In February, Illinois Gov. Pat Quinn proposed an unbalanced budget that relied on hefty tax increases and $8.75 billion in borrowing – not to mention, increased overall state spending by $1.7 billion. If followed, Gov. Quinn’s budget will prompt Illinois to run recurring, annual deficits of nearly $3 billion by the year 2016. By the end of the decade, Illinois could fall $15 billion behind on its bills. The nonpartisan Illinois Policy Institute has proposed an alternative, which:
Does not rely on recent tax increases as revenue sources
Does not include any borrowing to pay debt or general expenses
Has positive cash flow for fiscal year 2012
The following are major initiatives of Budget Solutions 2012:
Medicaid costs continue to grow year after year and crowd out core government services (see Appendix D in Budget Solutions 2012). Even with the increased spending, access to care continues to be an issue. Gov. Quinn’s plan to cut hospital reimbursement rates could negatively affect access to care for Medicaid beneficiaries.
The Institute proposes the state transform Medicaid into a premium assistance program. Through a federal block grant waiver, the state could transform Medicaid into a premium assistance program that would offer Medicaid beneficiaries greater access to care at a lower overall cost to the state. Rhode Island has received a waiver to attempt similar reforms.
Competitive Grant Funding
Each year the Illinois state budget is riddled with hundreds of grants and line items that cost $5 million or less. Added together, the 328 items add up to almost $350 million per year – a sum larger than the total operating budget of several state agencies. In Budget Solutions 2012, the Institute has proposed replacing these line items with a $150 million Competitive Grant Funding program. This will save $200 million while also allocating funds to where they are needed most. Read a more detailed explanation of the Competitive Grant Funding proposal on our blog.
Right-Size Education Funding
Education is perhaps the best example of how good policy – and not more money – drives better outcomes. The Illinois Policy Institute has documented the successes of schools in Florida, a state with significantly higher student poverty levels than Illinois that also spends $1,000 less per pupil.
Entering the 2011 fiscal year, Illinois schools were spending at record levels; the Illinois State Board of Education reports that real per pupil spending last year was a record $13,568 – at least $1,000 higher than any other year on record. The Illinois Policy Institute suggests the state spend $7.866 billion on education during fiscal year 2012. This figure is roughly $1.6 billion less than Gov. Quinn’s suggested $9.528 billion. This will force school districts to prioritize classroom spending over administrative salaries and perks.