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A closer look at the GOMB memo

Monday, May 29, 2017

* AP

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.

* Tribune

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?

Exactly right.

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.”

- Posted by Rich Miller        

  1. - Sideline watcher - Monday, May 29, 17 @ 10:08 am:

    And this is why its nearly impossible for Dems to negotiate with this guy and why its infuriating that the media (except Rich) continue to let him get away with it.

  2. - pawn - Monday, May 29, 17 @ 10:09 am:

    I am totally fed up with this administration’s doublespeak. Truly, how much of the Governor’s job does he plan to outsource and blame on others? Illinois has one of the most powerful governorships in the nation, but to listen to Rauner and his team, you think he was elected to be chief ribbon cutter and not much else.

  3. - Oswego Willy - Monday, May 29, 17 @ 10:10 am:

    The dissecting of this by you, Rich, thanks.

    It’s important to begin any discussion with where things are honest to process, policy, and even the politics.

    The real issues I have haven’t changed.

    An Administration, any administration, willing to give up the budgetary responsibilities that are required constitutionally, and also allow full autonomy for the legislative branch to dictate the executive’s budget for the agencies and programs and policies of the executive… that makes no sense if the executive wanted a budget that reflects the executives beliefs, policies, programs, and even agendas within a fiscal year.

    It’s also very disingenuous for an administration that had its budget director and agency refuse to admit any cuts during a budgetary hearing.

    There are “complaints” that there is no one to negotiate with, but I ask “why would an administration be so actively passive on budgetary matters and so actively engaged in blame and in promoting an agenda, and specicially as to those items an administration wants that have no budgetary value within what’s needed today.

    The memo is for the corner of the politics, not for the blanketing of policy and process to get a budget to signature.

    Again, great breakdown by Rich. Cool stuff.

  4. - Precinct Captain - Monday, May 29, 17 @ 10:12 am:

    Is the governor battling the president for who can run a more dysfunctional government?

  5. - winners and losers - Monday, May 29, 17 @ 10:15 am:

    Democrats are losing and Rauner is winning the political battle.

    Rauner is talking more and more like Trump: a position one day means nothing the next day.

    Do facts have political significance if the DEMS pass a Republican budget with NO Republican votes?

  6. - zatoichi - Monday, May 29, 17 @ 10:25 am:

    If the House is considering a broken budget that Rauner will veto, perhaps this would be a good time for Rauner to present exactly what is acceptable. Not generic commercial, campaign references,but real balanced numbers that show the effect of term limits, property tax freezes, and making pension payments.

  7. - jibba - Monday, May 29, 17 @ 10:36 am:

    To reiterate the consensus from this blog over many months, clearly Rauner does not care about the budget or deficit spending. He only cares about ousting Dems and breaking unions, at any cost to social services and universities. He has no goals for government otherwise. :legislative GOPs apparently have no spine to stand up for those who are hurting. Therefore, the Dems are left to go it alone. They must not do this or they will achieve Rauner’s goal for him. Two ways out: !) Propose a $32B budget (which cannot pass, but is a starting point for the war for public opinion), and 2) Let the government shut down after July 1, forcing legislative GOP to actually participate in government. The public pressure is what is needed. No spending at all after July 1 until a budget passes.

  8. - G'Kar - Monday, May 29, 17 @ 10:36 am:

    This is a rhetorical question, but what has happened to professionalism in offices like the GOMB? The same points could have been made w/o including all the snark.

  9. - RNUG - Monday, May 29, 17 @ 10:38 am:

    1) Property taxes have nothing to do with State revenue. In fact, we have high property taxes because we don’t have enough state revenue schools. Property tax relief required higher State taxes, not a freeze with no additional State revenue.

    2) $3B cut on the proposed budget is about a 9% cut. That seems fairly substantial.

    3) The State is currently running 1 to 2 years behind on paying employee insurance claims. The $435M cut will just put the State even further behind, paying even more interest on late payments. And the failure to achieve that savings through contract talks falls directly back on Rauner and his adminstration’s failure to get a contract with AFSCME.

