The House and Senate have passed a budget for FY15 and sent it to the Governor for his signature. Unfortunately, there were not sufficient votes to extend our current income tax rates, which will result in a colossal hole in our state finances when the current income tax rates sunset on December 31, 2014.
In the past several years, Illinois has made some major strides in cleaning up fiscal messes that have taken decades to create. We have fully funded our share of the state pension systems (this year $6,095,219,920 and next year $6,164,056,047), paid down billions of dollars in old bills (from a prior backlog of about $9 billion to about $5 billion), paid debt service to our bondholders on schedule (this year about $2,214,000,000), and have utilized old bill payment to achieve enhanced federal match and reduce our interest payments for old debt.
When the income tax surcharge sunsets this December, we will not only lose approximately $1.8 billion dollars in revenue for the second half of FY15, but will also have to reduce spending further to pay increases for collective bargaining agreements, growth in entitlement programs and other expense growth outside of control. In the next fiscal year, FY16, we will have to close a budget hole approaching $4 billion….an almost unimaginable scenario.
I hope that after the November elections my colleagues will be ready to vote for adequate revenue to pay for necessary operations of our state in the areas of elementary, secondary and higher education, human services and public safety. This could be done by reauthorization of the income tax surcharge, closing corporate loopholes, broadening the sales and use tax base or any combination of these or other ideas.
Amongst all the bleakness, I am happy to say that there were several good things that happened in the final days of the session. In the Appropriation—Human Services Committee which I chair, we were committed to some increases to protect and serve some of our most frail and vulnerable populations:
- Youth and After-school programming $8 million
- Homeless Youth Services $1 million
- Supportive Housing $2.7 million
- Substance Abuse Treatment $5 million
- Prevention of Abuse/Neglect of Disabled Adults $3.8 million
- Prevention of Child Psychiatric Lockouts $7 million
- HIV/AIDS Prevention and Treatment $1 million
- Increase in the Personal Needs Allowance for CILA/ICFDD Residents
You can see the FY2014 Supplemental bill, including about $900 million in payments to old bills, $60 million supplemental for childcare services, etc. here: http://www.ilga.gov/legislation/98/HB/PDF/09800HB6060lv.pdf
You can see the Appropriations—Human Services budgets here: http://www.ilga.gov/legislation/98/HB/PDF/09800HB6096eng.pdf
Also this year, the House and Senate passed the Hospital Assessment/Medicaid Reform Omnibus bill which I sponsored. After months of negotiations with stakeholders from the hospital, nursing home, behavioral health, managed care and other healthcare related organizations across Illinois, this major bill does many important things, among which are:
- Reauthorization of the Illinois Hospital Assessments, which provides over $2 billion of revenue to all Illinois hospitals with federal matching funds and no cost to the state budget.
- Authorizes the State to apply for “ACA 400” money which would bring an additional $400 million of federal funds into our state for healthcare
- Holds all Illinois hospitals harmless from Rate Reform, and provides additional supplemental payments to Safety Net hospitals
- Provides for Accountable Care Organizations (ACEs) to become Managed Care Organizations, provides patient and financial protections for ACE providers and members, establishes payment criteria for emergency services and stabilization care, and network adequacy requirements.
- Provides additional protections and safeguards for nursing home residents
- Allows the Cook County Health and Hospital System to apply for Managed Care Organization status.
- Restores previous cuts to adult dental services for Medicaid clients.
- Restores previous cuts to podiatric services for Medicaid clients.
- Removes persons with Severe Mental Illness, and children in Coordinated Care Entities from restrictions imposed by the 4-drug prior authorization limits.
- Increases rates for Long Term Care Facilities for medically fragile and technologically dependent children, child psychiatric hospitals, Supportive Living Facilities, skilled home nursing services and certain more intensive nursing home services (e.g. for Alzheimers and dementia residents).
- Provides a sustainable funding source for the Illinois Poison Control Center.
You can see the entire legislation here: http://www.ilga.gov/legislation/98/SB/PDF/09800SB0741enr.pdf
As always, I appreciate your comments and can be reached at 773 348 3434 or greg@gregharris.org.