Governor Bruce Rauner outlined his budget today.
Governor urges pension reform, $1 billion tax cut
FY19 budget to fund top priorities through expense control, cost shifts
SPRINGFIELD (Feb. 14, 2018) — Gov. Bruce Rauner today urged the Illinois General Assembly to make comprehensive pension reforms and use the savings to give the people of Illinois a nearly $1 billion tax break. The prompt came during the governor’s annual budget address to legislators where he laid out his fiscal plan for 2019.
The plan Rauner submitted will produce a surplus provided legislators agree to contain expenses and shift responsibility for paying local pension costs.
“If we can agree on the fiscal framework set out in our FY19 budget,” Rauner said, “we will plug a $2 billion hole in the state’s pocketbook, avoid new taxes, fund top priorities, and start the long process of paying down our bill backlog with cash instead of credit.”
The FY19 surplus budget does not bank on the so-called consideration model for state pensions. But the governor challenged legislators to adopt the model and cut Illinois taxes by nearly $1 billion.
“Let’s make these reforms to grow the economy faster and make the Amazons and Apples of the world take notice,” Rauner said.
“Our FY19 budget sets out to make the structural reforms that will get us moving in the right direction,” he continued. “It reduces government expense but not customer service. It shifts responsibility for the cost of services to the people who buy those services. And it recognizes that we will never have balanced budgets if government grows faster than our economy.”
Schools to pay their own pensions costs
Under the governor’s plan, school districts and universities would begin to pay their own pension costs, resulting in savings of $591 million in FY19. The pension cost realignment would be phased in over the next four years in 25 percent per year increments. The phase-in is designed to help local governments adjust to the new payment plans.
“School districts would be able to offset the costs with increases they receive from the new school funding formula,” Rauner said. “We will also give local government the tools they need to reducetheir costs, including the power to consolidate or dissolve units of government and more flexibility in contracting, bidding and sharing services.”
Universities will get $101 million from the state to offset the first-year pension expense.
Rauner said another $470 million would be saved by right-sizing state employee health plans so government workers assume more of the cost of their health care insurance. Today, the state pays for platinum-level health plans for every employee. The premium is just over $18,000 per year per employee, or 35 percent higher than private-sector premiums.
“State government needs to do what every employer in Illinois has done over the last 10 years: Get itshealth care costs under control,” Rauner said. “Taxpayers shouldn’t have to pay for government employee health insurance policies that are richer than the ones they can afford for themselves.”
The proposed budget includes a provision for the sale of the Thompson Center in Chicago for $300 million, a move that nets $240 million after paying expenses to move employees to new, more productive work locations.
Rauner is again asking the General Assembly to reduce workers’ compensation insurance rates, a move that would save the state $20 million in FY19, spark new business activity and create thousands of jobs.
Plan includes record K-12 education funding
With the savings, Rauner intends to spend a record $8.3 billion on preK-12 education, including $350 million of new money distributed through the more equitable funding formula. Since 2015, Rauner’s first year in office, preK-12 funding has risen a cumulative $3.7 billion. Early childhood education will get $454 million, up 55 percent since 2015.
The governor’s budget brings an end to funding reductions for university and community college systems. It adds $100 million in capital funds to meet deferred maintenance needs. It maintains MAP grants at FY18 levels and lays the foundation for increased MAP funding in the future. It allots money to offset the first year of pension and group health costs that come as a result of the shift of pension cost responsibility.
The FY19 spending plan retains service levels for health and human services. Child care, for example, will continue to be funded at 185 percent of the federal poverty level. Service for the aging will be delivered at the same level but at less cost. The cost savings will include adjustments in managed care and better alignment with actual demand. Medicaid spending will total $14.2 billion to provide care for 3.1 million eligible patients.
