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Borrowing, budget and health care

Monday, May 30, 2011

* The borrowing bill got 19 votes in the Senate last night. The Democrats have 35 seats. So it wasn’t just the Republicans who defeated the proposal

Senate Republicans defeated a Democratic bid to borrow nearly $1.5 billion over seven years to pay down part of the state’s crushing backlog of unpaid bills. The measure failed by a 19-23 vote with 36 votes needed for Senate passage.

“It’s always a bad idea to borrow money when you don’t know how to repay it,” said Sen. Dale Righter (R-Charleston), who voted against the measure.

The one-sided loss involving the first piece of a four-bill, $6.1 billion borrowing proposal represented another significant defeat for Quinn: It effectively killed his hopes of righting the state’s bleak budget situation and persuading lawmakers this spring to authorize borrowing to pay unpaid state bills.

In February, the governor called for $8.75 billion in borrowing to deal with unpaid bills but had swung his support to the $6.1 billion borrowing plan pushed by Sen. John Sullivan (D-Rushville).

* The hope among Democrats is the governor will finally move away from this idea. He actually seems to be taking the hint

Stretching out the payment cycle to Medicaid providers into next year will allow Gov. Pat Quinn’s office to “manage” hundreds of millions of dollars, said state Rep. Sara Feigenholtz, D-Chicago, adding that the state pays $28 million a day for Medicaid services. […]

An Illinois Senate panel on Sunday approved a measure that would extend the amount of time the state has to pay its bills from three months to six months. That period, know as lapse-period spending, covers bills that arrive in Springfield after the end of the budget year, which ends in June. Illinois traditionally would pay those bills by September, but lawmakers want to give the governor until December to send the checks. […]

Senate President John Cullerton, D-Chicago, said if lawmakers do not give the governor more time, they have to either give him more money or tell businesses and hospitals to sue the state.

“This is not new spending,” said Cullerton. “This is giving (the governor) more time to pay the bills.”

Quinn’s budget spokeswoman, Kelly Kraft, said the governor would prefer that lawmakers “restructure” the state’s backlog of bills by borrowing $6 billion, but the Quinn administration will take what it can get.

“An extension is something we need to manage the state’s cash flow” said Kraft.

* Here’s another plan being floated

One idea that’s been tossed around is to limit local governments to the same share of revenue that they received this year. That would mean no additional money if the economy rebounds and the state collects more than expected from income and sales taxes.

* And, as I told you yesterday, this bill may not be going anywhere

State government retirees – many of whom don’t pay premiums for health insurance – would have to pick up roughly half the cost under a bill approved by the Senate Executive Committee Sunday.

The prospects for the bill, Senate Bill 175, are uncertain, however. Two senators on the committee said they voted for it only in order to give the full Senate a chance to consider the measure. They did not pledge to vote for it when it is debated by the full chamber.

The bill would affect thousands of retired state employees, most of whom pay no premiums for their state health insurance, according to a consultant hired by the state. Mercer Health and Benefits said that is a rarity both among state governments and large private employers.

Illinois reduces health insurance premiums by 5 percent for each year a retiree worked for the state, so a retiree with 20 years on the job pays nothing in premiums.

* Related…

* VIDEO: Rep. Feigenholtz on state spending plan

* Plan to borrow for old bills fails

* Senate Republicans block $6 billion in Illinois borrowing

- Posted by Rich Miller        

  1. - Quinn T. Sential - Monday, May 30, 11 @ 5:36 am:

    Looks like the censor is not observing the Memorial Day holiday.

  2. - Retired Non-Union Guy - Monday, May 30, 11 @ 6:36 am:

    I have SERS creditable service of 35+ years and I’ll still have to pay 65% for my health insurance. Because I have a spouse, that is going to be something like $670 on top of what I already pay for dependent coverage. I’ve already emailed my Senator, asking him to vote no.

