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* Like I said before, the Tribune has a good roundup…
Supporters said the plan includes $2.5 billion in spending cuts, including 5 percent across-the-board reductions to most state agencies and a 10 percent cut to higher education.
The personal income tax rate goes from 3.75 percent to 4.95 percent, which is expected to generate roughly $4.3 billion. A rise in the corporate income tax rate from 5.25 percent to 7 percent would bring in another $460 million. The research-and-development tax credit would be reinstated, and the earned income tax credit for low-income families would be increased. The law also ends several corporate tax breaks, including those for companies that operate on the continental shelves or shift production out of state.
Lawmakers said the budget includes enough surplus revenue to support roughly $3 billion in borrowing, which could be used to generate a total of $8 billion in extra cash to pay down debts. That’s because the state receives federal money when it makes some Medicaid payments.
Funding for elementary and high schools would be boosted by $350 million […]
The budget also assumes $500 million in savings from pension changes long-sought by Rauner to create a defined-contribution 401(k)-style retirement plan to compete with the defined-benefit pension plans currently offered to state employees.
The bill backlog is about $15 billion. About $4-5 billion of that is an acceptable level. Most people don’t pay bills the moment they arrive, and neither do governments. As long as the payment cycle is around 30 days, that’s normal. but this plan doesn’t get the state to that level.
Also, the governor’s office says that while they support that defined contribution plan, it contains no specific start date, instead allowing the pension systems to start the programs on their own. And that’s why they say there’s a $500 million hole in their own proposal. So, we’ll see.
posted by Rich Miller
Friday, Jul 7, 17 @ 10:21 am
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I was expecting the big gaming expansion to be part of the final revenue package but if it was I haven’t seen it mentioned anywhere. There remain some outstanding issues in need of a funding source, at least that’s one potential remaining revenue avenue.
Comment by The Captain Friday, Jul 7, 17 @ 10:27 am
==Funding for elementary and high schools would be boosted by $350 million […]==
Fools gold, this did not work before and won’t work now, they will just not send the money to schools months after they get to campaign on education spending. Most districts lost money last year despite the “increase” because they cut more in other line items and unfunded grants.
The fact my legislator does not understand that after years in office is why the requirement for voting for his opponents is that they have a pulse, and well, that may not be necessary.
Comment by the Patriot Friday, Jul 7, 17 @ 10:28 am
===because they cut more in other line items and unfunded grants. ===
No. The state simply didn’t have the money to make the grant payments because it didn’t have a budget, which it now does.
Comment by Rich Miller Friday, Jul 7, 17 @ 10:31 am
It also eliminates the 20 percent sales tax exemption for gasohol (E10), so gas prices should be a bit higher going forward.
Comment by Philo Friday, Jul 7, 17 @ 10:32 am
So the budget only has a 401K-style plan to “compete” with the defined-benefit plan? Why do we still even offer defined-benefit plans to state workers? They are ridiculously costsly and even with the Tier-2 benefits impactical. People will still work for the state absent a pension offer imo.
Comment by Anon Friday, Jul 7, 17 @ 10:33 am
Re: The Captain 10:27 I had the same question regarding the gambling expansion legislation. Seems like a good future revenue source for bonding to pay down the bill backlog. Rich–any news on this? Or did it die with the Grand Bargain?
Comment by Mtwtsn Friday, Jul 7, 17 @ 10:38 am
Anon at 10:33— you do know that teachers don’t pay Social Security don’t you ? Their only retirement is their pension. On that basis I can’t agree with you . Oh and there’s the matter of the federal government saying they don’t have enough retirement also.
Comment by ajjacksson Friday, Jul 7, 17 @ 10:38 am
===Why do we still even offer defined-benefit plans to state workers?===
Because constitutionally you have to for current employees. You can change that for future hires. But then the problem becomes new hires not paying into the system. So you can give new hires a 401k with some sort of matching %, and that matching percentage goes to that employee, instead of funding current retirees. That leads to even more state money being required in the pension system for 20 years or so. I like the 401k idea in the long run. But for the next couple decades, it makes costs higher.
Comment by Ducky LaMoore Friday, Jul 7, 17 @ 10:38 am
None of this would have been possible if not for the great leadership of Christopher think of my name Kennedy.
Comment by Props Friday, Jul 7, 17 @ 10:49 am
=But for the next couple decades, it makes costs higher.=
Only using politician math. Can we stop this lie already? If the bill has to be paid, it has to be paid. Who cares if it’s later down the road. Oh yeah, politicians.
