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* Subscribers were told about this development early today. AP…
Gov. Bruce Rauner’s office estimates a Senate proposal to break a nearly two-year Illinois budget deadlock would still leave the treasury billions of dollars in the red.
The review obtained Wednesday by The Associated Press shows tax increases floated in the Senate plan would increase revenue by $1.7 billion. But it says it adds more than $4 billion in spending. […]
But the budget office estimates the compromise Senate Democrats and Republicans put forth last week would only reduce the expected deficit by $1 billion [down to $4.3 billion]
As I told subscribers, after two years without a real budget nobody really cares about this fiscal year’s deficit as long as next fiscal year is balanced.
* The trouble is, GOMB’s analysis claims that next year’s proposal is out of whack, too…
The governor’s budget team says that $4.3 billion deficit for the current financial year would fall to $2 billion in the next one as money begins to roll in from the taxes proposed in the Senate’s budget framework, according to a copy the Chicago Tribune obtained.
The projected FY 18 deficit is actually $2.3 billion.
* More…
The math breaks down like this: Because of a series of court orders and laws that’s kept most of government spending on autopilot, the budget office estimates the state will spend $35.1 billion in the financial year that ends July 1. The analysis projects the Senate plan would bring in an extra $1.7 billion during that period, which would leave the state with $35.4 billion to spend. But the Senate plan calls for spending an additional $4.4 billion this year — including nearly $2 billion on employee health care that’s gone unfunded during the long-running impasse — hence the $4.1 billion deficit, according to the analysis.
Again, policymakers don’t care a huge amount about this fiscal year because it’s already half over, so coming up with a complete, balanced solution by the end of this June would be too painful on both the revenue and spending sides. There is a big push, however, to get a balanced budget by the end of next fiscal year. That’s understandable and desirable.
* Subscribers have a copy of the complete GOMB analysis (plus an analysis of the Senate’s “reform” proposals), but here’s what it says about FY 18…
Annualizing the new revenue sources in the Senate Plan for FY18 brings in an additional $5.4 billion in revenue compared to previous GOMB revenue estimates. This would bring total available general funds resources to $38.8 billion.
The Senate Plan does not include appropriations for FY18. As such, spending estimates rely on spending estimates previously contained in the GOMB 5 Year Report issued in November of 2016, which placed FY18 expenditures at $40.6 billion. Several items in the Senate Plan require adjustments to this spending level, including $650 million in pension savings, $85 million in procurement savings, an increase of $221 million related to CPS pension parity, and $1.1 billion in debt service for the $7 billion on General Obligation Bonds included in the plan to pay down old bills. With these adjustments, FY18 spending would total $41.1 billion.
With $38.8 billion in available resources, the projected spending total of $41.1 billion would lead to an FY18 budget deficit of $2.3 billion.
The Senate Democrats disputed these numbers yesterday, but haven’t yet put that on paper.
*** UPDATE *** From the Senate President’s spokesman…
We’ll check it out and see if changes need to be made.
The goal all along has been to produce a balanced, sustainable budget. We filed the legislation to invite input and constructive criticism.
The proposals remain under construction. We’ll look into this and take steps as needed.
posted by Rich Miller
Wednesday, Jan 18, 17 @ 4:40 pm
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Previous Post: Moody’s: Get a sustainable budget already
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Man, GOMB really has a quick turnaround, when it serves the governor’s agenda.
So, now that the governor has the facts from his whiz kids, he can come back with a counter if he doesn’t like it. That’s the way it’s supposed to work.
But if he’s going to continue to block the process due to his Turnaround Agenda, get the whiz kids working on those ROI numbers so we can understand his reasoning. You know they can do it, if he wants them to.
Comment by wordslinger Wednesday, Jan 18, 17 @ 4:51 pm
I see what’s going on here. It has to do with capping the healthcare expenses THAT HAVENT BEEN PAID. I get collection calls all the time about the state not paying their share for my kids braces. I paid my premiums but the state hasn’t paid yet. Now this is how Rauner is going to get his pound of flesh from AFSCME. Mark my words he’ll want that cap which will in turn change my healthcare. I smell perfidy here. Somebody tell me I’m wrong! I’m so sick and tired of Rauner trying to screw us at every turn.
