Republican Gov. Bruce Rauner is calling for massive cuts to health care, education and other vital services as part of his budget blueprint to "turnaround" Illinois. Progress Illinois rounds up some of the praise and outrage that has poured in following Rauner's first budget address.
Republican Gov. Bruce Rauner's so-called "turnaround budget" does not call for increased taxes, but, instead, proposes significant cuts to higher education, Medicaid and other essential services as a means to tackle the state's dire fiscal problems.
During his first budget speech Wednesday before the Democrat-controlled state legislature, Rauner said "necessary, but difficult choices" are needed to combat a $111 billion pension crisis and $6 billion budget deficit in the upcoming fiscal year, which begins July 1. The state is also facing a $1.6 billion budget shortfall in the current fiscal year.
"This budget is honest with the people of Illinois, and it presents an honest path forward," Rauner said of his $31.5 billion proposal, which is $4.1 billion less than the current budget. "Now is the time to start on a responsible path after years of financial recklessness.
"Instilling discipline is not easy, saying 'no' is not popular -- but it is now or never for Illinois," he added. "It is make or break time."
Reaction to the governor's fiscal blueprint has been pouring in from individuals and organizations across Illinois. The Responsible Budget Coalition, comprised of more than 100 groups working to protect vital services for Illinois families and communities, summed up Rauner's proposed budget cuts as being "morally reprehensible," saying such funding reductions would ultimately "compromise the future economic success of Illinois."
"Illinois is only as strong as its families and communities," John Bouman, president of the Sargent Shriver National Center on Poverty Law, a coalition member, said in a statement. "Communities are more than line items in a spread sheet; they are schools and small businesses, students and senior citizens. You cannot zero families and communities out -- they are the glue that hold this state together."
Illinois Republican Party Chairman Tim Schneider, on the other hand, praised Rauner's economic agenda for the state:
Gov. Rauner promised to fix the broken status quo in Springfield without raising taxes, and today he laid out a plan to do just that.
He's proposing a budget that funds our top priorities including education; the economy; and public safety, while keeping the needs of the taxpayers front and center.
Gov. Rauner inherited a mess, but today he laid out a path to close a $6.2 billion budget deficit - without raising taxes. It shouldn't be a surprise for a governor to do what he says, but after years of broken promises and broken budgets, it's about time.
Democrats, who have veto-proof majorities in both chambers, are likely to reject many of Rauner's proposals. In response to the governor's budget address, Senate President John Cullerton (D-Chicago) noted that the "content of his plan raises significant questions about its viability in the legislative process."
Cullerton also blasted the proposed budget's potential impact on working families and its reliance on "phantom savings":
The Governor deserves credit for keeping his promise to increase education funding for Illinois students. However, I'm disappointed that Governor Rauner's budget will disproportionately impact the working families of those same students. Governor Rauner's plan includes proposals that will undermine access to health services, child care, affordable college and retirement security for working- and middle-class families. These programs provide many of the work supports and opportunities that families need to succeed and respond to the economy.
For all the pain that Governor Rauner's budget plan would extract from the most vulnerable people with human service needs, the basic math still doesn't work in his proposal. Governor Rauner leaves a $2.2 billion hole in the budget by relying on unrealistic revenues from a questionable pension proposal. Even as the courts review a significant test case, the governor's plan banks phantom savings for a pension plan that may fail key legislative and judicial tests. When we passed pension reform last year, we took care to exclude possible savings from budget plans pending a legal resolution. The governor's plan rejects that wisdom.
This is an important day for the Governor, but it is just the beginning of the legislative process. There will be no easy solutions. With that truth in mind, I intend to work with the Governor to produce a final budget that responds to our fiscal realities in a way that makes Illinois just as compassionate as it is competitive.
State Rep. Mike Zalewski (D-Riverside) said although lawmakers don't dispute the need for a "leaner" budget, it's fair to assume that many of Rauner's "aggressive" fiscal proposals won't fly in the Democrat-led legislature.
"There was a large variety of ideas put forth, but you're dealing with a supermajority Democratic legislature, so it's incumbent upon us to sort of sort through them and determine what can become law and what is not politically viable," he told Progress Illinois. "There's going to be give and take and there's going to be some balance."
Zalewski and State Sen. Kwame Raoul (D-Chicago) both agree that the governor's call for criminal justice system reforms is at least one key area of possible common ground.
