Latest Post | Last 10 Posts | Archives
Previous Post: SUBSCRIBERS ONLY - Today’s edition of Capitol Fax (use all CAPS in password)
Next Post: SUBSCRIBERS ONLY - Supplement to today’s edition
Posted in:
* My weekly syndicated newspaper column…
The Illinois Legislature’s Commission on Government Forecasting and Accountability released its latest monthly fiscal report last week. The report claimed the state is still on track to match the commission’s revised November estimate of a $4.1 billion revenue increase for the current fiscal year.
Revenue had originally been projected to fall from the previous fiscal year. And much of the recently projected increase is believed to be a one-time event and has so far been treated as such.
But revenue projections have become so unreliably squirrelly that groups which rely on state funding are starting to push to get their fair share of what they see as a fast-growing pie.
Take a look at Medicaid, an always complicated and expensive topic that will become much more so in the coming months.
More than 300,000 Illinoisans risk losing Medicaid coverage at the end of March. There are those who believe that many of those folks are already back on employer health care coverage (or should be). States haven’t been required to conduct redeterminations on Medicaid recipients during the pandemic, and that process will restart soon.
While the state could save money with fewer Medicaid recipients, states are also losing part of their federal Medicaid matching dollars that had been increased during the pandemic. The federal government has increased matching rates during past economic downturns, but it’s never easy to adjust to a decrease, particularly when states have received so much extra for so long.
Hospitals were hit hard by the pandemic. They lost the ability to offer revenue-producing services during the closures, and the deadly viral waves that followed decimated their workforce, with illness, deaths and burnout.
When that federal Medicaid match falls, hospitals will undoubtedly feel an even greater pinch. Hospital closures are already a national problem, and it could get even worse as the financial pressure increases.
In the past, hospitals were pushed to increase their self-assessments, which injected more money into the Medicaid system and produced more matching federal funds. But hospitals say the state is cash-flush enough to provide more money on its own.
And, like I noted above, there’s very little trust in budget projections. If the projection is flat or less, it’ll be met with widespread skepticism. And many are now eyeing the state’s new $1 billion rainy day fund.
But the problems don’t end there. The state has allowed out-of-state and retired nurses to practice here during the pandemic, and those emergency rules will disappear in May, when the governor’s pandemic executive orders expire.
The Illinois Hospital Association estimates 15,000 of those nurses are working here right now, many of whom are well-paid traveling nurses. While the travel nurses are straining hospital budgets, the workforce situation is such that the sudden loss of that many nurses could shock the entire system and create huge additional costs.
The hospitals have been trying for years to enroll the state in an interstate nursing compact to allow non-Illinois nurses to practice here, but that has always been thwarted by unions.
The governor has already said he wants to greatly expand preschool and child care programs and make college tuition “free for every working-class family.” All of that will cost money, and hospitals are just one group that will be pounding at the door.
Hospitals are the largest employers in most downstate and even some suburban legislative districts. And even if they aren’t the largest employers, their boards are usually populated with the most influential business leaders in the region. It’s very hard to ignore them.
Meanwhile, after forcefully opposing a graduated income tax in 2020, the Civic Committee of the Commercial Club of Chicago is now proposing a 10-year, personal and corporate state income tax “surcharge” of 0.5% and 0.7%, respectively, regardless of income.
None of the $2.9 billion raised by the tax hike could be spent on social services or other budget priorities. Instead, all the money would be sent to the pension funds and the rainy day fund.
The group also says the state should implement mostly unspecified “cost disciplines” to help pay for the plan. It suggests an example of slicing agency spending by 2-3% as a start. It also suggests eliminating the estate tax on assets above $4 million, the current state trigger. They should’ve left that one out because it’s a bad look, to say the least.
Widening the revenue base while narrowing the spending base makes fiscal sense on paper. But the report ignores the decades of all-too-real state underfunding of services for people with dire needs.
posted by Rich Miller
Tuesday, Feb 14, 23 @ 8:47 am
Sorry, comments are closed at this time.
Previous Post: SUBSCRIBERS ONLY - Today’s edition of Capitol Fax (use all CAPS in password)
Next Post: SUBSCRIBERS ONLY - Supplement to today’s edition
WordPress Mobile Edition available at alexking.org.
powered by WordPress.
=== They should’ve left that one out because it’s a bad look, to say the least. ===
Standard GOP regressive tax plan BS, but, yeah, the Estate Tax elimiination is the out loud part.
Comment by PublicServant Tuesday, Feb 14, 23 @ 8:58 am
== But the report ignores the decades of all-too-real state underfunding of services for people with dire needs.==
And this is why DCFS, Agencies such as Choate, and overall mental health services are where they are. To borrow from a comment on another story, it’s not what monsters have we become? It’s why don’t we diagnose and treat the monsters that could be?
