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March 3, 2009
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Federal Stimulus
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Comptroller
Recommends Legislators Short Term Borrow to Access
Federal Stimulus Dollars
State owes doctors,
hospitals and providers $2.2 billion
Other non-Medicaid
bills total another $2.3 billion
From the Comptroller: Comptroller Dan Hynes urged
changes in the state's short term borrowing laws
saying the move would ensure access to enhanced
federal funding from the stimulus package and also
tap additional federal monies available from the
Hospital Assessment Program.
In testimony before the Senate Executive Committee,
Hynes said SB324 would allow state officials to
temporarily borrow a maximum of $1.5 billion that
would be paid back with federal stimulus and
Medicaid funds. He also said the cash would be
necessary to meet new federal prompt payment
guidelines.
"This is a narrowly focused, fiscally responsible
proposal that allows the state to maximize federal
dollars and meet its obligations," Hynes said.
"Lawmakers should act quickly to pass the measure to
obtain those monies within the next few weeks."
Hynes said that without additional borrowing
authority the state may be unable to fully access
$2.9 billion in additional federal Medicaid funds
during the next two years authorized by the
President's stimulus initiative. To qualify for the
extra funding, the state is required to pay doctors,
hospitals and nursing homes promptly, within 30
days. The state is currently holding an estimated
$2.2 billion in unpaid Medicaid bills, some of which
date back to services provided in September.
"By any standard," Hynes said, "the 30-day prompt
payment requirement is not currently being met."
Hynes has been a long-time advocate of timely bill
payments, as a matter of fairness and to ensure the
financial viability of health care providers and
public access to health care services.
The borrowing change also would allow the state to
keep its commitment for the five-year, $3.8 billion
Hospital Assessment Program. The program provides
critical funding to the state's hospitals for a
variety of programs and up to an additional $1.3
billion to the state for health care spending during
that time.
Hynes predicted vendors of all types might have to
seek reimbursement for hundreds of millions of
dollars in services through the Court of Claims
because the state will have insufficient revenues to
pay the bills by Aug. 31, the end of this fiscal
year's lapse period. In addition to Medicaid bills,
there currently is another $2.3 billion worth of
non-Medicaid bills awaiting payment, dating back to
November of 2008.
SB324 is sponsored by Sen. Jeffrey M. Schoenberg,
D-Evanston.
"This proposal is critical if we are to provide the
more than 200 hospitals across Illinois who depend
on these additional funds with the certainty that
they need to meet the critical health care needs in
their communities," Schoenberg said.
Background on Deficit and Federal Stimulus Dollars
for Illinois
According to Comptroller Hynes, by the end of the
fiscal year the state deficit will reach $9
billion. Although the federal stimulus will provide
additional dollars to Illinois, it will not close
the deficit.
The American Recovery and Reinvestment Act will
provide about $6.3 billion to Illinois through
2013.
To help close
the current year deficit the stimulus will
provide about $880 million for Medicaid payments
and about $2,055 billion for a "State Fiscal
Stabilization Fund," of which $1,681 must be
used for K-12 education and the remainder to
avert budget cuts in education or in other basic
state services, such as public safety and law
enforcement, services for the elderly and people
with disabilities, or child care.
If Illinois were to access all of the State
Fiscal Stabilization Funds and the $880 in
Medicaid funding the deficit will remain at
around $6 billion.
The White House projects the bill will create
148,000 jobs in Illinois.
(View the White House memo here).
For Illinois taxpayers, the Center for Tax Justice
projects Congress's Stimulus Bills Would Provide
Illinois Families with Children an Average $786 to
$922 in Tax Cuts in 2009.
(View the fact sheet here).
View the legislation here (H.R.1):
Most states are facing budget problems that the
fiscal stimulus will not solve. As written by
stateline.org, according to the National Conference
of State Legislatures, the 50 states face budget
gaps totaling $132 billion for this year and next.
The stimulus bill includes $53.6 billion in
education aid and $87 billion in Medicaid aid for
the states - $140.6 billion in fiscal relief, but
stretched out over five years.
What's In the Legislation?
According to the Center on Budget and Policy
Priorities, Illinois is set to get about $6.3
billion in federal aid from FY 2009 to FY 2013
(View the report here.)
This includes: All
dollars in millions
Fiscal Relief
for State Medicaid Costs
FY 2009 $880
FY 2010 $1,340
FY 2011 $680
Total: $2,900
Education Block
Grant
FY 2009 - FY 2010
$1,681
Available immediately but must be used within
two years. Education grants would support K-12
and higher education during state fiscal years
2009, 2010, and 2011. A portion of the funds
would be dedicated to helping states maintain K-
12 and higher education funding, the remainder
would flow directly to local school districts.
The funds must first be used to restore state
education funding up to the greater of the FY08
and FY09 level, or, if higher, up to existing
state formula levels. They can also be used to
allow the phase-in of previously enacted equity
and adequacy adjustments. Any funds remaining
after these uses must be sent to local school
districts. If funds are not sufficient to
provide state support for K-12 and higher
education at these levels, the state must
allocate the funds between K-12 and higher
education in proportion to the relative
shortfalls.
