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*** UPDATED x1 *** More budget deets leak

Tuesday, May 27, 2014

* I told subscribers about this earlier today

Although the so-called “middle of the road” budget plan may be more palatable to election-minded lawmakers, the new approach nearly guarantees Gov. Pat Quinn will have to navigate some serious financial potholes as he runs the state and plots his re-election chances against Republican Bruce Rauner.

The proposal, for example, won’t account for rising wages, higher health insurance bills and other unavoidable cost increases in the fiscal year beginning July 1, meaning even a flat budget in some state agencies could still seem like a significant cut — especially once the temporary tax hike expires at the end of the year.

“It’s still going to feel very draconian,” said Rikeesha Phelon, spokeswoman for Senate President John Cullerton, D-Chicago. “The agencies will have their challenges.”

Without an increase to payroll and health insurance lines, the state may very well be forced to lay off workers.

Earlier this year, the Senate Democrats estimated that total “increased costs from legally binding personnel contracts” for next fiscal year would be $373 million.

*** UPDATE *** So much for that idea

A bid to fight obesity through taxing sweetened drinks lost its fizz Tuesday as a House committee rejected a plan that could have injected $600 million into the state treasury.

The measure, which failed by a 2-7 vote, would have charged a penny more per ounce on sweetened beverages, making a 2-liter bottle of soda cost about 67 cents more than its artificially sweetened, zero-calorie counterpart.

“I think the public policy initiative is good; I just think you’re really hitting the consumer with a substantial tax that, to me, is not consistent,” said Rep. David Harris, R-Arlington Heights, who voted against the legislation.

But state Rep. Robyn Gabel, D-Evanston, the sponsor of the sugar tax, said the difference in cost was necessary because it incentivized choosing the healthier drink.

- Posted by Rich Miller        


24 Comments
  1. - wordslinger - Tuesday, May 27, 14 @ 11:51 am:

    Here come the layoffs. That should be economics everyone can understand. Keep your head down.


  2. - Sir Reel - Tuesday, May 27, 14 @ 12:02 pm:

    I know Illinois has the lowest number of state employees per capita and personnel costs are a fraction of the State budget, but a one third billion dollar increase in personnel costs a year is not sustainable. Unfortunately any layoffs to downsize the State workforce won’t target the patronage positions that are not contributing.


  3. - Ghost - Tuesday, May 27, 14 @ 12:14 pm:

    Keep in mind this includes layoffs at revenue generating agencies, so they will need to reduce the budget more.

    Also since the pension system is kept afloat by using current worker contributions to help offset expenses, reductions in staff increase the burden on the State to cover this expense as well.


  4. - Norseman - Tuesday, May 27, 14 @ 12:22 pm:

    Nothing is sustainable if you act irresponsibly.


  5. - archimedes - Tuesday, May 27, 14 @ 12:22 pm:

    Sir Reel @ 12:02

    So - how is a $373 million increase in total personnel costs not sustainable? What % increase is that of total personnel costs? IS that a one time increase - or do costs increase to that extent each year?

    I get tired of throwing out absolutes like some cost is not sustainable.

    The General Revenue budget goes up about $1 billion a year (barring deliberate actions like not extending the income tax). This $373 million may not be a recurring increase into the future.

    The General Assembly has deliberately created an imbalanced financial system - blaming contractual personnel costs is a red herring.


  6. - Plutocrat03 - Tuesday, May 27, 14 @ 12:35 pm:

    Personel direct and indirect compensation tends to rise each year. e.g. raises and cost of insurance etc.

    It is most likely that the figure quoted is an annual increase.


  7. - Formerly Known As... - Tuesday, May 27, 14 @ 12:36 pm:

    This would be quite a disjointed approach to running things. Mr. Quinn already claims credit for ending the process of fund “sweeps” that Blago started in 2003 http://capitolfax.com/2011/10/28/supremes-to-ga-sweep-away-cogfas-advice-unclear-on-the-concept/ Supporting a funds “sweep” could be risky for him in that regard.