Comment by Honeybear Wednesday, Jan 18, 17 @ 4:55 pm
Rauners torpedoing the grand bargain. Not enough labor pain for him
Comment by Honeybear Wednesday, Jan 18, 17 @ 4:57 pm
===Rauners torpedoing the grand bargain===
Nope.
This is a numbers thing.
Comment by Rich Miller Wednesday, Jan 18, 17 @ 4:58 pm
The Senate Democrats can dispute the fiscal analysis of the grand bargain all they want, ideologically Republicans I doubt can support it anymore unless GOMB numbers are totally falsified which is not likely. Skewed in a deficit increasing direction is indeed possible.
This makes Senator Christine Radogno look very bad for agreeing to this deal. Really how did she have the deal vetted by her caucus? Or did she at all?
The problem here is the closed nature of this deal making. No wonder it was all going to be run through the executive committee. This is an embarrassment for Republicans in the Senate and also for President Cullerton and his budget people assuming the GOMB number crunching is in the ball park.
Comment by Rod Wednesday, Jan 18, 17 @ 5:03 pm
@Wordslinger- It does seem like that was a quick turnaround on the analysis. Much faster than in the past. Could it be because there is trouble afoot for the plan to bring government to a halt?
Makes one think
Where is that TA ROI?
Comment by JS Mill Wednesday, Jan 18, 17 @ 5:10 pm
===Much faster than in the past===
Huh? It’s taken them a week. That ain’t fast by any stretch of the imagination.
Comment by Rich Miller Wednesday, Jan 18, 17 @ 5:12 pm
It’s obvious where this is going.
Rauner: “It’s a good start, but it’s not balanced. Get back to me when you have a balanced budget that includes reforms.”
Madigan: [silence]
I’m trying to stay optimistic, but it’s looking more and more like a “perfect is the enemy of the good” situation. Apparently our only options are (1) a budget that is balanced and satisfies everyone, and (2) no budget.
Comment by tobias846 Wednesday, Jan 18, 17 @ 5:14 pm
===looking more and more like a “perfect is the enemy of the good” ===
$2.3 billion deficit in 18 ain’t good.
Comment by Rich Miller Wednesday, Jan 18, 17 @ 5:16 pm
As pointed out by GOMB, until the pension bill is actually passed and the IL SC weighs in with a final decision, they better take out that $650M in pension savings out of FY18.
Comment by RNUG Wednesday, Jan 18, 17 @ 5:33 pm
This can’t be a big surprise. Rarely does ignoring a problem today make solving it easier in the future.
Comment by Pundent Wednesday, Jan 18, 17 @ 5:36 pm
–Huh? It’s taken them a week. That ain’t fast by any stretch of the imagination.–
Now that’s what we need! Someone to crack the whip on these numbers-crunchers to provide the necessary projections so informed decisions can be made on the governor’s turnaround agenda.
The governor has just been too nice to his peeps, what with those ROI numbers he promised about a year ago still not available.
Comment by wordslinger Wednesday, Jan 18, 17 @ 5:39 pm
===what with those ROI numbers he promised about a year ago still not available. ===
lol
Yeah. Different, though. We’re talking approp numbers here, not numbers pulled out of thin air to justify substantive legislation and then yanked back into the closet when informed the numbers are ridiculously low for all this pain.
Comment by Rich Miller Wednesday, Jan 18, 17 @ 5:41 pm
What’s the surprise? I think I read on this very blog that to start to dig out we have to look at a rate around 7 percent ZX plus tax at least some retirement income. The Senate plan is clearly just an opener, not a solution.
Comment by Skirmisher Wednesday, Jan 18, 17 @ 6:01 pm
–Yeah. Different, though. We’re talking approp numbers here, not numbers pulled out of thin air to justify substantive legislation and then yanked back into the closet when informed the numbers are ridiculously low for all this pain.–
Understood.
Comment by wordslinger Wednesday, Jan 18, 17 @ 6:05 pm
Hey you guys are off by $4 Billion.
Senate: Alright. We’ll check it out.
LOL.
Comment by BK Bro Wednesday, Jan 18, 17 @ 6:08 pm
It is a work in progress, but the numbers need to work.
Cuts and revenue.
The only fear now is can Radogno and Cullerton get this done with Rauner guaranteeing a signature in the end.
That’s still the ball game.
Comment by Oswego Willy Wednesday, Jan 18, 17 @ 6:12 pm
–$2.3 billion deficit in 18 ain’t good.–
But strictly from a numbers standpoint, it’s a heckuva opening gambit compared to where we’re at now.
