* This decision won’t be loved by anybody who relies on a special state fund…
The Illinois Supreme Court may have opened the door for Gov. Pat Quinn and state lawmakers to grab hundreds of millions of dollars for the next state budget.
In a 6-to-1 decision Thursday, the high court upheld a 2006 Sangamon County Circuit Court ruling that backed the governor and Legislature’s ability to take money from hundreds of special state funds, a practice commonly referred to as sweeping.
Motorcycle riders sued former Gov. Rod Blagojevich after he ordered that $296,000 be taken from the Cycle Riders Safety Training Fund, or CRSTF. A portion of the fee for an Illinois motorcycle license went into the CRSTF, which the motorcycle education and advocacy group A Brotherhood Aimed Towards Education, or ABATE, argued, was only to be spent on motorcycle safety education. The governor that year used the $296,000 to pay general state bills.
“Clearly, the fee charged by the state for motorcycle registration and licensing is state revenue, and therefore the portion of this state revenue which the General Assembly has allocated to the CRSTF is also public money,” wrote Justice Anne Burke in the majority opinion.
Burke rejected the ABATE lawyers’ argument that the special fund was tantamount to a special trust fund.
The full opinion is here.
* Quinn, however, has no plans to sweep…
Quinn’s budget spokeswoman, Kelly Kraft, said there are no plans to sweep any special funds for the next state budget.
“Gov. Quinn worked to end the practice of fund sweeps, and sweeps are not a possibility for FY13,” said Kraft.
But the governor has come to rely on interfund borrowing. Quinn borrowed $500 million from special state funds in the current state spending plan. That money is supposed to be paid back at the end of the fiscal year.
* Considering the growing war between the governor and the General Assembly, I wouldn’t be too sure that Gov. Pat Quinn will necessarily follow precedent…
A legislative commission’s vote against closing four state facilities that treat people who are mentally and developmentally disabled isn’t enough to prevent Gov. Pat Quinn from shuttering the facilities.
The Commission on Government Forecasting and Accountability, or COGFA, voted to keep the following facilities open: Singer Mental Health Center in Rockford; Chester Mental Health Center in Chester; Mabley Developmental Center in Dixon; and Illinois Youth Center in Murphysboro.
Quinn announced he was targeting seven down-state facilities for closure, because the General Assembly’s $33.2 billion budget didn’t give him enough money to keep the doors open and their 1,938 employees working. Quinn introduced a proposed budget of about $36 billion.
“Their recommendation, unfortunately, doesn’t change the reality of the budget we’re tasked with managing,” Brooke Anderson, a spokeswoman for Quinn, said. […]
COGFA’s vote is only advisory, meaning that Quinn still can close the centers.
“However, no administration has ever moved contrary to how the commission has recommended,” state Sen. Jeffery Schoenberg, D-Evanston, and co-chairman of COGFA, said. “He could if he wanted to, but it would set a precedent.”
If the GA doesn’t find the money to keep those facilities open, then Quinn may have to follow through. So far, nobody has come up with alternatives. The only major legislative proposals we’ve seen from the Republicans (whose facilities were targeted) have been about cutting taxes by hundreds of millions of dollars, not finding ways to move money around or generate new revenue.
* And, finally, the Tribune editorial board really needs to get itself a clue…
No, Gov. Quinn, you may not borrow more money, no matter how often you call it “restructuring” or any other euphemism. Borrowing is borrowing. It’s a big reason why Illinois is drowning.
First, the state is not “drowning.” That’s just the Tribune’s hyperbolic goofiness showing through. Secondly, the state is already borrowing from struggling small businesses, not for profit social service providers, hospitals, doctors, pharmacists, road builders, etc. by not paying our bills on time. The state has mostly dealt with its structural debt through cuts and tax hikes. The problem is the old bills, which will take years to pay down, one way or the other.
Either Illinois sells bonds or it continues making late payments to its vendors for years and does major budget cuts along the way. Selling bonds is a lot less painful to all involved. In other words, the difference is we can shaft our own businesses and not for profits by borrowing from them, or sell bonds on the market. So, of course, Mother Tribune demands we continue shafting the little guys, whack the budget and slash pensions and healthcare.
- wordslinger - Friday, Oct 28, 11 @ 11:34 am:
The Tribbie editorial board is clueless.
But then again, they’re world-class deadbeats as well, only they had the protection of a bankruptcy court.
How those guys can lecture on fiscal responsibility while in bankruptcy, or on pensions after Zell stole their ESOP, is the ultimate in chutzpah.
- Don't Worry, Be Happy - Friday, Oct 28, 11 @ 11:42 am:
Rich-
You’re dead-on about the State already borrowing the money from the vendors. The other point to make is that the State is paying those vendors a very high interest rate for the privilege of borrowing from them. Doing a short term bond would get them a lower interest rate for that debt, and would actually constitute a spending cut!