Flexible Block
Grant
FY 2009 - FY 2010
$374
Available immediately but must be used within
two years. Flexible block grants to avert budget
cuts in education or in other basic state
services, such as public safety and law
enforcement, services for the elderly and people
with disabilities, or child care.
Worker Training
and Employment Services (Youth Services,
Dislocated Workers, Adult Activities)
FY 2009
$54
Food Stamp
Program Administration
FY 2009 - FY 2013
$12 to the state for administration of
program
$890 Million to participants, would aid an
additional 1,371,000 people
Emergency
Shelter Grant Program
FY 2009
$72
Unemployment
Insurance Modernization Act
$23 for program administration
The Unemployment Insurance Modernization Act (UIMA)
is bi-partisan federal legislation (S. 1871/H.R.
3920, Title IV) that provides substantial
financial incentives for the states ($7 billion)
to close the major gaps in the unemployment
program that deny benefits to large numbers of
hard-working families. In addition, the measure
provides $500 million in necessary funding for
state agencies to better serve the record
numbers of workers now applying for unemployment
benefits and seeking to navigate today's
challenging job market.) $316 million to
residents.
Education -
Increase Title I and IDEA
FY 2009 - FY 2010
$1,041
Childcare
The economic recovery package will provide an
additional $2 billion in child care funding
under the Child Care and Development Block Grant
(CCDBG). CCDBG provides funding to states to
subsidize child care for children in low-income
working families and low-income families in
which parents are
engaged in education or training. Illinois
residents will receive about $147 million in
Childcare subsidization
Child Supports
FY 2009 - FY 2010
$37
According to the Center for Law and Social
Policy, the child support enforcement program is
an important part of the safety net for
struggling families. One in four children
receives child support services. Families spend
their child support income to pay for basic
needs, shoring up consumer demand for goods and
services and preserving jobs in the economy.
The program is cost effective, it collects $6
for every federal dollar invested.
Total
FY 2009 - FY 2013
$6,293
TAX RELIEF FOR
INDIVIDUALS AND FAMILIES
According to the Center for Tax Justice, Congress's
Stimulus Bills Would Provide Illinois Families with
Children an Average $786 to $922 in Tax Cuts in
2009.
(View the fact sheet here).
Highlights of the
Legislation
"Making Work Pay" Tax Credit. The bill would
cut taxes for more than 95% of working families in
the United States. For 2009 and 2010, the bill would
provide a refundable tax credit of up to $400 for
working individuals and $800 for working families.
This tax credit would be calculated at a rate of
6.2% of earned income, and would phase out for
taxpayers with adjusted gross income in excess of
$75,000 ($150,000 for married couples filing
jointly). Taxpayers can receive this benefit through
a reduction in the amount of income tax that is
withheld from their paychecks, or through claiming
the credit on their tax returns.
Economic Recovery
Payment to Recipients of Social Security, SSI,
Railroad Retirement and Veterans Disability
Compensation Benefits. The bill would provide
a one-time payment of $250 to retirees, disabled
individuals and SSI recipients receiving benefits
from the Social Security Administration, Railroad
Retirement beneficiaries, and disabled veterans
receiving benefits from the U.S. Department of
Veterans Affairs. The one-time payment is a
reduction to any allowable Making Work Pay credit.
Refundable Credit
for Certain Federal and State Pensioners. The
bill would provide a one-time refundable tax credit
of $250 in 2009 to certain government retirees who
are not eligible for Social Security benefits. This
one-time credit is a reduction to any allowable
Making Work Pay credit.
Increase in Earned
Income Tax Credit. The bill would temporarily
increase the earned income tax credit for working
families with three or more children. Under current
law, working families with two or more children
currently qualify for an earned income tax credit
equal to forty percent (40%) of the family's first
$12,570 of earned income. This credit is subject to
a phase-out for working families with adjusted gross
income in excess of $16,420 ($19,540 for married
couples filing jointly). The bill would increase the
earned income tax credit to forty-five percent (45%)
of the family's first $12,570 of earned income for
families with three or more children and would
increase the beginning point of the phase-out range
for all married couples filing a joint return
(regardless of the number of children) by $1,880.
Increase Eligibility
for the Refundable Portion of Child Credit.
The bill would increase the eligibility for the
refundable child tax credit in 2009 and 2010. For
2008, the child tax credit is refundable to the
extent of 15 percent of the taxpayer's earned income
in excess of $8,500. The bill would reduce this
floor for 2009 and 2010 to $3,000.