  3. - Illanoyed - Monday, May 30, 11 @ 6:59 am:

    The problem with any plan to take $45 million in “growth” from income tax money owed to local governments is that there isn’t any expected growth next year. Based upon anticipated economic performance, there’s actually an estimated decline in local government per capita income tax revenue.

  4. - Retired Non-Union Guy - Monday, May 30, 11 @ 6:59 am:

    RE borrowing … thought 1/2% of the recent 2% income tax increase was “dedicated” for 5 years to paying off borrowing so there is, supposedly, a revenue stream for the borrowing. Or has the legislature already “stolen” that money to balance the budget this year?

  5. - Anonymous - Monday, May 30, 11 @ 7:02 am:

    I have no problem as a retiree contributing a FAIR amount towards my healthcare, but the amounts required in this bill will be devastating to many. Here is one example. According to information provided by the Senate, a person earning $833 (gross) per month ($10,000 per year) will pay $240 per month. A person earning $10,416 (gross) per month ($125,000 per year) will pay only $606 per month for their healthcare. Yes, retirees should contribute towards their health care, but lets be fair about it.

  6. - Retired Non-Union Guy - Monday, May 30, 11 @ 7:23 am:


    It’s even higher than that. I get less than half the $125K case you cite … but I’ll be paying $760 (current $94 for spouse plus new $670) since the State’s cost includes the full cost of both the retiree and the dependent coverage for a spouse.

  7. - Cindy Lou - Monday, May 30, 11 @ 7:28 am:

    One of the things concerning me most on the retiree healthcare premium right now is the switch to mostly nonHMO in a large section of the state…and so very few tier one for those who have to switch to OAP. A premium plus all new expenses on HC to begin with is going to knock some of the retirees right out of insurance or waiting until their health is dire before seeking treatments.

  8. - Anonymous - Monday, May 30, 11 @ 7:36 am:

    Cindy Lou, I agree. My wife and I both have health alliance, we have numerous specialists. Blue Cross offers virtually nothing in Central Illinois. So many of the Health Link doctors are not taking new patients. Its like no one cares. We both have chronic conditions and health alliance has been super! This on top of possibly having to pay new huge amounts for health insurance as a retiree.

  9. - Nearly Normal - Monday, May 30, 11 @ 7:46 am:

    Blue Cross options are useless in Blm-Normal area. Closest doctor is in Morton and would have to use Peoria hospitals. The OSF system hospitals and doctors are not in BCBS and so that leaves us who use Humana and Health Alliance programs to sign up for the CIGNA plans at twice the price. Add the additional cost from this new bill and a lot of seniors are going to hurt. My 90-year-old mother would be one of those.

  10. - Don't Worry, Be Happy - Monday, May 30, 11 @ 8:33 am:

    With all of the rhetoric about borrowing to pay bills, let’s keep in mind that the State pays 12% interest annually to the vendors when the payments are late. Bonding to pay them off on time would save a lot of money.

  11. - wordslinger - Monday, May 30, 11 @ 8:47 am:

    Hard to believe you can’t get a majority of allegedly sophisticated legislators to refinance a debt at a lower rate and pump billions of dollars immediately into a wobbly economy to cash-strapped vendors.

  12. - Retired Non-Union Guy - Monday, May 30, 11 @ 9:03 am:

    re borrowing … Senator Larry Bomke’s quote accurately summed it up. It’s a lot easier to explain not borrowing to John Q Public.

    The problem is the Legislature and Gov have not been honest with the public in language the public understands. They need to be up front that it costs this much to not borrow and this much to borrow. The State costs so much to run; they need to be up front that either cuts get made or taxes have to be raised. Explain it clearly in one and two syllable words. It will be a hard sell because the public heard the politicians say the most recent tax increase would fix everything … and those of us here know that was not true. Unfortunately, it would someone with the give of gab like Blago to sell it …

  13. - wordslinger - Monday, May 30, 11 @ 9:48 am:

    –It’s a lot easier to explain not borrowing to John Q Public.–

    I think most adults understand the concept of refinancing debt at a lower rate.