Using the Trib’s thinking, I shouldn’t refinance my mortgage at a lower interest rate to save money, because I would simply be borrowing more money. Never mind that the new loan is used to pay off the old loan.
- walkinfool - Friday, Oct 28, 11 @ 11:54 am:
Many Trib reporters have been good and solid over the years. The Trib editorial board disgraces them and the newspaper, with baseless arguments.
I don’t begrudge them their opinions; I do mind them falsifying simple facts, (e.g. this is clearly not “borrowing more money.”)
The Trib editorial board cannot be that stupid, can they? They simply choose not to meet their basic responsibilities as a free press, which we need for our democracy to succeed.
Sorry for the soapbox.
- soccermom - Friday, Oct 28, 11 @ 12:04 pm:
I realize this is an unpopular position, but I do think it’s important to look at the total cost of borrowing, not just the rate. If I borrow 1,000 bucks from you at 20 percent annually and pay it off in six months, that will cost me less than borrowing at 2 percent and paying it off over 30 years.
- JBilla - Friday, Oct 28, 11 @ 12:05 pm:
I’ve become more and more disappointed in the fare put forth by the Trib and Sun Times. No offense Rich, there are still some good ones out there: Kass, Zorn, Miller, Steinberg, Dumke (Reader), Miner (Reader), Jarovsky (Reader), Hilkevitch, Page, Schmich, Marin, Swartz (RedEye) and a few others.
With the changing (cratering) economy, we need everyone to pick up the slack and offer ideas. Simply dismissing borrowing is as dumb as simply dismissing taxes, is as dumb as simply dismissing the importance of jobs in Illinois. We can talk in a three way circle till we are blue in the face, or we can come up with ideas. Good ideas, of what kinds of business to go back to school for, of which companies will do well in the future, of which local companies need a hand up, and which companies should be wooed away from other places. Instead, I see a static state of nonsense. I see a reactive press, a reactive government, and an unwillingness to bring all the relevant parties to the table and do something right. The issue of the day is jobs. Not the number of people unemployed, or how unemployment affects the GDP, or what Obama or Romney, or Madigan or Quinn has to say about it, it’s where are the job fairs, where are the classes on specific jobs, which staffing firms work with which industries, what are hourly pay rates, resume tips, and future market opportunities. For instance, I support a smart grid, because I studied it in school and I know the necessary improvements it entails. I haven’t seen an article in the Trib or Suntimes that laid out the features of a smart grid: on demand battery packs for community energy storage, high power transmission lines and next generation transformers, bi-directional digital meters, DC quick chargers for electric cars, and real time market based pricing. All I hear is the dollar amount it will cost, which is either read from one press release or the other, and which politician is for or against. We need a more informative platform, and one that addresses the most important issue of the day: JOBS.
- soccermom - Friday, Oct 28, 11 @ 12:06 pm:
Of course, you can make the point that borrowing and paying off all the bills at once pumps $4.5 billion into the state economy now when we need it. And there is definitely the moral issue of borrowing money from struggling non-profits without their consent. I’m just saying it’s not as simple as comparing interest rates…
- Rich Miller - Friday, Oct 28, 11 @ 12:07 pm:
soccermom, I don’t disagree. But nobody is talking about a 30-year bond here. Also, you have to look at the real damage the state is doing to providers. The state uses private providers to save money. If they go under, we’re in real trouble.
- Leroy - Friday, Oct 28, 11 @ 12:07 pm:
1.) As part of the Senate Republican budget plan announced in the spring, they noted at least 12 (or was it 15) members of their caucus could put votes on rebalancing expensive institutional care…
2.) I am glad Rich Miller is pointing out the BS in the Trib’s editorial. Maybe the Trib should check out the Partner’s for Human Service impact study on late payments..http://illinoispartners.org/sites/default/files/FINAL_Illinois_general_budget_impact_fact_sheet.pdf
- cynical - Friday, Oct 28, 11 @ 12:08 pm:
The problem with borrowing at a better rate to catch up on the bills is that it assumes the state will suddenly start acting fiscally responsible. With our current set of brilliant politicians what would happen is that we would get caught up on our bills now, but then eventually let them slide until we’re once again as behind as we currently our. Someone will say, “hey, we come up with x amount of dollars if we just delay our payments from 30 days to 60 days”. Then the 60 becomes 90, etc. And of course they can justify that because everything is an emergency when you don’t work a budget responsibly. And I said “work” a budget, which implies tracking income and spending continuously and making adjustments as needed instead of making a plan once a year that is both initially out of balance and immediately ignored. The state didn’t just suddenly get behind by billions of dollars. It happens everyday that more money is spent that came in. Speaking of that, when is the income tax increase supposed to start helping things?
