going to go away, and the fact that we are so sure that it is going to go away, [it] is even a better reason for us to set the money aside."
And the GOP believes Democrats saw the "April Surprise" as a way to move money around and free up more dollars to spend next year on "pork" projects.
Sen. Matt Murphy, a Palatine Republican, said the budget "continues down a path of tax, spend, borrow that has crushed opportunity for people in this state and drove many to leave."
AP writer Kerry Lester contributed.