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 Weekly Review
Provided through the Generous Support of the McCormick Tribune Foundation
CTBA Weekly Review June 17, 2008  
CTBA Quick Links
In This Issue
Budget Update
State EITC
Contact Gov on Ethics Bill
Fall Veto Session Calendar
Education Funding & Fiscal Reform
From the Capitol  
Capitol Dome
FY 2009 Budget Update

 
You may have thought that since the General Assembly passed the FY 2009 budget on time, the fiasco of last year would not happen again.  Not so.  Budget negotiators passed a state budget for FY 2009 that is $2 billion out of balance- and left the Governor to balance it by using line-item vetoes. The governor is allowed to reduce or erase any individual line in any appropriations bill.

Last week the Governor threatened massive human service and education cuts to the FY 2009 GA passed budget.  In a letter addressed to "Dear State Leader" and sent to individuals and organizations who rely heavily on state funding, Governor Blagojevich advised recipients to "take appropriate action now to limit the impact" of massive cuts he may make in the FY 2009 state budget.

The letter states:
 
"Unless the General Assembly acts swiftly to pass revenues necessary to support their proposed budget, I will be compelled to use my constitutional authority to address the deficit."

He stated, "Action necessary to face our budget challenges may include, but should not be limited to:

· Instituting a hiring freeze on all non-critical positions,
· Freezing all non-essential operating spending,
· Unilaterally reducing or imposing reserves to all operating programs that do not address issues of life, safety or health of Illinoisans, and
· Eliminating programs or functions that do not address key priorities of the State."
 
These policies "will ... impose significant difficulties on you and the people of Illinois," he said, adding that they can be avoided "if the House passes the capital plan" supported by both caucuses in the Senate and the GOP caucus in the House.
 
A copy of the governor's letter can be read here.

It is likely Blagojevich will call a special session, perhaps on June 24, to deal with these budget and revenue issues.  The Governor would like the House to concur with the Senate on bills to enact fund sweeps, float a pension debt-restructuring bond issue and enact a major capital program.

Highlights of the General Assembly Enacted Fiscal Year 2009 Budget:
 
  • Increases spending by $2.1 billion over fiscal year 2008
  • Schools received an increase of $500 million, including a $225 increase in the per-pupil foundation level (raising the foundation level to $5,959 per student).
     
  • Appropriates $600 million for Medicaid, however this does not eliminate the backlog of unpaid Medicaid bills
The budget bills can be accessed at the following links:

Senate Bill 1115
Senate Bill 1129
House Bill 5701
Senate Bill 1102
Senate Bill 773 (Budget Implementation Bill)


 
FY 2009 Revenue Options Passed in the Senate, Not Considered in the House
 

 
  • Fund Sweeps - SB 790 provides the Governor the authority to sweep up to $530 million in special state funds in FY 2009 to pay for Medicaid obligations, obligations of the State Board of Education or obligations that secure federal funds.   On Thursday, May 29, the Senate passed SB 790 on a vote of 37-21-00. The bill currently sits in the House.  View SB 790 here.
     

In the coming weeks CTBA will have a full analysis of the Fiscal Year 2009 final budget.



 
Tax Fairness
 		  
New Report Proves Importance of Earned Income Tax Credit

 
A new report issued by the Center on Budget and Policy Priorities shows that Earned Income Tax Credits (EITC) serve a number of important public policy goals. State EITCs reduce poverty,
increase workforce participation among low-income families, and
make state tax systems fairer.

Read the entire report here

 What is the Illinois Earned Income Tax Credit?  It is the only tax benefit that expressly encourages and rewards work - a tax credit that last year benefited nearly 750,000 low-income, working families statewide. It is based on the federal EITC, which long has enjoyed strong bipartisan support. Eligible working families receive a credit of up to $235 - money they can invest in necessities ranging from housing and groceries to savings for college tuition and household emergencies.

Why the EITC?  It provides a strong work incentive for low-income families by "making work pay," allowing them to hang onto more of their hard-earned money at tax time. It helps to reduce the heavy responsibility that too many of them shoulder in state and local taxes - just as the federal EITC offsets the effect of the payroll tax. The EITC represents targeted assistance for struggling families who need it most.

Consider that in tax year 2003, the poorest one-fifth of Illinois households paid about 13 percent of their incomes in state and local taxes, while the wealthiest 1 percent of earners spent less than 6 percent of theirs on such taxes. Low-income families simply pay more than their fair share for the public goods that we all enjoy - from roads and schools to police and fire protection. The EITC helps to reduce this disparity. And because families spend their EITC money at the local level, many economists say this credit provides true "economic stimulus" for businesses and communities.

