Rough waters ahead?
Thursday, Nov 15, 2007 - Posted by Rich Miller
* Buried way down in this well-done article is some disturbing news…
Meanwhile, the administration is spending its Medicaid dollars at a fever pace. Lawmakers appropriated $6.9 billion for Medicaid spending through June 30, the end of this fiscal year, said Carol Knowles, spokeswoman for state Comptroller Dan Hynes. But by Nov. 8 — roughly one-third of the way through the fiscal year — the state’s health-care agency had spent 45 percent of that money, she said.
“It has been common for that agency to run out of appropriation authority sometime in the spring,” she said. “But at the pace that the agency is going, it likely will run out earlier than ever before.”
Steve Brown, spokesman for House Speaker Michael Madigan, D-Chicago, said lawmakers may need to approve additional spending in the spring, but it’s not clear where the state might find the money. […]
“I don’t know where he finds the money for a supplemental appropriation,” Brown said.
Rep. Dave Winters, R-Shirland, predicts the administration will slow its payment cycle to stretch its dollars.
* Add this Medicaid overspending stuff to the previous reports of a potential revenue shortfall this fiscal year, and we could be heading for some serious rough waters next spring…
With the ink barely dry on a new state budget, two recently released financial reports already are raising concerns about whether state revenues will keep pace with spending.
Both the bipartisan Commission on Government Forecasting and Accountability and Comptroller Dan Hynes issued reports warning that income from some state revenues — particularly the sales tax — could be lower than expected. […]
COGFA does economic forecasting for the General Assembly. It found that for the first three months of the state’s new budget year — July, August and September — sales tax receipts are down by $55 million from a year ago, a 3 percent drop. Corporate income taxes also dropped by $18 million during the period, a 4 percent decrease.
A bright spot was that personal income taxes increased by $120 million. But officials are worried about the drop in sales taxes, which provide more than 25 percent of the state’s revenue. […]
Worse, COGFA doesn’t think things will turn around. The report says both the sales tax and corporate income tax “may well find growth elusive over the remainder of the fiscal year.”
The budget was pretty flush this year and we still saw terrible problems getting things done. Imagine the nastiness if cutbacks have to be made. Not pretty.
- The Conservative - Thursday, Nov 15, 07 @ 9:09 am:
Just think how much we would save if Illegals were not given benifits they have not earned.
- Bill - Thursday, Nov 15, 07 @ 9:14 am:
Thats it. Blame the immigrants.
- Rich Miller - Thursday, Nov 15, 07 @ 9:16 am:
TC, blaming all problems on one particular cause is never very wise. Take a deep breath.
- GoBearsss - Thursday, Nov 15, 07 @ 9:21 am:
I don’t know if this is news, Rich. Actually, I am not saying it isn’t “news,” just that I don’t think it is “new.”
As far back as I can remember, medicaid spending runs out sometime in the Spring, and Public Aid (or now healthcare and family services) had to get a supplemental, or delay paying providers until July 1. What happens, then, is that a lot of that May & June money is paid July 1 instead of June 1.
This has, over the years, frontloaded the payments in July, leading to greater spending those first few months of the fiscal year, and much less spending in the last few months of the fiscal year. Its a cycle now that would be hard to break without a large infusion of cash.
The question should not be “how much has been spent so far”. It should be “how much has been spent at this point in a historical perspective.”
The State still may be over-budget at this point, but probably not as much as 45% vs. 33% quoted in this article.
How would we find that out?
- Cassandra - Thursday, Nov 15, 07 @ 9:53 am:
Well, out here in California, where I am at the moment, they are looking at a potential $10 billion dollar deficit next FY (starts July 1). This after a protracted budget battle this fiscal year ended with various rosy assumptions of solvency for the foreseeable future.
Wonder how many rosy assumptions our current Illinois budget was built upon. Guess we’ll find out this spring.
- so-called "Austin Mayor" - Thursday, Nov 15, 07 @ 9:57 am:
“Immigrants! I knew it! Even when it was the bears, I knew it was the immigrants!” — Moe Szyslak, Springfield tavern owner.