Comment by Anonymous Wednesday, Jan 18, 17 @ 6:14 pm
I’m waiting for CGFA to weigh in. In their last 3 Year budget forecast, CGFA stated each 1 percentage point increase in the income tax rate added about 4 billion per FY in revenue. GOMB now states it’s less than half that? Yet GOMB never disputed the finding in the CGFA forecast.
Comment by Markus Wednesday, Jan 18, 17 @ 6:14 pm
-–$2.3 billion deficit in 18 ain’t good.–-
-But strictly from a numbers standpoint, it’s a heckuva opening gambit compared to where we’re at now.-
Indeed. It’s arguably an improvement over no budget at all.
Comment by tobias846 Wednesday, Jan 18, 17 @ 6:23 pm
No sarcasm at all–this is a refreshing post. Numbers and how to make our government work within budget again. No name calling or posturing.
Get it done.
Comment by Lefty Lefty Wednesday, Jan 18, 17 @ 6:24 pm
Amen RNUG. Pension chickens are being counted before hatching.
Comment by DuPage Dave Wednesday, Jan 18, 17 @ 6:49 pm
Nice to see people talking…about anything. That in itself is a win and it seems to gotten the Governor engaged. Don’t miss the shift here for the Governor. He is talking and engaging without demanding his TA agenda first. The agenda is still there but negotiations are going forward. What is missing here? Nary a peep from the HDEM’s.
Comment by Suburban Hillbilly Wednesday, Jan 18, 17 @ 7:18 pm
The Governor is free ( and actually required ) to submit his own balanced sustainable budget any day now. Of course, he continues to use his TA as an excuse instead.
Comment by Thoughts Matter Wednesday, Jan 18, 17 @ 7:21 pm
=What’s the surprise?=
Indeed. The need for a much higher income tax rate to pull us out of this mess has been mentioned many times. Rauner knew that, and Radogno knew that when she supposedly agree to a 4.95 % rate (in order to come in at a rate lower than Quinn’s.
The game-playing continues, and the longer the impasse goes on, the more we need additional revenue dollars.
Rauner’s actions have been immoral. Blagojevich (I’m not a fan) did much less harm to the state than our present governor.
Comment by illinoised Wednesday, Jan 18, 17 @ 7:22 pm
2 billion for employee health not paid. Someone should take that to a court and see if they can get in the auto payment process. Those in the middle of cancer treatments, need surgery, and a host of other things are on the bubble. Paid health insurance premiums not used. You can bet if this was a private employer they would be in deep trouble and punished but the State gets by.
Mr Rauner you can propose a counter plan, do your job and stop touring the state doing promo and glad handing.
Comment by Cleric dcn Wednesday, Jan 18, 17 @ 8:07 pm
Add an additional 1% income tax surcharge for a couple of years to pay off the backlog created when the tax was allowed to drop 2 years ago. The surcharge goes away in 3-4 years when the backlog of bills is gone.
Simple, right?
Comment by Pot calling kettle Wednesday, Jan 18, 17 @ 8:35 pm
==This is a numbers thing.==
But my question is, when did Rauner’s people suddenly learn to math? :p
Comment by HangingOn Wednesday, Jan 18, 17 @ 8:41 pm
-2 billion for employee health not paid. Someone should take that to a court and see if they can get in the auto payment process.-
There is already a class action suit in progress: https://goo.gl/3u70d0
This suit made headlines when it was filed last year, but the media seems to have forgotten about it. The court could easily order the state to pay the medical bills whether there’s a budget or not.
Comment by tobias846 Wednesday, Jan 18, 17 @ 8:43 pm
So where exactly is the $$$ for my Alma Mater and all the other Regional institutions,
Comment by illini Wednesday, Jan 18, 17 @ 9:54 pm
RNUG, as a matter of parity and the original deal, the $$ for CTPF should be taken out until constitutional State pension reform is achieved.
Comment by Arthur Andersen Wednesday, Jan 18, 17 @ 10:55 pm
When you pull imaginary rabbits out of a non existent hat, all things are possible to the gullible
Comment by Anonymous Thursday, Jan 19, 17 @ 7:38 am
>This is an embarrassment for Republicans in the Senate and also for President Cullerton and his budget people
This is a big issue, but I can’t help that celebrate that conversations are occurring and using actual, real numbers. Also, Cullerton and Radogno have put their names to a proposal that contains a lot of things unpopular with a lot of people and compromises of their own. That’s leadership with the bests interests of Illinois at heart.
