* I told subscribers weeks ago that we might expect the General Assembly to use the long-dormant conference committee process to iron out differences between the House and Senate budget proposals. Senate President John Cullerton was the one who brought it up to me, but yesterday House Speaker Michael Madigan broached the topic as well, and in a way that appeared to be a shot at Cullerton…

Reconciling those, and therefore the different chamber’s budget bills, could be troublesome.

Madigan laid out one possibility Wednesday during the Elementary and Secondary Education Appropriations Committee. When the Senate and the House can’t come to some kind of agreement on a specific bill, five members from each chamber meet and try to hammer out the details in a conference committee.

Because the House’s $33.2 billion revenue projection is more conservative than the Senate’s $34.3 billion projection, Madigan said Senate Republicans might be inclined to side with the House in such a meeting.

“In the Senate, I think the people that want to raise the numbers would be the Democrats, and they would have three appointments on that conference committee, and they ought to be out voted,” Madigan said. “The report coming out of the conference committee should be for the numbers contained in the House bill(s).”

Actually, conference committees were used during the early 1990s. But the system got out of hand as lobbyists and members started inserting major legislative changes into long conference committee reports. So, it was stopped.

* But the scenario might not work as Madigan envisions. The Senate Republicans aren’t yet willing to completely abandon their Democratic colleagues and throw in their lot with the Speaker…

State Sen. Matt Murphy, R-Palatine, the Senate GOP’s budgeteer, said he’s not sure how a conference committee on budget legislation would play out.

His Republican colleagues in the Senate generally lean toward more conservative budget numbers and didn’t agree with the Senate’s adopted $34.3 billion projection, he said, with a caveat.

“We also felt like a number a little bit higher than what the House came up with is reasonable as well,” he said. “I think it’s a little premature for us to start to weigh in, and choose sides, in a conference committee that I don’t know is even going to happen.”

* Meanwhile, some in the media focused attention on the apparent detente between Madigan and House Republican Leader Tom Cross…

A truce broke out in the Illinois House Wednesday as Democrats and Republicans embraced the outline of a budget plan that is more conservative than the one proposed by Gov. Pat Quinn and would cut money for schools.

In a rare side-by-side appearance, House Speaker Michael Madigan, D-Chicago, and House Minority Leader Tom Cross, R-Oswego, acted like old chums rather than political warlords out to crush each other. They led the House in allocating billions of dollars for debt and pension payments and setting out spending plans for areas including education.

Heh…

As Madigan and Cross faced reporters, shoulder to shoulder, after a committee hearing, both brushed off the idea that there was ever bad blood between them.

“I don’t think there ever was a problem. Was there, Tom?” said Madigan, who routinely has bottled up Republican bills in the Rules Committee and repeatedly referred to Cross’ caucus as “nonparticipating dropouts.”

“I don’t remember a problem,” said Cross, whose political organization put up billboards throughout northeast Illinois blaming the state’s fiscal problems on Madigan.

“Maybe some journalists thought there was a problem,” Madigan said.

Yeah. OK.

Madigan teamed up with Cross and the Senate Republicans the last time he went up against a free-spending governor and Senate President. Cross eventually broke with Madigan over the capital bill (with Cross siding with Rod Blagojevich and Emil Jones) and the two have not cooperated since then. Until now, that is.

* The school cuts are just part of the package…

The latest projection from Springfield is that schools can expect at least $600 million less than last year. […]

Rep. Will Davis, D-Homewood, said there will be $200 million fewer state dollars, and nearly $400 million fewer federal dollars this year. Davis, who will craft the education budget in the House, said he’s been told he can spend no more than $6.8 billion. […]

Although school districts have received less money and delayed payments from the state, ISBE is still advocating for more education funding. The agency recommends $7.6 billion in state funding for fiscal year 2012 budget, more than 5 percent more than the governor’s proposed $7.2 billion.

ISBE is going to be sorely disappointed, and this story about schools hoarding cash reserves won’t help their cause…

The statewide total of $8.9 billion unspent at the close of the 2010 budget year is enough to cover the entire state portion of public school budgets across Illinois next academic year, though districts stress that the money isn’t just sitting around for no reason — some of it is meant for future school expenses, building projects and other uses.

They say that while these balances can help stave off staff or program cuts, they cannot eliminate the need for them. Many districts that lay off teachers or cut programs have already spent down their reserves, and school officials say it’s irresponsible to use fund balances, which the state likens to checking or savings account balances, for ongoing expenses.

Fund balances are widely considered prudent by school officials weathering Illinois’ fiscal crisis, but they rile taxpayers who say districts are hoarding their money and should give some of it back by lowering tax bills.

The balances have grown by $3.6 billion since 2004-05 and now average about 40 percent of districts’ main operating revenue, up from 30 percent five years ago. The Illinois State Board of Education’s barometer for healthy fund balances is at least 25 percent — enough to cover three months of expenses.

The Tribune found that 8 of 10 school districts had fund balances exceeding that amount when the books closed on June 30, 2010. Nearly half of districts reported fund balances of 50 percent or higher, and 70 school districts — many in the Chicago area — had balances equaling 100 percent or more, enough to cover a whole year of expenses.

* And we can expect to see much more hand-wringing as reality sets in on the other appropriations committees…

Madigan and Cross have settled on a revenue projection about $600 million lower than Quinn’s. After covering various fixed costs, such as pensions, they’re allocating that money to five different broad categories: $6.9 billion for education, $1.2 billion for general services, $2.1 billion for higher education, $12 billion for human services and $1.7 billion for public safety.

Now House appropriations committees are supposed to decide which particular programs get money and which ones don’t. The demand far exceeds the amount of money available.

“We’re going to try to figure out how to stick a 10-inch foot in a 5-inch shoe,” said Rep. Sara Feigenholtz, D-Chicago.

And don’t forget the lobbyists…

Meantime, dozens of lobbying groups circulated through the Capitol Wednesday calling on lawmakers to reverse cuts proposed by Quinn.

In a letter distributed to members of the legislature, Southern Illinois Healthcare President Rex Budde, said Quinn’s proposal to reduce Medicaid spending by $552 million could result in delays to bricks and mortar improvements at its hospitals and other facilities as well as cuts in services and physician re-cruitment.

“We urge the General Assembly to reject the proposed Medicaid cut,” Budde noted in the letter.

* And the Tribune editorial board contradicted itself today in an editorial against a Pat Quinn borrowing plan that would capture a higher rate of Medicaid reimbursement…

Quinn spokesman Kelly Kraft responds that paying interest costs on another $2 billion in debt might still leave Illinois with a good chunk of the $175 million Medicaid reimbursement. She notes that the Republican proposals couldn’t be enacted soon enough to produce $2 billion in the current fiscal year. And, she says, the higher income tax isn’t producing new money fast enough to meet the other demands on that revenue and also pay these Medicaid bills. We won’t argue. [Emphasis added.]

Um, so the state shouldn’t borrow, but it might be a good idea? I don’t get it.

* Related…

* Press release: Senate Democrats Respond to GOP Budget Suggestions

* John Cullerton: Give new era in state Senate a chance

* House bill would require state contractors to stay in Illinois

* Tuition bills fail; SIUE finances still troubling: Two bills pending before the higher education committee in the state Senate would have frozen public university tuition for two years.

* Press release: Cross and Madigan co-sponsor budget proposal

* Schools stockpile large amounts of money in fund balances - Taxpayers, school administrators debate how much is too much money in reserves

* Inspector General: City wastes $18 million a year on truck drivers