Comment by Papa2008 Tuesday, Feb 14, 23 @ 9:00 am
===is the out loud part===
Raise taxes, cut spending and, oh, by the way, get rid of the estate tax.
Comment by Rich Miller Tuesday, Feb 14, 23 @ 9:04 am
== The group also says the state should implement mostly unspecified “cost disciplines” to help pay for the plan. It suggests an example of slicing agency spending by 2-3% as a start. It also suggests eliminating the estate tax on assets above $4 million, the current state trigger. They should’ve left that one out because it’s a bad look, to say the least. ==
Suggestions like these two combined in the same statement tell me they are not serious people. Having gone through four (yes, FOUR; hasn’t been a great couple of years for immediate and extended Leap Day Family) family deaths since November 2020 and now been privy to the estates and trusts that were set up, I’m fairly convinced the estate tax trigger isn’t low enough. Having $4 million in assets left behind after charitable donations and other tax-free transfers of wealth is a ridiculously large amount. I can’t believe Republicans have been successfully able to make hay over of fear of a tax that 0.2% of the people ever have to encounter federally and maybe 1-2% at the Illinois state level.
Comment by Leap Day William Tuesday, Feb 14, 23 @ 9:05 am
-now proposing a 10-year personal and corporate state income tax “surcharge” of 0.5% and 0.7%, respectively, regardless of income.-
Nothing is so permanent as a 10 year tax in a place like Illinois.
Comment by Steve Tuesday, Feb 14, 23 @ 9:08 am
As a first thought, and thanks Rich for a great piece, I can’t help but think of Laurence Msall when I read about the fight ahead.
To the post,
Man, this is so much saying it so small;
===And, like I noted above, there’s very little trust in budget projections. If the projection is flat or less, it’ll be met with widespread skepticism. And many are now eyeing the state’s new $1 billion rainy day fund.===
The folks that will complain about “too rosy a picture” and will complain too about a “rainy day fund” and the fiscal prudence, the reality is about social services as Rauner showed with his fiscal destruction.
Illinois finds itself not trusting each other and understanding challenges as “confusion” (real or imagined) gives daylight to proposals that either can’t get 60/30 or they can get there but will revenue match ambition.
My own take to policy has always began with this.
“Agreed truths to facts, and moving policy with the agreed facts by the politics to the policy wants”
When facts are moving targets, the wants move further away from agreement.
It’ll be up to both the legislature and the executive to find the truth, the real fiscal dollar truth to make arguments to policy in the agreed facts.
Comment by Oswego Willy Tuesday, Feb 14, 23 @ 9:32 am
Now is not the time to go hog wild with new spending programs … which is what happens whenever the Legislature finds excessive revenue or new revenue.
But, at the same time, any agreed upon ‘extra’ revenue beyond what is already committed should be going to DCFS, Mental Health, and Education. Money spent there is an investment in a, hopefully, better future.
Comment by RNUG Tuesday, Feb 14, 23 @ 9:41 am
Even the thought of hitting the rainy day fund when unemployment is super low like this makes me fiscally sad.
Inevitably much, much rainier days are ahead. Save for those.
Comment by ChicagoBars Tuesday, Feb 14, 23 @ 9:54 am
===It suggests an example of slicing agency spending by 2-3% as a start.===
I’m old enough to remember Jeanne Ives and that budget…
And now this discussion?
Waste, Fraud, and Abuse… amirite?
Comment by Oswego Willy Tuesday, Feb 14, 23 @ 10:06 am
Although this is primarily a Federal issue I’ll ask anyway. Employer provided healthcare is a Depression era relic (and a tax break as well).
Hypothetically speaking, that program is eliminated and everyone buys their own health insurance (pre existing conditions are covered, low income support) just leaving Medicaid…does that help the underlying problem? Why should full time work be necessary for decent health insurance?
Comment by Jerry Tuesday, Feb 14, 23 @ 11:08 am
==does that help the underlying problem==
How would that help the problem? The expenditure doesn’t go away. The employer is still going to pay for it one way or the other - whether through the purchase of insurance or through a subsidy to the employee.
Comment by Demoralized Tuesday, Feb 14, 23 @ 11:19 am
Cutting spending that causes loss of federal matching funds should be the last thing cut.
Comment by DuPage Tuesday, Feb 14, 23 @ 11:34 am
COGFA has used good data and analytics in the past, and tries to remain nonpartisan. They’ve not been perfect, but there’s no reason to bank on GOMB or GA staff to produce a better number. Legislators have enough to do deciding on spending priorities; let’s not spend too much time fighting over revenue forecasts.