- Greg - Thursday, Nov 15, 07 @ 10:14 am:
Cassandra,
Yeah, CA’s deficits are a complete embarassment if you consider their revenues. The state income tax tops out at 9.3% before even hitting the median income, not to mention the millionare surcharge. And it’s not as if CA avoids sales and property taxes. Those rates, coupled with the state’s strong economic base, should help dispel the urge to balance budgets by only looking at the revenue side; fiscal prudence is the critical variable.
- DeepFriedOnAStick - Thursday, Nov 15, 07 @ 10:14 am:
GoBearass, I think that’s precisely the point that Knowles from the comptroller’s office is making. She says the agency typically runs out of money before the end of the fiscal year, but that this year it looks like they will run out earlier than ever before. That seems like news to me.
- Gene Parmesan - Thursday, Nov 15, 07 @ 10:23 am:
Time to get new government employees (state, teachers, etc.) off of pension plans and into 401k’s. This won’t solve everything, but it would be a nice start. We simply can’t afford the pensions anymore.
- Rich Miller - Thursday, Nov 15, 07 @ 10:26 am:
DeepFried made my point.
- Captain America - Thursday, Nov 15, 07 @ 10:30 am:
An economic recession, a fiscal train wreck, and a mass transit doomsday are fast approaching. The Medicaid shortfall is what makes the Governor’s efforts to implement his health care for the uninsured initiative by executive fiat so financially irresponsible.
I think the Goivernor wants to create a fiscal
crisis - just like he appeared to see a government shutdown as desirable last summer. Sonehow, he figures he can maneuver the situtation to get his way by fostering a crisis.
- GoBearsss - Thursday, Nov 15, 07 @ 10:35 am:
Hmmm… didn’t the Gov cut the Medicaid budget as part of his slash job on the budget?
Could that be the reason?
- Bill - Thursday, Nov 15, 07 @ 10:38 am:
Gene,
Putting public employees into 401ks would cost the state far more than their average pension plan benefits do now. Add the cost of social security to employer along with any match in the 401k and the state is already paying more. The IRS will not allow any pension holidays for social security payments. Pension benefits are not the problem. Lack of state contributions to fullfill its obligations over 5 decades is.
- zatoichi - Thursday, Nov 15, 07 @ 10:38 am:
So basically, if you do business with the state (in any form that is touched by Medicaid dollars) you better have a good cushion to pay the bills or other strong revenue sources. I am sure the banks will be very understanding if you need a line of credit (say for payroll?) and state Medicaid is the primary funder.
- VanillaMan - Thursday, Nov 15, 07 @ 12:23 pm:
This is sad, but not unexpected news, right?
We are spending ourselfs further into a black hole. We have a governor who refuses to acknowledge fiscal reality. Our state government is paralyzed and has been all year. The fights are getting uglier. What does this mean?
It means we are out of money. We are out of credit. We have taxed everyone to the hilt. And few wish to announce that the parade has ended.
Illinois missed the Bush economic boom and now that boom cycle is ending. So instead of rosy scenarios that haven’t paid off, we are faced with tough times with a broken down government, unpaid bills by the billions, and politicians who refuse to stop promising what cannot be delivered.
We elected them because we knew the crash was coming, and we wanted our piece of the pie protected. Instead of long-term plans to grow the Illinois economy, we are living in the short-term, backstabbing one another over a buck and fingerpointing at those we consider wealthier than us.
Governments are not empowered to start class warfare. They are not at their best when they accuse some of not paying in order to give freebies to their consituents. What we have had over the past few years is really BAD government.
For a guy willfully blinded to economic reality, Blagojevich’s Reagan-like optimism is not a fit with our times today. Reagan got lucky, and by 1984 the US economy recycled out of recession. Blagojevich has not been lucky, and now that the cycle is working against us, he is simply not the guy for the difficult tasks ahead.
He has to stop arguing, threatening and fighting.