* 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.
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.