    As that story also notes, however, Mr. Quinn is open to “borrowing” from those funds. Doing so would be consistent with his prior comments and help avoid accusations of flip-flopping.

    Unfortunately, if we borrow money from those funds to cover our expenses now, the problem becomes doubly worse when we have to cover those same expenses next year while also repaying the money “borrowed” from those special funds.


  8. - Union Man - Tuesday, May 27, 14 @ 12:39 pm:

    I think we should pay all the members of the General Assembly, minimum wage as they provide minimal solutions to the states problems. If they were paid based on their merits, they’d be paying us to work there. Most are useless.


  9. - Formerly Known As... - Tuesday, May 27, 14 @ 12:42 pm:

    A shorter way of phrasing things is that I do not envy the Governor’s choice. Neither one is pretty for him should a funds sweep or fund borrowing wind up being “the plan”.

    He might be better off sticking to his guns publicly, advocating for the tax increase and then pleading he has no choice but to sign the bill if this is what the legislature sends him.


  10. - Anon - Tuesday, May 27, 14 @ 12:47 pm:

    == Unfortunately, if we borrow money from those funds to cover our expenses now, the problem becomes doubly worse when we have to cover those same expenses next year while also repaying the money “borrowed” from those special funds.==

    It’s a problem for the winner of the gubernatorial election because he is required to propose a balanced budget for FY 16.


  11. - Ghost - Tuesday, May 27, 14 @ 1:05 pm:

    On the soad thing, we dont need new taxes, we just need to staff up and enforce the taxes and fees we have.

    also we need to stop with the sin taxes! punishing people with taxes for behavior the government does not like is scary stuff. What if we tax all haircuts that are not a certain way, or if your busghes arent trimmed how we like you get a fee….

    this pavlovian use of taxes to direct behaviour is a horrible way to develop a tax code.


  12. - Arizona Bob - Tuesday, May 27, 14 @ 1:08 pm:

    =Earlier this year, the Senate Democrats estimated that total “increased costs from legally binding personnel contracts” for next fiscal year would be $373 million.=

    Seems like SOMEONE in Springfield did a lousy job of negotiating labor contracts if they gave these kinds of raises without funding available to do it.

    How does the GA square negotiating these raises when they didn’t have the money to pay for it?

    What am I saying? When does available funding EVER become a consideration in the GA and Guv appropriating spending? Just look at all the pork bills passed by the Dems a few weeks ago….


  13. - Just Observing - Tuesday, May 27, 14 @ 1:31 pm:

    === But state Rep. Robyn Gabel, D-Evanston, the sponsor of the sugar tax, said the difference in cost was necessary because it incentivized choosing the healthier drink. ===

    I beg differ over what is the “healthier” drink — for health purposes, I would take a naturally sweetened soda over a chemically sweetened soda any day.


  14. - Anon - Tuesday, May 27, 14 @ 1:45 pm:

    Ghost - I think the difference is that many “vices” create negative externalities for society, unlike a haircut or shrubbery. Much like with smoking, drinking soda has demonstrably negative health effects, the costs of which are borne by society in the form of higher health care expenses. A “soda tax” or other such “sin taxes” are attempts to internalize those externalities, so that the person choosing to indulge in the vice is bearing the cost, rather than society at large.


  15. - Jimbo - Tuesday, May 27, 14 @ 1:46 pm:

    AZ Bob, that contract was a major win for the state. The contract provided no raise in the first year, followed by a raise of 2% in July of the next two. Additionally, employees pay a percentage of healthcare cost rather than the fixed amount previously agreed upon. By all means though, Bob, continue to opine on things you know little about from your ivory tower in the desert.


  16. - Formerly Known As... - Tuesday, May 27, 14 @ 1:53 pm:

    == It’s a problem for the winner of the gubernatorial election because he is required to propose a balanced budget for FY 16. ==

    It certainly is.

    “We” is meant in terms of us as a state, rather than any one party.