Comment by Earnest Thursday, Jan 19, 17 @ 7:51 am
JS Mill, Word, here’s the problem with REMI analysis that even I know. It depends on the assumptions going in. If you don’t know those going in then you have to reverse engineer.
Conversely if you want the numbers to be a certain way, there are things you can so to tweak the end result. Markus is on it. They lowered the assumption of how much each point would bring in. Boom, the result you want.
It’s why I thought Rauner was torpedoing, or at least shaping the outcomes.
Analysis is skewed by assumptions going in for political purposes. That’s why academics have peer review analysis.
Comment by Honeybear Thursday, Jan 19, 17 @ 7:58 am
The numbers are the numbers. Cullerton & Radogno’s people will do their math, again, and have to contend with GOMB — it’ll have to get reconciled.
And it likely will. After that happens, does that mean Rauner gives this structure a stronger nod? I tend to doubt it given Madigan’s silence and his proposed corp tax cut (which can’t be a serious proposal) in the House. Madigan likely has several other bills outlining his ideas too.
It still appears Cullerton & Radogno are setting markers out there with the hope that Madigan & Rauner can find something each can save face with to try to use that framework for an achievable deal. We’ll see, I guess.
I am wondering if 7 GOP Senators (other than Radogno) will really vote in favor of the “bargain’s” tax increases, minimum wage increase, and expansion of gambling … knowing that these bills are unlikely to be called by Madigan. That’s a lot of exposure voting on those bills with seemingly little to no upside.
Comment by Deft Wing Thursday, Jan 19, 17 @ 8:06 am
I know it is a bit off topic, but was Honeybear really complaining because the state is not paying for her kids braces? Really? Their benefit package includes braces, wow.
Comment by SixByEight Thursday, Jan 19, 17 @ 8:23 am
===I’m waiting for CGFA to weigh in. In their last 3 Year budget forecast, CGFA stated each 1 percentage point increase in the income tax rate added about 4 billion per FY in revenue. GOMB now states it’s less than half that? Yet GOMB never disputed the finding in the CGFA forecast.===
My exact thoughts the moment I saw that the GOMB revenue projection.
Comment by Ducky LaMoore Thursday, Jan 19, 17 @ 8:33 am
SixByEight- Yes I pay premiums for Delta Dental which includes a set price for braces. I have paid I believe 3500 dollars, my portion for each, of my girls. I JUST GOT a collection call trying to stick me with the state’s half which has not been paid.
Comment by Honeybear Thursday, Jan 19, 17 @ 8:39 am
Actually, I shouldn’t have said half because I believe the state pays less than I do. Thus I pay my premiums through my paycheck which the state is not remitting to Delta Dental which in turn is not paying my orthodontist. I then get the collection call.
Comment by Honeybear Thursday, Jan 19, 17 @ 8:41 am
The tragic irony. Our so-called ‘governor’ has failed his Constitutional duty to bring forth a balanced budget for 2 years running.
Finally, he gets the monkey to jump to the GA, where an actual bipartisan budget sausage document is made.
Now raunner comes riding in criticizing and whining about the product. Getting HIS air time coverage for HIS failures!
Amazing; but it is IL.
Comment by Anonymous Thursday, Jan 19, 17 @ 8:45 am
Now here comes the part were Rauner details $2.3 billion in cuts……..waiting…….waiting……
Comment by blue dog dem Thursday, Jan 19, 17 @ 8:51 am
$2.3 billion deficit in 18 ain’t good.
What’s it gonna be with no budget?
Comment by Anonymous Thursday, Jan 19, 17 @ 8:54 am
with Rauner guaranteeing a signature in the end.
More likely ‘guaranteeing failure in the end.’
Comment by Anonymous Thursday, Jan 19, 17 @ 8:58 am
“was Honeybear really complaining because the state is not paying for her kids braces?”
No, Honeybear was complaining because the state is reneging on its obligation to pay its pre-arranged share of the cost of her kid’s braces, and now she’s getting calls from collection agencies. Honeybear (and all other state employees) are being forced to pay because the state won’t. And to add insult to injury, probably Honeybear’s credit rating is taking a hit.
