The House has committee hearings scheduled Monday to continue reviewing the $37 billion budget plan the Senate approved. It includes $5.4 billion in revenue raised mostly by a 32 percent increase in the personal income tax rate from 3.75 percent to 4.95 percent.
The Senate sent the plan to the House last week. It also includes $3 billion in spending reductions.
As Democrats were behind closed doors, Rauner budget director Scott Harry sent a letter to House members warning the governor would veto the Senate plan should it make it to his desk. Harry estimated the budget and tax plan was at least $435 million out of balance, and said it does nothing to pay down the bill backlog or put in place economic changes the governor has pushed such as a property tax freeze.
* Here’s that memo. I’ve added paragraph numbers so we can more easily dissect it…
From: Scott Harry, Director, Governor’s Office of Management and Budget To: Members of the Illinois House of Representatives
Date: May 28, 2017
Re: GOMB Analysis of SB 6
1) The Senate Democrats’ budget bill (SB 6) proposes to spend $5 billion more than the state’s fiscal year 2018 revenue forecast of $32 billion. Notably, Senate Democrats also passed a large tax increase to accompany SB 6 without any significant changes to our broken system – no real and lasting property tax relief and no economic reforms to grow the economy.
2) Drafted and voted upon without bipartisan support, SB 6 fails to make substantial spending cuts and has no real and hard spending cap beyond fiscal year 2018. If SB 6 were enacted, government spending would likely continue to explode, driving our state deeper into debt.
3) The Governor’s budget office estimates that even if the House enacted the Democrat-only tax hike proposal accompanying SB 6, the budget would be out of balance by at least $435 million in fiscal year 2018 (due to the lack of implementing legislation to achieve savings in the group health insurance program) and roughly $1 billion in fiscal year 2019. Furthermore, SB 6 takes no action to meaningfully pay down the bill backlog – concealing an even higher planned income tax rate than the Senate already passed.
4) From a technical drafting perspective, the FY17 appropriations in SB 6 were not drafted to address the true obligations of the state and fully cover commitments from FY16 and FY17. Other problems are caused by the drafting approach to structure the FY17 appropriations around spending authority that the Comptroller has established for consent decrees, court orders and continuing appropriations.
5) In sum, the House is considering a broken budget contingent on a large tax hike without any meaningful property tax relief or job creating reforms – which even if enacted would not even balance the budget. SB 6 is a lose-lose for taxpayers. If this bad deal for taxpayers comes to the Governor’s desk, he will veto it.
1) Oh, please. That is so misleading. Unlike the governor and his budget office, the Senate Democrats cut spending from the GOMB forecast and then added revenues. And that “large tax increase” was supported by the governor during negotiations.
2) The proposal didn’t receive GOP votes, but it most definitely received lots of Republican input. It makes billions of dollars more spending cuts than Gov. Rauner and his budget office proposed in February. And while there is no spending cap beyond FY 18, one can be enacted for FY 19 and beyond in the future. The governor could also simply propose a budget that has a spending cap.
…Adding… As mentioned in comments, Gov. Rauner’s agency directors all said during appropriations committee hearings that they couldn’t enumerate any cuts and that any cuts would be bad, yet Gov. Rauner’s budget director expects the Senate to find them anyway. Nice one.
3) The governor’s proposal to reduce spending on group health insurance requires changes to collective bargaining laws - something that Senate President Cullerton has completely ruled out. The Senate proposed the same reduction as Rauner did, but they put it on Rauner to achieve his spending reductions via the collective bargaining process and/or the courts.
And, seriously, they’re worried about a possible budget deficit in Fiscal Year 2019 that doesn’t even end for two more years? Really? Rauner can’t propose a solution to this alleged problem next February? From the Senate Democrats…
How much of his job is the governor expecting the Senate to do?
I agree that it’s a copout for the Senate Democrats to punt on the bill backlog, among other things. No doubt about it. But Rauner did the exact same thing in his own budget proposal. From a May 9th report…
The Civic Federation’s Institute for Illinois’ Fiscal Suitability is not able to support Governor Rauner’s recommended FY2018 budget because it has an operating deficit of at least $4.6 billion, presents an insufficiently detailed plan for closing the gap and does not address Illinois’ massive backlog of bills.
And from the Senate Democrats…
Two weeks ago, the Senate came within 3 votes of passing a budget that cut deeper while also refinancing that debt, and I don’t recall the governor rounding up votes to try to help get it passed.
4) “Technical drafting” errors are fixable.
5) If this is a “broken budget,” then why doesn’t the governor’s budget office propose a real one?
* Also, here’s an important point from Rep. Greg Harris (D-Chicago)…
Harris said the whole budget discussion is taking place while Rauner is making public appearances and airing ads that attack the Democrats’ plan.
“They (Senate Democrats) actually passed a lot of the revenue ideas he’s been championing since he became governor,” Harris said. “He’s on social media and on paid advertising and on robocalls attacking people for doing the things he’s been suggesting.”