Anyway, it’s like taking a 2nd mortgage to pay off the credit card, and then running the cards up to the limit again. You DO end up with more debt unless your spending habits change, and I just don’t see that happening with our current elected goofballs.
- soccermom - Friday, Oct 28, 11 @ 12:15 pm:
Rich, I agree with you about the morality of failing to pay state vendors. I’ve been screaming for more than two years that this is ultimately a jobs issue, and that we need to get out in front and explain how many jobs are dependent on the state’s paying its bills on time. Not to mention — when we contract these services out to non-profits, Illinois taxpayers are not on the hook for the providers’ retirement costs.
I just think it’s deceptive to make the argument based on comparing interest rates. Let’s compare the total costs of borrowing, vs. the cost of lost jobs — and that includes unemployment compensation as well as lost tax income. And then let’s look honestly at those numbers and talk about what makes the most sense today and what makes the most sense looking forward. This is a math problem, and we should be able to discuss it rationally. (”To dreeeeeeeam the impossssible dreeeeaaaammm….”)
- Rich Miller - Friday, Oct 28, 11 @ 12:21 pm:
I don’t think I’ve made the argument about interest rates.
Everybody wants to talk about helping struggling businesses. Well, the vast majority of state vendors are businesses, both for- and non-profit. The government is one of the biggest drags on this state’s economy.
When the Republicans had the governor’s office and exerted real power in the Senate and House, they understood that making sure vendors were paid was important, partly because so many vendors were Republicans, but also because vendors are businesspeople and the GOP tends to side with business. Now, though, they just don’t care.
- Yellow Dog Democrat - Friday, Oct 28, 11 @ 12:47 pm:
1. We could pay off our old bills somewhat quicker without borrowing if we ended taxpayer subsidies for the newspaper industry. Please, someone file a bill.
2. I’m no lawyer and haven’t read the briefs or opinion on the special funds case, but I think the plaintiffs would have made a better argument if they had simply relied on Article IX, Section 2 of the Constitution:
“In any law classifying the subjects or objects of
non-property taxes or fees, the classes shall be reasonable and the subjects and objects within each class shall be taxed uniformly.”
It is reasonable to charge a fee for gun licenses or hunting licenses to operate a license registration system or maintain public lands and manage wildlife for their enjoyment.
It is NOT reasonable to charge a fee for gun licenses and hunting licenses for the general operation of state government.
That said, this is a hollow victory for the governor, General Assembly, and taxpayers. Special funds may indeed be swept to balance the state budget, but no one will ever again propose a special fund and fee be imposed upon themselves to provide state services, meaning the taxpayers as a whole will pay.
BTW, that includes fees set up to sustain the operations of the Courts.
If I were ABATE, I would push for legislation in response that abolishes the special fund and its associated fees. Let the GA figure out how to pay for programs out of general revenue.
- soccermom - Friday, Oct 28, 11 @ 12:47 pm:
Rich — I wasn’t focused solely on you. (Sorry.) Other folks keep talking about the current interest rate vs. the bond rate, which I find overly simplistic.
- Tom Joad - Friday, Oct 28, 11 @ 1:43 pm:
Does the Supreme Court decision that the sweep of the Motorcycle Safety Fund was legal mean that the funds that had legislation passed saying their fund couldn’t be swept are included? It seems that it does. It would also include the check offs on the State Tax Return. Maybe this will result in groups trying to get their cause on the state tax check off list to think twice about using this method to raise money for their causes.
- Capital View - Friday, Oct 28, 11 @ 3:05 pm:
I’ve said it many times, and I’m glad to see you say it as well, Rich — Illinois state government is one of the worst drags on the Illinois economy.
I wonder if we can create a cluster of expected late payment interests that the state expects to pay, and use that budget amount as the annual interest and principal amount against bonds borrowing. Then it does not cost the state anything.
And about our declining reporting and editorial policies of our major newspapers –
perhaps it is time to collect sales tax on newspapers, as more that a few states already do.
- maddem - Friday, Oct 28, 11 @ 4:32 pm:
When the Trib declared bankruptcy, it had $13 billion in debt and $7.6 billion in assets–a deficit of $5.4 billion. More that the Governor wants to borrow.
http://dealbook.nytimes.com/2008/12/08/tribune-files-for-bankruptcy/
- Chefjeff - Friday, Oct 28, 11 @ 4:54 pm:
I remember the Thompson (Republican) administration running 120 days to pay bills because the money ran out in the budget. I missed going BK by a hair, but closed and 10 people lost good jobs.
The most frustrating thing was State payables could tell you exactly when they would send a check, but it was not soon enough to cash flow my business.
- sal-says - Friday, Oct 28, 11 @ 5:53 pm:
It’s pretty clear. The Trib has apparently lost its’ editorial way some time ago. Hey, it’s the Trib.