    Unfortunately, plenty of people understand the concept of putting off paying bills for as long as they can, too, as many people in business know.

    But one path is wiser and more ethical, to boot.

  14. - Will County wiseguy - Monday, May 30, 11 @ 9:49 am:

    We have already borrowed this money. We’ve borrowed it from small businesses, non-profit and for profit, who can I’ll-afford to lend money to the State and never agreed to lend money to the State. We already pay interest to these businesses to the tune of 24% per year. What on earth is wrong with refinancing this debt, paying off these businesses, and paying the debt back at a much lower interest rate to bondholders.

  15. - Voucher, I Hardly Know Her - Monday, May 30, 11 @ 9:52 am:

    The Dems run the borrowing bill where nearly half of their own members vote no or present or don’t vote? Where’d the rift come from? I can’t believe the leadership would be unaware if there was that much opposition within their own caucus.

  16. - steve schnorf - Monday, May 30, 11 @ 10:07 am:

    ws, my guess is that you could put the votes together, if there was a compromise on how much for how long. Try $4B for 4 years.

  17. - Retired Non-Union Guy - Monday, May 30, 11 @ 10:33 am:

    ws … it ain’t being sold as refinancing, which is one of the problems.

  18. - Publius - Monday, May 30, 11 @ 10:41 am:

    The health care premiums were promised years ago when i started as a janitor with paul powell and were still promised when i was a director under jim edgar. I believe sb 175 is mrally wrong and would be a tremendous burden on people who planned their retirement based on those promises. If the system has to be changed for new hires, so be it. But we grandfathers deserve to be grandfathered.

  19. - BigBob - Monday, May 30, 11 @ 11:31 am:

    Publius: I agree with you.

    SB175A1 is a bad bill. Even if you think retirees should be paying something, it is a bad bill.

    Here is one example: Why use household pension income rather than just individual pension income. Is it because using household pension income will require married couples who both receive State pensions to both pay a higher premium than will a single retiree with exactly the same pension, age, and years detail of either or both of them? Why should married retirees be penalized in this way?

    It looks like this bill is specifically designed to disproportionately punish married retiree couples and retirees who opted to accept the early retirement options offered by the State in order to save the State money.

    Like many issues like this, Schoenberg has tried to file SB175A1 at the last moment and hope that everyone is too busy to take a really good look. Just because it was recommended by a consultant does not mean it is a good bill.

    SB175A1 is a bad bill that is poorly conceived and poorly written. It deserves to die on the legislative vine.

  20. - FDR - Monday, May 30, 11 @ 12:31 pm:

    SB175 is a horrendous bill!

    I agree with all of the aforementioned reasons, plus it is unconstitutional.

    A reason not brought out into the public discourse is it will set up a two tier system of premiums. The bill if passed and signed into law will on it’s effective date raise the premiums of all non-union members to the catastrophic levels proposed. After the CBA expires the state can’t impose these levels on two unions; AFSCME and the INA (because it is written into their contract). They must negotiate (See..The Labor Act) these changes to their contract. All the other union members will immediately have their premiums reflect what all non-union members would already have been paying for two years. If any person believes, for a second, that AFSCME will ever agree to this; I say just look at the history. So, this is just so much of an injustice… how can anyone vote yes on this that in the past have made their careers by speaking up against injustice. The people you impose this on have no organizational voice, they have no lobbying arm… but they have mortgages, they have medical bills, they have car payments, they are putting kid’s thru college… they just want the dignity to be treated fair.

    C’mon press look into this!

  21. - Liberty_First - Monday, May 30, 11 @ 3:09 pm:

    For years, state workers have earned paid healthcare under the law. Would this not be a pension benefit even if it is funded under a different line item?

Sorry, comments for this post are now closed.

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