This week in the Illinois Senate's budget committee, lawmakers began discussions about how to keep the state functioning in the face of a $13 billion deficit. If anyone doubted how bad the situation has become, Illinois State Board of Education Supt. Christopher Koch testified that his department is prepared to layoff at least 13,000 school employees next year.  No matter how you slice and dice the numbers, the state still owes $6 billion in unpaid bills from this fiscal year and faces a $7 billion gap in FY 2011. And there are only so many places where the budget can be cut next year if Illinois wants to recoup federal matching money and remain in compliance with a host of court-ordered consent decrees.

In other words, making across-the-board cuts is not a realistic -- or fiscally responsible -- option.

In its latest policy brief (PDF), the child-advocacy group Voices for Illinois Children (VFIC) examined Gov. Pat Quinn's preliminary budget figures (which don't incorporate the income tax hike he favors) to deduce exactly how the potential cuts would impact education and social service programs. Their findings aren't pretty. Here are the highlights:

- $922 million will be slashed from elementary and high schools budgets, primarily in the form of state aid, which disproportionately hurts low- and middle-income districts.

- Universities and community colleges will lose $144 million in state support.

- The Illinois Student Assistance Commission would have to trim $254 million, likely gutting the scholarships provided through the Monetary Award Program.

-The Department of Human Services (DHS) would eat most of the $386 million in social service cuts, forcing up to 25 percent reductions in funding for children's mental health programs, prenatal case management, after-school activities for 25,000 at-risk youth, alternative education for teen parents, and homeless youth programs

For a closer look at how the state got into this financial mess, Larry Joseph -- VFIC's director of the budget and tax policy initiative -- gets down to the root causes of the deficit:

The state fiscal crisis is a product of both short-term and long-term factors — a “cyclical deficit” resulting from the deep nationwide recession and a “structural deficit” produced by a state revenue system that cannot support established service levels and other ongoing obligations.

That "cyclical deficit" is tied largely to recession-related drops in income and sales taxes, which fell by nearly $2 billion in fiscal year 2009 and are expected to drop another $1.9 billion before the current year is out. By the governor's budget office's count, a modest increase in those revenues --  roughly $600 million -- is anticipated for next year. But as VFIC points out, even with a small uptick, revenue from sales taxes and individual and corporate income taxes will still fall short of fiscal year 2006 figures. The state also has to deal with the loss of federal stimulus money, which plugged a $1.4 billion hole in the state's budget this year.

The structural deficit -- meaning a revenue system that does not grow with the economy -- leads to difficulties paying off long-term obligations.  There's no more egregious example of that than the state's grossly underfunded pension system. After pushing off those obligations for years, the amount owed in fiscal year 2011 will ramp up by $5 billion. That figure includes paying back the $3.5 billion that was borrowed to make last year's payments, plus a $585 million legislatively-mandated increase and a $1.1 billion jump in pension-related debt service.

In the end, VFIC comes to the same conclusion that experts of all political stripes -- from the the Civic Federation to public policy experts -- have reached: "A balanced approach to a responsible budget must include a significant amount of new revenue."  You can read VFIC's entire report here.