Illinois Senate approves balanced, no-new-taxes budget

May 31--In a turnaround from the sharp partisan differences of the past few years, Illinois senators Wednesday evening overwhelmingly approved a new spending plan for the state, paving the way for the House to vote on the budget Thursday.

The Senate voted 56-2 on the spending plan that senators from both parties said is balanced without raising additional taxes. A companion bill needed to implement some of the spending plan passed on a 54-2 vote.

The Senate also approved a separate bill to get $63 million in back pay to unionized state workers, even though the same provision was included in the budget itself.

The spending plan, which was hammered out over weeks of negotiations among rank-and-file lawmakers, spends about $38.5 billion in general state tax collections. Add in federal money and other income and the total budget comes to about $80.2 billion.

"This has been certainly the first time since I've been an appropriation chair where I feel like it has really come together as a true bipartisan effort," said Sen. Heather Steans, D-Chicago. "I don't think anybody would say it's ideal and exactly what they wanted. That's the nature of compromise."

Steans said the budget "truly does balance," something that has not always applied to budgets approved by the legislature.

Sen. Chapin Rose of Mahomet, a ranking Republican on the Senate Appropriations Committee, also praised the negotiating process this year after years of partisan bickering.

"Quite frankly, the last few weeks has had far less partisanship and rancor than I've seen in a long time in this building," Rose said. "This process works when you let it."

Included in the spending plan is an extra $350 million for K-12 education that is required under the revised school funding formula put into place last fall. It also includes a $50 million increase for early childhood education. The budget does not call for switching downstate teacher pension costs to local school districts.

Universities and community colleges will see a 2 percent increase over the current budget. There is no pension cost shift for higher education, either.

The budget legislation includes about $1.4 billion to cover additional expenses in the current year budget. This includes about $405 million the Department of Corrections says it needs to ensure prisons can stay open through June 30. Overall, though, spending on Corrections will go down somewhat, reflecting a lower number of inmates in Illinois prisons.

The supplemental also includes $63 million to pay thousands of union workers wage increases they have been owed dating back to 2011. However, the spending plan does not include money for step increases that are owed to more than 15,000 members of the American Federation of State, County and Municipal Employees union. Sen. Andy Manar, D-Bunker Hill, said the money will have to be paid, but the exact amount owed is still being determined.

Local governments will see an increase from the budget. In the current spending plan, 10 percent of the state income taxes that cities are entitled to was withheld to balance state spending. In the new proposal, the state will cut the amount withheld to 5 percent.

Likewise, the state this year began holding back 2 percent of some sales tax collections from communities as an administrative charge for collecting the tax. In the new budget, that fee will be cut to 1.5 percent.

The budget fully funds state employee group health insurance next year. Budget negotiators rejected Gov. Bruce Rauner's call to cut state worker health care benefits to save the state money. At the same time, the budget hopes that current and some former employees will take advantage of voluntary pension buyout programs to save the state money on pension costs.

One buyout would apply to people who are vested in a state-funded pension system but no longer working in that field. They would be allowed to get a cash payment for giving up their future pension benefit. The budget estimates this will save about $41 million.

The state hopes to save much more money by offering workers in a Tier 1 pension plan a cash payment to give up their future 3 percent compounded annual raise in pension benefits. The annual increase would be 1.5 percent instead, not compounded. The estimated savings is about $381 million.

Steans emphasized that both buyout programs are voluntary.

Steans said the budget proposal includes a new "critical access rate" for pharmacies. It is intended to ensure independent pharmacists receive rates from Medicaid that are adequate to cover their costs. Smaller, independent pharmacies complained this year they are being squeezed by rates under the state's new Medicaid managed care program which is designed to reduce costs. At the same time, a 4 percent Medicaid rate reduction that Rauner sought is not part of the agreement.

Manar said the budget has about $500 million in cuts in it.

Contact Doug Finke: doug.finke@sj-r.com, 788-1527, twitter.com/dougfinkesjr.

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