Rauner’s FY19 plan promises to increase IDOT funding levels with $2.2 billion in pay-as-you-go appropriations for its annual road program. It adds $511 million for infrastructure improvements. If the FY19 budget is approved, the administration’s new transportation infrastructure spending since 2016 will total nearly $10 billion.
The administration has been actively engaged in conversations over the last year with the White House and the U.S. Department of Transportation about an infrastructure program.
“As the plan announced this week works its way through Congress,” Rauner said, “we will work closely with our Illinois Congressional delegation to maximize the return on Illinois’ investments in its infrastructure.
Public safety spending takes into account efficiencies from reduced prison and juvenile populations plus job and life skills programs adopted by the Department of Corrections. Rauner also has prioritized funding to fight the opioid epidemic and for cadet classes that will add up to 300 new state police troopers.
Video of the budget address will be available here.
The full budget may be viewed here.
Legislative reactions that have been received follow:
Sen. Althoff reacts to Gov. Rauner’s State Budget Address
Springfield, IL… State Senator Pamela Althoff (R-McHenry) releases the following statement regarding Governor Bruce Rauner’s State Budget Address:
“Today, the Governor presented the General Assembly with his budget plan along with statutory changes that together create a balanced budget. Not only is his FY19 budget plan balanced, but it does not include a single tax increase.
“Not everything the Governor presented today I will agree with, and certainly not everything he presented will the Democrat majority agree with, but his plan lays a good working foundation for the General Assembly. By engaging with each other in an understanding manner, we can work out our differences and pass a budget that is not only balanced but one that legislators on both sides of the aisle can get behind.
“The Governor has made the tough choices. Some of those choices I don’t necessarily agree with, but nonetheless, he did his job and created a balanced budget. It’s now time for the General Assembly to undergo the standard negotiation process.”
GOVERNOR KICKS THE CAN TO LOCAL TAXPAYERS
Today Governor Bruce Rauner proposed the largest property tax hike in Illinois history. The Governor is banking on passing almost $1.3B to local municipalities and in turn to our property taxes. This isn’t just kicking the can down the road, it’s kicking the can to local taxpayers who are already being taxed out of their homes.
Speaker Michael Madigan has been waiting for the opportunity to implement this pension shift for years and he has now found the perfect tool to do so in Governor Bruce Rauner, who has again demonstrated that he isn’t in charge by bending to Speaker Madigan’s will.
I am committed to continuing the fight for real and substantial cuts to spending, not higher property taxes for as long as the people of the 66th District grant me the privilege and honor to serve.
Here are State Senator Dan McConchie’s thoughts:
State Rep. David McSweeney commented,
“Governor Rauner proposed another unbalanced budget that relies on high taxes. The phony Rauner budget also includes the Madigan pension cost shift that would cause a massive increase in property taxes.”
This has been received from State Senator Karen McConnaughay:
Sen. McConnaughay reacts to Gov. Rauner’s State Budget Address
Springfield, IL… State Senator Karen McConnaughay (R-St. Charles) releases the following statement regarding Governor Bruce Rauner’s State Budget Address:“The Governor presented a Fiscal Year 2019 budget plan that along with some cost-saving statutory changes, is balanced and lays a working foundation for the General Assembly.
“It’s certain that not everything the Governor presented in his plan will be agreed upon by lawmakers on the other side of the aisle.
“In fact, there are parts that I don’t agree with; however, I recognize the hard choices the Governor had made to ensure that he was providing the General Assembly with a balanced budget.
“Over the last couple years, the Governor has continuously made these tough decisions—decisions that the Democrat majority has failed to make. Instead of fulfilling the General Assembly’s responsibility to pass a balanced budget, last year they enacted an FY18 budget over the Governor’s veto that left the state with a $600 million budget hole.
“The Governor’s proposal is just the start of a long negotiation process that the legislature now has to undergo.
“But, by engaging and collaborating with lawmakers from across the aisle, we can work out our differences and provide the people of Illinois with a balanced budget that they deserve and so desperately need.”