"American
Opportunity" Education Tax Credit. The bill
would provide financial assistance for individuals
seeking a college education. For 2009 and 2010, the
bill would provide taxpayers with a new "American
Opportunity" tax credit of up to $2,500 of the cost
of tuition and related expenses paid during the
taxable year. Under this new tax credit, taxpayers
will receive a tax credit based on one hundred
percent (100%) of the first $2,000 of tuition and
related expenses (including books) paid during the
taxable year and twenty-five percent (25%) of the
next $2,000 of tuition and related expenses paid
during the taxable year. Forty percent (40%) of the
credit would be refundable. This tax credit will be
subject to a phase-out for taxpayers with adjusted
gross income in excess of $80,000 ($160,000 for
married couples filing jointly).
Refundable
First-time Home Buyer Credit. Last year,
Congress provided taxpayers with a refundable tax
credit that was equivalent to an interest-free loan
equal to 10 percent of the purchase of a home (up to
$7,500) by first-time home buyers. The provision
applies to homes purchased on or after April 9, 2008
and before July 1, 2009. Taxpayers receiving this
tax credit are currently required to repay any
amount received under this provision back to the
government over 15 years in equal installments, or,
if earlier, when the home is sold. The credit phases
out for taxpayers with adjusted gross income in
excess of $75,000 ($150,000 in the case of a joint
return). The bill eliminates the repayment
obligation for taxpayers that purchase homes after
January 1, 2009, increases the maximum value of the
credit to $8,000, and removes the prohibition on
financing by mortgage revenue bonds, and extends the
availability of the credit for homes purchased
before December 1, 2009. The provision would retain
the credit recapture if the house is sold within
three years of purchase.
Sales Tax Deduction
for Vehicle Purchases. The bill provides all
taxpayers with a deduction for State and local sales
and excise taxes paid on the purchase of new cars,
light truck, recreational vehicles, and motorcycles
through 2009. This deduction is subject to a
phase-out for taxpayers with adjusted gross income
in excess of $125,000 ($250,000 in the case of a
joint return).
For information on
other individual and family tax benefits of the bill
and to find out provision on small businesses taxes,
manufacturing, renewable energy development and
unemployed workers click
here
View the Tax Stimulus Report Card by the Tax Policy
Center at the Brookings Institution and Urban
Institute
More from the Center for Tax Justice here
More from the National Conference of State
Legislatures
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Earned Income Tax Credit
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Support Illinois Workers
EITC would provide Illinois an economic stimulus
Support HB 2319 and SB 1562
The EITC 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 Illinois the poorest one-fifth of
Illinois households pay about 13 percent of their
incomes in state and local taxes, while the
wealthiest 1 percent of earners spend less than 5
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? Currently Illinois' EITC is the
smallest of the nation's 21 state EITCs. It is set
at 5 percent of the federal credit.
HB 2319 and companion bill
SB 1562 would increase EITC assistance for
struggling families through a stairstep
approach.
In FY 2009
the Illinois EITC would rise to 7.5 percent of
the federal credit for a maximum value of
approximately $360 per qualifying family;
In FY 2010
it would rise to 10 percent of the
federal credit for a maximum state EITC of about
$500.
Fact Sheet on SB 12
HB2319 is posted for hearing in the House Revenue
Committee this coming Thursday, 5 March at 9 a.m.
in Room 115 of the state capitol.
More on the EITC
Fact Sheet on HB 2319
Top Ten Reasons Working Poor Families Need the EITC
Find out if you are eligible for the Illinois Earned
Income Tax Credit
Together, State Minimum Wages and State Earned
Income Tax Credits Make Work Pay, from The
Center for Budget and Policy Priorities finds that
state EITC's are an effective method for fighting
poverty.
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CTBA Fiscal Symposium
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New Date
Due to scheduling issues,
CTBA's 8th Annual Fiscal
Symposium
has been rescheduled for Monday,
March 30, 2009
A panel discussion on how the
current economic downturn
is affecting Illinois' ability
to provide crucial public
services.
Monday, March 30, 2009
Registration: 8:15 am
Continental Breakfast: 8:30 am
Program: 9:00 am to 12:30 pm
Union League Club of Chicago
69 West Jackson Blvd.
Main Lounge, 2nd Floor
Chicago, Illinois
Please mark your calendars!
Details and
registration form will be
forthcoming
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Calendar
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WHAT: Dupage Federation on Human Services
Reform, Making the Connection: Accessing Public
Benefits for Low Income Persons
WHEN: October
1, 8, 15, 22, 29
February
18, 25
March 4,
11, 18
June 3,
10, 17, 24
July 1
WHERE: All trainings held at NIU Naperville,
1120 Diehl Road, Naperville, IL
INFO: Making the Connection training sessions
contain information in an easy-to-understand format
regarding many programs available to assist low
income persons.
Individuals who register for a Making the Connection
training session now receive membership access to
the Federation's newly developed Making the
Connection Illinois website, www.mtcil.org.
To register and for more information please visit
www.dupagefederation.org.
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Do you have something to add to the Weekly
Review?
email Chrissy Mancini @
cmancini@ctbaonline.org
___________________________________________________________________________
Center for
Tax and Budget Accountability
70 East Lake Street, Suite 1700
Chicago, IL 60601
312-332-1041
www.ctbaonline.org
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