Comment by Robert the 1st Friday, Jul 7, 17 @ 11:02 am
==It also eliminates the 20 percent sales tax exemption for gasohol (E10)==
Removing that incentive might mean more than one gas station in my country where I can get 100% gasoline which I prefer for my lawn equipment. Do you know if this also eliminates a similar incentive for B20 biodiesel?
Comment by AC Friday, Jul 7, 17 @ 11:03 am
Meant to say county not country, although it seems like it sometimes.
Comment by AC Friday, Jul 7, 17 @ 11:04 am
@Robert the 1st
Huh? The bill has to be paid no matter what. A 401k style retirement program would make the current costs higher now because current employees can’t just be moved to a 401k system. In the long run, it is a money saver. In the short to mid run, it is costlier. I don’t see how that is politician math. It is reality.
Comment by Ducky LaMoore Friday, Jul 7, 17 @ 11:08 am
AC, the bill did not eliminate the biodiesel exemption. In fact, it extended the exemption by changing its sunset date from 12/31/18 to 12/31/23.
Comment by Philo Friday, Jul 7, 17 @ 11:12 am
Ducky- with a 401k system we would never had union lobbyists substitute teach one day and qualify for a TRS pension.
Comment by Robert the 1st Friday, Jul 7, 17 @ 11:22 am
The state would be much more financially stable paying social security and a 401k match now vs what is awaiting us in the future to pay this insane pensions.
Comment by Robert the 1st Friday, Jul 7, 17 @ 11:23 am
@Robert the 1st
Agreed. But the pensions are a reality for current employees. The ILSC says so.
Comment by Ducky LaMoore Friday, Jul 7, 17 @ 11:25 am
This budget guarantees all the 16-17 grants and reimbursements for schools will get paid and fully funds all of 17-18? Not happening.
This has gone on for years. Sit in a school board meeting next May/June and you will see the State will be behind again because the projected revenue is off so budget or not, they still won’t have the money.
But hey, my legislator can’t read or write and is doing ok.
Comment by the Patriot Friday, Jul 7, 17 @ 11:33 am
Question on FY 18 health claims. Does this mean that current claims will be paid on a timely basis but the prior two years’ claims are still in arrears? Not clear.
Comment by No Raise Friday, Jul 7, 17 @ 11:47 am
Anyone have a link to the budget that passed? I’d love to see line item detail.
Comment by Confused Friday, Jul 7, 17 @ 12:01 pm
@Confused
http://www.ilga.gov/legislation/100/SB/PDF/10000SB0006enr.pdf
Comment by Chicagonk Friday, Jul 7, 17 @ 12:39 pm
== Question on FY 18 health claims. Does this mean that current claims will be paid on a timely basis but the prior two years’ claims are still in arrears? ==
Well, back when we last had a budget, the State was only appropriating enough to pay about a 1/2 year of claims … so we kept falling further and further behind.
This budget at least as appropriates what should be a full year of funding.
So my take on it is that the state will not fall any further behind.
Depending on how big a bond gets floated to pay backlogged bills, and how the backlogged bills are prioritized for payment, *maybe* the State will catch up some.
Comment by RNUG Friday, Jul 7, 17 @ 12:50 pm
Can anyone confirm?; It appears that the ERP system (general ledger) contract with Deloitte has been de-funded. Or has that funding been buried somewhere that isn’t obvious?
Comment by (Un) Happy Friday, Jul 7, 17 @ 1:53 pm
It’s too bad there isn’t potential for a popular prohibited plant-based revenue source…..
Comment by Anonymous Friday, Jul 7, 17 @ 2:34 pm
== Can anyone confirm?; It appears that the ERP system (general ledger) contract with Deloitte has been de-funded. Or has that funding been buried somewhere that isn’t obvious? ==
I haven’t looked (because I don’t really feel like digging for it), but I previously assumed that project is buried in the SSRF (Statistical Services Revolving Fund), not GRF. A large portion of the SSRF (If not all of it) comes from the fees CMS charges the agencies, which they pay out of GRF and Federal funding. And SSRF is what pays the software a lot of “personal services” contracts.
That’s obvious to me, because I worked with all those funding sources. But it would be buried to the layman.
Comment by RNUG Friday, Jul 7, 17 @ 3:03 pm