"Republicans and Democrats alike agree that warehousing criminals, without preparing them to rejoin society, is neither humane nor prudent," Raoul said in a statement. "We agree that our sentencing laws are outmoded and aren't making our neighborhoods safer," he added. "We agree that too many Illinoisans - particularly young African-American males - have been left sitting in prison, at great cost to taxpayers, instead of getting the help they need to leave crime behind."
On the topic of pension reform, Rauner wants to move state employees into the "Tier 2 pension plan," which was enacted in 2010 for new hires and provides fewer benefits. Police and firefighters would be exempt from the pension proposal, which Rauner says would save over $2 billion in the first year, if such a measure was enacted. However, the proposal, which he would like to put into place by July 1, is likely to face a court challenge.
Rauner said the pension proposal would "protect every dollar of benefits earned to date," and let current retirees receive everything they were promised. Under the proposal, Rauner said workers hired before 2011 could "take a buyout option - a lump sum payment and a defined contribution plan in return for a voluntary reduction in cost-of-living adjustments."
The Illinois Federation of Teachers said Rauner's proposed reforms boil down to an "unconstitutional gutting of pension funding."
"His proposal is absolutely and totally illegal," said IFT President Dan Montgomery. "He must know it and every legislator in that assembly today knew it, including all the Republicans, because many of them voted for Tier 2. And the reason they voted for Tier 2 is because they knew it was illegal to change the benefits willy nilly on all the people in the system, and so they said we can't change the benefits retroactively, so we can change them for all new hires."
Montgomery called the plan a "disgusting" attempt to "kick the can down the road."
"He's using those $2 billion to balance the budget, supposedly," he said. "So this is like Blagojevich or somebody playing fast and loose with the facts and building a budget on fantasy."
Zalewski said he believes Rauner's pension proposal is "less constitutional" than SB 1, the 2013 pension reform overhaul being challenged in court by the We Are One labor coalition.
"I would urge the governor to be a strong supporter of Senate Bill 1, and hope that the Supreme Court upholds it," he said.
During his address, Rauner boasted of a proposed $300 million increase in K-12 education spending, but failed to mention the $387 million in higher education funding he wants to cut.
"Cutting higher education funding by 31 percent will hurt Illinois students who are already having trouble affording a quality education," said College Democrats of Illinois President Brexton Isaacs. "It's clear that Gov. Rauner doesn't understand the implications that a $387 million cut will have on our colleges, universities, and families across Illinois. By attempting to balance the budget on the backs of hard working students who are trying to obtain an education and get ahead, Rauner is only hurting our state even more. This is a short-term solution that will only cause long-term problems."
The potential cuts to higher education have advocacy groups for young adults seething about the long-term impact the plan could have on the futures of Millennials in the state.
"Governor Rauner's budget that would slash $1.5 billion for Medicaid and nearly $400 million for higher education would put the health and financial stability of many young people across Illinois at risk," said Eve Rips, Midwest director of Young Invincibles, a Millennial research and advocacy group. "Of the almost half a million uninsured young adults in Illinois, more than 36 percent are eligible for Medicaid, and these cuts would jeopardize their chance to get critical health benefits. Illinois already has the fifth-highest college tuition in the country and today MAP grants are only able to meet a fraction of students in need. The Governor's proposed cuts would also make it impossible for our state to meet its goal of increasing the number of workers with higher education degrees to 60 percent by 2025."
Meanwhile, the Chicago Teachers Union issued a scathing response to the Republican's fiscal proposal. Here's a snippet:
The Republican lawmaker claimed that this is an honest budget and that it's make or break time. But that's a deeply dishonest statement and his solution is evidently to break the state. He was crystal clear: any consideration of revenue will only be tied to draconian reforms that harm working people. Like his good friend Rahm Emanuel, the governor is attempting to capitalize on a manufactured crisis rooted in his unwillingness to raise revenue from those who are most able to pay.
There are two clear realities of this budget proposal. The first is that budget cuts will hit every segment of government operations, even those that get an 'increase' in funding. The education funding 'hike' comes at the expense of other public services on which students depend. Research is clear that out-of-school factors have huge impacts on students' ability to learn and grow during school. Thousands of students across the city have transportation challenges, so cuts to public transportation mean that more students will miss days of attendance, negatively impacting their achievement. Rauner's cuts to mental health only exacerbate the effects of Mayor Rahm Emanuel's cuts to mental health clinics. Students suffer as a result, as their traumas go untreated, as workloads increase for already over-taxed school counselors, and as family members are sent to jail rather than to treatment. The Governor's cuts to Medicaid ensure that students' loved ones, often the family's primary caregiver and source of support, will lose access to healthcare; consequently these students' ability to be in school and concentrate when there declines. In a Rauner budget, students will be clearly harmed.