    4) That is a valid point. If the State were to try to pay off in one year all the debts Rauner ran up, an even higher tax increase would be required. If Rauner is really concerned about that, let him propose a temporary 1% or 2% income tax surcharge to pay those debts.

    5) If Rauner wants real property tax relief, let him propose a 9% or 10% income tax rate with the extra money going to a State funding level of 80% of the local school districts cost and capping the current local school district levy at 1/4 of it’s current level. Alternatively, even if Rauner doesn’t ask for it, send it to him anyway and let him veto it. Imagine the ads about Rauner vetoing such a massive property tax relief plan.

    That note / memo is nothing more than a hot air word salad of phrases that poll well but have zero relationship to actually governing a state.

  10. - Norseman - Monday, May 29, 17 @ 10:43 am:

    Yes, bravo to Rich for his analysis.

  11. - The Captain - Monday, May 29, 17 @ 11:01 am:

    “We’re real, real close.”
    - Bruce Rauner

  12. - winners and losers - Monday, May 29, 17 @ 11:46 am:

    ==Property tax relief required higher State taxes, not a freeze with no additional State revenue….If Rauner wants real property tax relief, let him propose a 9% or 10% income tax rate==

    Which legislator is stating these real facts?

  13. - Common Sense - Monday, May 29, 17 @ 12:56 pm:

    So much for unbiased reporting Rich. Why don’t you just take a job on Madigan’s staff like Zorn and get it over with.

  14. - Oswego Willy - Monday, May 29, 17 @ 1:00 pm:

    - Common Sense -

    Did I mess your comment refuting Rich Miller’s points?

    Rich even numbered the paragraphs for you, in case you wanted to have a thoughtful rebuttal.

    If you did go point to point to Rich’s critique, that’s on me, my bad, I missed it… lol

  15. - Rich Miller - Monday, May 29, 17 @ 1:02 pm:

    === Why don’t you just take a job on Madigan’s staff like Zorn===


    Madigan won’t even speak to me these days.

    So, bite me, moron.

  16. - Rich Miller - Monday, May 29, 17 @ 1:03 pm:

    Also, the GOMB memo was about the Senate’s budget, not the House’s, so you appear to be illiterate as well as moronic.

  17. - A guy - Monday, May 29, 17 @ 1:52 pm:

    ===Madigan won’t even speak to me these days===

    He’s likely not speaking to Zorn either. No one does. lol

  18. - efudd - Monday, May 29, 17 @ 3:42 pm:

    Common Sense-you were the class snitch, weren’t you?

  19. - cdog - Monday, May 29, 17 @ 5:56 pm:

    Harry memo, “(due to the lack of implementing legislation to achieve savings in the group health insurance program)”

    Health care savings? Rauner just wants to beat up the unions, he has no real interest in the middle class and the struggle to navigate the ridiculously opaque healthcare markets. Hot air.

    (There is an opportunity for Illinois to create a niche market for businesses and solve some of its own problems.

    What ever happened to the free market in health care? There are zero real market forces in healthcare and if there were, we’d all save tons personally and via our taxpayer obligations.

    Some of these ideas from a Market Ticker article, if implemented in Illinois would be brilliant and an opportunity for small businesses.

    If “network” pricing was eliminated in Illinois, and prices for all products and services were published, kind of like buying milk or a car, people would flock to Illinois and not even submit claims. Need blood work? Shop for it. Need an elective surgery? Shop for it.

    Another legislative idea, “Any test or diagnostic that carries no exposure to drugs or radiation, nor is invasive beyond a blood draw, may be purchased without doctor order or prescription.”

    Can you imagine? Medical tourism right here in Illinois. There are places figuring this out, why not Illinois?)
    (note: some of the ideas in here are a little rough when it comes to lifestyle diseases…)

Sorry, comments for this post are now closed.

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