How can the EITC be improved? Illinois' maximum EITC of $235 per family is among the smallest of the nation's 23 state EITCs, which range as high as $2,000 in such states as Wisconsin.

SB12, which passed the Senate unanimously in February 2007, would increase EITC assistance:

 
  • In 2008, the Illinois EITC would rise to 7.5 percent of the federal credit, for a maximum value of approximately $350 per qualifying family;
     
  • In 2009, it would rise to 10 percent of the federal credit, for a maximum state EITC of about $470.

 

 
Ethics  
No Action by Governor on Ethics Bill
 

HB 824, the bill that would help end "pay to play politics" unanimously passed the General Assembly May 31st.
The bill prohibits entities with more than $50,000 in state contracts from giving political donations to the elected officials who control those contracts.
 
Currently, Illinois has no campaign contribution limits.
 
It now sits on the Governor's desk.  Blagojevich can sign it into law, veto the entire bill, or amendatory veto portions of the bill.  The Governor has stated he may add new provisions to the bill. If so, lawmakers would then need to rally support a second time to enact the legislation.

Contact the Governor and tell him to sign the bill into law:

Web Site: www.illinois.gov/gov

207 Statehouse
Springfield, IL 62706
Phone: (217) 782-0244
Fax: (217) 524-4049

Main District Office:
100 W. Randolph St., Ste. 16-100
Chicago, IL 60601-3220
Phone: (312) 814-2121
Fax: (312) 814-6183


Track HB 824 Here.
 
Veto Session
 		  

The fall veto session calendar can be accessed at the following links:

House
Senate


 
Education Funding & Fiscal Reform  

Schools and Kids Need Your Help!
 
Is Your Senator a Co-Sponsor of SB 2288?
 
 
SB 2288 now has 22 co-sponsors! 
Click here to see if your Senator is a sponsor.  If not, please contact him or her and tell them to co-sponsor SB 2288!
 
The lead sponsors of SB 2288, Senator James Meeks and Senator John Cullerton, are committed to bringing the bill to a vote in November.  This gives us the spring and summer to work for the passage of the bill. 
 
Senate Bill 2288 provides a new, permanent revenue source for schools, property tax relief for homeowners and
$1 billion for debt service for a state infrastructure program.  It is the only piece of legislation that will truly reform the way education is funded in Illinois by making the state the primary funder of K-12 education.  The bill also provides $300 million for community colleges and universities.
 
Read the bill here
 
 
Please continue to call or write your Senator and tell them to co-sponsor SB 2288.  Use the A+ Illinois' website tools to find your Senator and their contact information here.   
 
SB 2288 makes significant changes to tax and school funding laws.
  • It reduces our reliance on property taxes to fund schools by mandating an annual property tax abatement of $2.9 billion (indexed to inflation for each subsequent year) with every property owner seeing a minimum of 20% property tax relief on the portion of the bill designated to education.
  • The Invest in Illinois Fund is created and funded with $1 billion each year to provide funding for debt service and fees on bonds for capital projects, such as roads and schools, throughout the State.
  • The bill also mandates a $300 million annual appropriation (indexed for inflation) for grants to institutions of Higher Education.
  • Increases for Early Childhood education are phased in, from $45 million in 2009-2010 to $180 million in 2012-2013.
  • Increases to the Foundation Level are phased in, raising it from $6,253 for the 2009-2010 school year (from $5,734) up to $7,809 for the 2012-2013 school year.  The Foundation Level and Supplemental General State Aid (Poverty Grants) are automatically tied to increases to the Employment Cost Index to control for inflation.
  • Creates a School Improvement Partnership Fund to target resources to proven programs such as smaller class sizes, literacy coaching, longer school days and teacher mentoring;
  • Maintains and expands grants for high-poverty schools
  • The personal income tax is increased to 5% (from 3%), and the corporate income tax is increased to 8% (from 4.8%).
  • Family Tax Credits are provided to single taxpayers earning less than $26,695 and married couples earning less than $53,694.

 

    Click here to listen to a presentation on SB 2288 by the Center for Tax and Budget Accountability.

CTBA has numerous reports outlining the education funding problem in Illinois and how to fix it.  Visit the education page of the CTBA website for more information. 
 
 
 
Do you have something to share in the Weekly Review?
 
Please email Chrissy Mancini