    Regardless of who the Governor is, fund borrowing would mean that next year Illinois must come up with either more money or even deeper cuts than we already do today. We would still have to address the same shortfalls we face today, plus pay back the “borrowed” money from those funds. It would delay making a decision, but it would also exacerbate the problem for next year.


  17. - Formerly Known As... - Tuesday, May 27, 14 @ 1:56 pm:

    == What % increase is that of total personnel costs? ==

    That’s a good question. I do not recall seeing a specific statewide line item for this in any of the budget docs or anything from CGFA, GOMB, etc.

    You would have to go through every agency and manually tally the numbers, wouldn’t you? Does anyone know a simpler place to find that figure?


  18. - DuPage - Tuesday, May 27, 14 @ 2:09 pm:

    “Borrow from these funds?” The best one I have heard all day. They “borrowed” from the pension funds for many years. The only difference I see is the pensions have constitutional protection, these other funds do not.


  19. - Newbie - Tuesday, May 27, 14 @ 2:11 pm:

    Thank you, Just Observing. Not enough people are pointing out the “health” aspect of this. Diet soda is not the healthier choice. Artificial sweetener is likened to poison and banned in many countries. It causes kidney stones, Parkinsons, cancer, etc. How about taxing the diet soda and hope people learn self control and drink the real stuff in moderation. That would be the “healthier” choice.


  20. - Norseman - Tuesday, May 27, 14 @ 2:26 pm:

    === … demonstrably negative health effects, the costs of which are borne by society in the form of higher health care expenses. ===

    There are very few things in a grocery store where this rationale can’t be used to justify taxes under this criteria. The same can be said of behaviors or lack thereof. Maybe you should be taxed if you fail to exercise for the recommended time.

    If revenue is needed, raise taxes. Just don’t try and convince me this is a more justified tax than any other.


  21. - Both Sides Now - Tuesday, May 27, 14 @ 3:03 pm:

    There has been study after study indicating that artificially sweetened drinks are just as bad or worse for you than those sweetened with real sugar. Therefore the logic of taxing “unhealthy” drinks sweetened with something real rather than artificial is flawed.


  22. - low level - Tuesday, May 27, 14 @ 3:05 pm:

    AZ Bob - you are one of the biggest fools ever to post here.

    State workers have a contract that provided one of the smallest increases in wages of any state in the nation. What’s the average increase each year? $20-50? Big money, for sure.

    Thanks to fanatical opposition to taxes of any sort, now there will be layoffs, which will result in the downward spiral described above (more unemployment claims, less people in revenue collecting agencies, etc).

    This is why I call people like you CONservatives. You are con artists. You want services but don’t want to pay for them.
    When I started out 20 years ago I could have a legitimate discussion with friends in the Edgar Admin over taxes, workforce levels, appropriate role of government.

    Those were conservatives in the truest sense of the word. People like you are radical — so far to the right you think any spending is wasteful, that govt workers should work for free, but God help us if roads have cracks in them. Prisoners excaping because DoC budget was cut?!

    Yes…but at least we got our income taxes to go back to 2011 levels, right? Yay! More of my own money to keep!

    Unbelievable.

    (P.S. Sorry if you need to delete this or if I have violated the guidelines, Rich - but this guy is a perfect example of why a very reasonable solution and compromise cannot be found, IMO).


  23. - Capitol View - Tuesday, May 27, 14 @ 4:39 pm:

    so the state is now doing to itself what it has been dinog to community based providers for years — pretending that a stable budget is not a cut.

    But the state can always have bake sales for itself, which I have believed was the state response to community based human services underfunding — no, wait, Sen Trotter made that unworkable, too.


  24. - steve schnorf - Tuesday, May 27, 14 @ 10:54 pm:

    in the word of a (slightly altered) old country song,
    Here we go down that wrong road again
    Goin’ back where we’ve already been
    Even knowin’ where it will end
    Here we go down that wrong road again

    Read more: Crystal Gayle - Wrong Road Again Lyrics | MetroLyrics


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* Question of the day
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