Pritchard's Perspective for August 17th

Observations and comments about state government by State Representative Robert W. Pritchard.
District Office 815-748-3494 or E-Mail to bob@pritchardstaterep.com

August 17, 2015
In This Issue: 
  Ø  House Finally Agrees to Allow Access
  Ø  State Spending Continues without a Budget
  Ø  Many Human Services Struggle to Keep Operating
  Ø  Farmland Disaster Declaration Approved
  Ø  Ideas for Growing State Revenue

House Finally Agrees to Allow Access
After over an hour of debate and some political maneuvering, the House agreed last week to allow state programs and social services to access federal dollars.  Senate Bill 2042, as it passed overwhelmingly and in a bipartisan manner in the Senate, would allow almost $5 billion in federal dollars to "pass through" the state to citizen services.  
The money had been held hostage due to the lack of a state budget.  When the bill came to the House, the Speaker attached an amendment that would have added over $1 billion in additional state spending and therefore would have received a certain veto by the Governor.   
Republicans asked that the amendment be added to another bill so that the vital services in SB 2042 could quickly get through the legislative process instead of being held up.  However, those pleas were rebuffed and a vote produced less than the required number for passage.  The amendment was then removed and a second one was quickly introduced and passed with bipartisan support.
With such political games being played over federal dollars and dozens of critical services, you can understand why progress on a state budget is so difficult.

State Spending Continues Without a Budget
The idea of spending over three quarters of state revenue without a budget would have been inconceivable even a few short years ago.  The constitution clearly states there can be no spending—with a few exceptions for continuing and court ordered appropriations—without a budget proposed by the legislature and approved by the governor.
Yet now over 7 weeks into the fiscal year without a budget, the state is making expenditures at the rate of nearly $31 billion for a full year.  This compares with expenditures of around $38 billion last year and revenues this year expected to total just $32 billion.
A combination of court orders, continuing appropriations and approval of the FY16 elementary and secondary education budget have forced the expenditures.  The education appropriation totals around $7 billion, state worker salaries comprise another $6 billion, Medicaid payments $8 billion, debt and pension payments around $9 billion, and foster care and human services about $1.1 billion.
The Governor’s office is trying to get a handle on the full-year expenditures required by courts and past legislatures.  Needless to say, the Governor is fast losing any ability to manage the budget with these pre-emptions. 
One area where the Governor is cutting program eligibility and thus expenditures involves the Child Care Assistance Program.  The legislative oversight committee to such administrative cuts tried, but failed, to block the Governor’s actions last week.  The majority party just doesn’t accept cutbacks as a means to balance the budget.

Many Human Services Struggle to Keep Operating
With the actions of the courts and the Governor to continue funding most of the state programs, salaries and services, the remaining areas of the budget—Emergency Management Agency, higher education, senior care, and children and family services to name a few—are receiving little attention.  
A recent survey of many service providers found that one-third have cut clients, one-fifth will deplete their financial reserves by the end of August, and one-quarter are operating on lines of credit.
In DeKalb County for example, Meals on Wheels will be cutting back delivery days and wellness checks for its senior clients.  Programs to keep senior adults active are also being reduced.  It is these kinds of community-based programs that help avoid more expensive institutionalization in long-term care facilities. 
In discussions with a group of senior service providers recently, I suggested they look for alternatives for their clients should they have to reduce their programs due to state funding delays.  Such providers could refer clients to other agencies that are still operating, alert neighbors of clients to help fill the gap, and encourage other organizations like religious groups to help.

Farmland Disaster Designation Approved
The United States Department of Agriculture (USDA) has granted the request from the Governor for disaster designation in 101 Illinois counties that suffered losses due to flooding and rain delayed planting this spring.  Governor Rauner made the request which had the backing of the entire Illinois congressional delegation.
All three counties in the 70th district are included in the declaration, which makes farmers in the area eligible for low-interest operating loans.  Farmers who are interest in such help should contact their county Farm Service Agency office or the state FSA office at (217) 241-6600.  Loan applications are considered on a case-by-case basis, taking into account the extent of losses, security available, and applicant’s repayment ability.  

Ideas for Growing State Revenue
It is obvious to even many fiscal conservatives that more state revenue is needed to dig our way out of the state’s current fiscal canyon.  While many liberals only see answers involving tax and fee increases, several legislators spoke out on the House floor last week with other ideas. 
One of the first suggestions was to “stop the bleeding” of companies leaving the state with their jobs, payrolls, and business activities.  Just last week another company announced it will be moving its operations from Chicago to Indiana.  Crain’s Chicago Business quoted the company as saying it was an easy decision for them because they could save millions of dollars each year due to Indiana’s better business climate.  The company said it could save $1 million dollars a year in lower Worker’s Compensation costs alone.  So the state should try to retain its current revenue by improving its business climate.
Another suggestion was to keep more of our current tax revenue by eliminating certain business tax credits and refunds.  This desperate measure would end incentive programs that were created to attract businesses, encourage expansion, and job growth.  It would also reduce payments for businesses to collect certain taxes on behalf of the state.
I took a different approach and spoke about the importance of investing in higher education, attracting federal research grants and providing a skilled work force that attracts businesses to Illinois. 
Just last year 49,000 graduates from Illinois public universities entered the job market with the potential of adding $2.8 billion in new taxable income for the state.  There is an undisputed correlation between level of education completed and employment earning potential.  Helping more students attend higher education and complete a degree pays real dividends.
Another dividend of investing in higher education is the capacity to attract $1.5 billion in “new” money for Illinois in the form of federal research and out-of-state tuition.  We have to have the university research infrastructure to “win” the grants and attract graduate students to help with the research.
Yet other benefits of investing in higher education are reduced demands for state services (expenditures).  Research has found that people with even some college education have better health, obtain jobs therefore needing less social support, stay out of prison, are more engaged in their children’s education, and donate more time and money to charitable causes.
Prioritizing state spending for higher education will have positive future implications for the state and its workers.

I will be in the district this week so call if you’d like to share your ideas.
Bob