Weekly Review

Today: Special Session on Education Funding
Tomorrow: Special Session on Capital Program

Governor Announces He May Call Two to Four
Special Sessions a Week in September

The Governor has called two more special sessions this week. Today's special session began at 3pm, "to consider measures aimed at increasing school funding, improving the school funding structure and eliminating any current inequities." Different plans may be discussed during the session including, eliminating property taxes for education (similar to Michigan), SB 2288, an income tax increase that will pump more money into education and fund a capital program, while reducing property taxes and providing tax credits for low and middle income workers, or eliminating residency requirements for students. The Governor has not made any specific recommendations for the General Assembly to consider, but has stated he is opposed to an increase in the income tax.

Wednesday's session is scheduled for 5 pm to consider a "capital infrastructure plan, along with any other measures necessary to provide for the capital infrastructure needs of the State of Illinois." The Governor has scaled back his proposed capital plan from $34 billion to $25 billion and has said he will not pursue expansion of gaming to pay for the program. Instead, the Governor said he would fund the program through a partial lease of the Illinois State Lottery, Road Funds and gasoline sales tax revenues. (Currently gasoline sales tax revenues go toward the State's General Fund. That means any gasoline sales taxes diverted from the GF to a capital program would require more GF budget cuts).

Education funding reform has vexed lawmakers for decades and the state has not passed a capital plan since 1999. Lawmakers will most likely find it difficult to find solutions to these complex problems in a single day.

The Center for Tax and Budget Accountability testified against leasing the Illinois State Lottery due to concerns over lost revenues for education. Lottery revenues for schools usually increase each year. Any proposal that sets up a flat funding mechanism to replace those revenues would mean a funding decrease after accounting for inflation. Further, sale or lease of a long term revenue generating asset to cover ongoing operational expenses is questionable fiscal policy. Once the asset is sold or leased and the money spent the state loses all or most of the ongoing revenue, putting pressure on other revenue sources to cover the lost revenue.

The Governor also announced he is considering calling special sessions two to four days a week in September if there is no solution found on capital and education funding this week.

Legislators and Top Officials to Receive Raises Unless Senate Acts
Legislators will receive a pay raise if the Senate does not vote down the issue by Wednesday. The House has already voted down the pay raise. The raises will automatically go into effect unless the Senate acts. Comptroller Dan Hynes weighed in on the pay raise issue, announcing that pay raises for lawmakers and top state officials will not be made even if the Senate fails to reject the pay raises.

Hynes cited the lack of an appropriation necessary to enact the raises. Such an appropriation will require an affirmative vote by the General Assembly and the signature of the Governor to enact the raises.

"We cannot implement the pay raises without an appropriation. But more importantly, I am of the opinion that this is no time for pay raises," Hynes said, pointing out the drastic cuts to health care providers and social service programs in the FY09 budget.

It is unknown at this time if legislators and state officials will receive back pay when and if the raises eventually go into affect.

Resources:

Read SB 2288

More info on SB 2288

Information on Michigan's school funding "Proposal A"

Recap of the Governor's vetoes and House overrides

Read CTBA's analysis of FY 2008 revenues - Revenue misses inflation mark by $155 million

Check Back Here for CTBA's
FY 2009 Budget Analysis
Coming Soon!