Comment by Walker Tuesday, Feb 14, 23 @ 11:44 am
Full time work is required to pay the employee part of most health plans (not the full cost).
Most people get the cheapest coverage, or if they can avoid getting coverage if they can, and then when they need medical help, it is up to everyone else to foot the bill.
Same with Life Insurance. Most people have no insurance to cover their own burial, so it is someone’s expense.
Comment by Appears Tuesday, Feb 14, 23 @ 11:54 am
No you are not right.
Imagine the horror of slashing 2-3% after a 20% increase in the budget.
38 states don’t impose an estate tax.
Illinois is an outlier and this does contribute to our out migration of successful small businesses and residents.
At least those that don’t park their money off shore in the Bahamas like our Governor
https://taxfoundation.org/state-estate-tax-inheritance-tax-2022/
Comment by Lucky Pierre Tuesday, Feb 14, 23 @ 12:03 pm
== Most people have no insurance to cover their own burial … ==
Which I totally do not understand. A small value life insurance policy can be had for almost nothing. I think I’m paying $15/mo for $25,000 whole life coverage on the grandkids. These days, if you’re younger and healthy, you can get $50,000 for about $20/month. And it’s often cheaper than that to cover your spouse or dependents through a workplace plan.
And while you rarely collect on a policy on kids (it happens, I have), the accidental death plan the schools offer is a real bargain.
Comment by RNUG Tuesday, Feb 14, 23 @ 12:05 pm
===Imagine the horror of slashing 2-3% after a 20% increase in the budget.===
Then giving tax relief to the Bears, legislatively, by the locals as the state budget is cut 2-3% across the board seems fiscally unsound.
Comment by Oswego Willy Tuesday, Feb 14, 23 @ 12:08 pm
===after a 20% increase in the budget===
Which didn’t go into base agency spending. But I’m pretty sure you knew that and are just blowing smoke as usual.
Comment by Rich Miller Tuesday, Feb 14, 23 @ 12:09 pm
After years of taking apart State agencies, where staffing, technology and the like are bare-boned, while need has increased, well, you then get what you pay for. If you want good schools, good social services programs, a good State Police force, good programs for foster kids, good programs for people with disabilities, well, that isn’t free. And the people who are employed by the State already usually work for less than they can make in the private sector. They stay because they believe in their work.
Comment by Appears Tuesday, Feb 14, 23 @ 12:49 pm
=38 states don’t impose an estate tax.=
34 states have progressive income taxes.
So if we are supposed to be like everyone else…
Comment by JS Mill Tuesday, Feb 14, 23 @ 1:03 pm
Appreciate the column.
Very well written and great information.
Comment by Back to the Future Tuesday, Feb 14, 23 @ 1:13 pm
=No you are not right.==
That should be your name on here. “No I’m Not Right.”
There’s are old pal @LP again. Fighting for the rich.
I really wish you would be a part of that outmigration @LP. I’d help you cover your moving expenses.
Comment by Demoralized Tuesday, Feb 14, 23 @ 1:33 pm
== ‘extra’ revenue beyond what is already committed should be going to DCFS, Mental Health, and Education.=
Don’t forget to IDOT too. For new and improved highways. Especially in the Springfield area.
Comment by Stuck in Celliniland Tuesday, Feb 14, 23 @ 2:06 pm
== Which I totally do not understand. A small value life insurance policy can be had for almost nothing. I think I’m paying $15/mo for $25,000 whole life coverage on the grandkids. These days, if you’re younger and healthy, you can get $50,000 for about $20/month. And it’s often cheaper than that to cover your spouse or dependents through a workplace plan. ==
I totally understand this. What is “almost nothing” for you and me is often a burden for lower income. Good financial planning is sadly a luxury a lot of people can’t afford, especially when many are living paycheck-to-paycheck and don’t have an employer-sponsored policy. Setting aside savings and having a life insurance policy is often a “future me” problem, after which health problems have set in (genetic and/org self-inflicted) and now rates have gone up.
Never underestimate how absolutely expensive it is to be poor.
Comment by Leap Day William Tuesday, Feb 14, 23 @ 2:18 pm
@ Jerry
== Employer provided healthcare is a Depression era relic ==
Not true. It is a relic of the 1950s and 1960s when employers competed for skilled workers, and were willing to pay to keep their workers from taking better paying jobs.
Comment by Anonymous Tuesday, Feb 14, 23 @ 2:48 pm
Anonymous at 2:48 is me. Sorry.
Comment by H-W Tuesday, Feb 14, 23 @ 2:49 pm
@ LP
== Illinois is an outlier ==
Not true. If a third of states are on one side, and two-thirds on the other, neither side is an outlier.
Comment by H-W Tuesday, Feb 14, 23 @ 2:51 pm