Try to keep up.
Comment by Nick Name Thursday, Jan 19, 17 @ 9:03 am
Isn’t that lovely
Comment by Rabid Thursday, Jan 19, 17 @ 9:26 am
Ducky, Markus and Honeybear, The GOMB analysis shows less than half the revenue coming in because its for this current fiscal year and the year is half over.
Look at the full year projections, which are over $5 billion. That seems to be in line with what I would expect.
But we probably should be talking about how FY 14 spending was $36 billion and included pre-funding Medicaid because of the tax cut in 2015, and our fiscally conservative Governor is planning on spending $41 billion in 2018. (And pretty sure the pension contributions have not gone up by $5 billion over that time.)
Comment by Juice Thursday, Jan 19, 17 @ 9:36 am
– I tend to doubt it given Madigan’s silence and his proposed corp tax cut (which can’t be a serious proposal) in the House.–
Why can’t it be serious? A 50% cut would be about a $1.3 billion revenue hit from the 1/3 of Illinois corporations that pay it.
It’s impossible to restructure revenues — including handouts and tax credits — to make that up?
Comment by wordslinger Thursday, Jan 19, 17 @ 9:53 am
FY2015’s budget - the potential “doomsday” budget - appropriated $31.5 billion (give or take a smidge) in GRF dollars. Unless the $41+ billion is GRF and federal funds then in less than three years GRF spending will have gone from $31.5 billion to over $41 billion - a 23% increase. How in the world has that happened?! I know there are court/consent decrees and increased Pre-K through 12 spending but higher ed spending has sharply decreased and a lot of other programs have decreased as well.
Comment by Team Sleep Thursday, Jan 19, 17 @ 9:53 am
Thanks for the correction Juice. I’m not a financial person and your stuff helps
Comment by Honeybear Thursday, Jan 19, 17 @ 9:58 am
==$2.3 billion deficit in 18 ain’t good.==
But we really need a budget, man. And if the system were working the way we hoped, the policy makers would be able to come together over the next few weeks (months?) to fill that gap. I don’t think the Cullerton/Rodogno plan is a take-it-or-leave-it offer. And I’m not certain Rauner is interpreting it that way yet.
==After that happens, does that mean Rauner gives this structure a stronger nod? I tend to doubt it given Madigan’s silence and his proposed corp tax cut (which can’t be a serious proposal) in the House. Madigan likely has several other bills outlining his ideas too.==
It seems to me that Rauner’s best play here is to jump on the Senate bill and put Madigan in the trick bag. The worst move for him would be to actively scuttle the deal, at least publicly.
Comment by Arsenal Thursday, Jan 19, 17 @ 10:06 am
== Really? Their benefit package includes braces, wow. ==
I don’t work for the state, but my dental coverage includes a set amount for braces. As with Honeybear, we had to pay the rest. I don’t think $$$ toward orthodontia is that unusual in a healthcare package.
Comment by Pot calling kettle Thursday, Jan 19, 17 @ 10:16 am
Pot - it’s not unusual if you work for a company of a significant number of employees. Which is what the state as an employer is. Pretty much every employer I have had since 1978 paid ( or would have paid) a portion of dental and orthodontia for my family if the patients were under 19. The only time that wasn’t true is when I took a job for an employer of a small firm. I didn’t stay there long because benefits are part of my compensation and I expect to be compensated appropriately for my skill set.
However, certain other taxpayers think state employees should be compensated at minimum wage level with no benefits, regardless of position.
Comment by Thoughts Matter Thursday, Jan 19, 17 @ 11:07 am
Brucie will do anything to avoid a budget and end the chaos he relishes.
Comment by d.p.gumby Thursday, Jan 19, 17 @ 12:53 pm
I’m am Stunned !(snark). It’s Time to stop spending and start TAXING everything, services of all kinds. Put it on for 4 years and let it sunset(LOL) mid term 2002. Let the chips fall where they may. One things for sure we ain’t growin out of $130 Billion dollar hole. At some point the exodus will stop, the economy will stabilize and there will be backfilling of jobs for skilled workers, providing a future for kids growing up here…. right?
Comment by NorthsideNoMore Thursday, Jan 19, 17 @ 1:40 pm
Where is the governor’s balanced budget? Where are his numbers?
Comment by Mama Thursday, Jan 19, 17 @ 4:20 pm