Rauner stressed in his speech that next year's multi-million budget gap "is the result of years of bad decisions, sleight-of-hand budgeting and giveaways we couldn't afford."
"It is not the result of decreasing tax rates," he declared.
Decreasing tax rates will, however, mean greater income inequality in the state, as detailed in a new analysis by the Center for Tax and Budget Accountability.
On January 1, when the 2011 temporary income tax hike rolled back, the state income tax dropped from 5 percent to 3.75 percent for individuals and from 7 percent to 5.25 percent for corporations.
According to the CTBA's report, the wealthiest income earners in Illinois will benefit the most from the rollback of the higher income tax rates.
The phaseout of the higher rates comes with $3.7 billion in tax relief for Illinois income earners. However, the top 11.8 percent of Illinois tax filers, or those with incomes exceeding $100,000, will capture more than 54 percent, or about $2 billion, of that relief, according to the report.
On the flip side, the bottom 88.2 percent of income earners will be left with just over 45 percent of the tax cut benefit. For the bottom 50 percent of Illinois tax filers, they will gain just 8 percent, or $300 million, of the tax relief.
The rollback of the higher income tax rates means the wealthiest top 0.2 percent of tax filers, or those with incomes greater than $1 million, will see an average annual tax cut of $37,000. That works out to be 344 times the $107 tax reduction for the bottom 50 percent of earners making $25,000 or less.
"This system is going to worsen income inequality," CTBA's Ralph Martire said, referring to the state's rolled back income tax rate.
In remarks after Rauner's address, House Speaker Michael Madigan (D-Chicago) said he took issue with the lack of revenue ideas outlined in the budget. Madigan revisited his "millionaire tax" proposal, an idea Illinois voters overwhelmingly supported through a non-binding ballot referendum in November.
"I don't think you can work your way out of the budget deficit by cuts alone," the House speaker said, the Chicago Tribune reports. "There has to be a blend: cuts in spending plus new revenue like the imposition of the 3 percent surcharge on millionaires ' income over $1 million."
A tax on millionaires is one of several revenue ideas backed by Fair Economy Illinois.
The statewide group, which favors revenue proposals like a tax on financial transactions, the closure of corporate loopholes and a refinance on pension debt, said the General Assembly and Rauner "must restructure Illinois' tax code to raise adequate revenue."
"There is plenty of money in Illinois," Fair Economy Illinois member Toby Chow said in a statement. "Our legislators and governor just need to decide to get it from those who can afford to pay more. The money is not in programs that allow seniors to live dignified lives, or in hard earned retirement funds for public workers, and or in health benefits for low-income people. The money is on LaSalle Street, in corporate tax loopholes and the bulging pockets of the one percent."
Rauner's budget plan calls for a $1.5 billion decrease in Medicaid spending, a proposal that is garnering fierce criticism from health professionals. The Illinois Retail Merchants Association is also "more than a little concerned" about the proposed funding decrease.
The governor said he wants to "re-implement many of the Medicaid reform measures that were enacted just a few years ago, but have already been undone."
"By re-instituting the SMART Act and prioritizing our re-determination efforts, we will save hundreds of millions of dollars," Rauner stated.
Maryjane A. Wurth, president and CEO of the Illinois Hospital Association, criticized Rauner's ideas for Medicaid changes, saying they would reverse improvements made to the system and adversely impact the state's economy:
Illinois' Medicaid program is in the midst of great transformation, with new ways to deliver care, improve outcomes and achieve savings, as a result of major reforms enacted in recent years. More than 115 hospitals across the state are part of innovative systems, such as Accountable Care Entities and Care Coordination Entities, that coordinate care for Medicaid enrollees to ensure the best outcomes and control costs. These reforms have reduced Illinois' spending on Medicaid by more than $1 billion since 2012.
However, the Governor's Medicaid proposal - a drastic $1.5 billion spending cut (roughly 10%) as well as harmful policy changes - would take the state in the wrong direction and undo the substantial, groundbreaking progress being made to transform the Medicaid program and the state's health care delivery system. It will also hurt the economy. For example, a 10% spending cut to hospitals alone would mean the loss of more than 8,200 jobs and $1.1 billion in economic activity.
Many of our families, friends and neighbors rely on Medicaid for their health and well-being. It is the health insurance program for one out of every two children in Illinois, and for one in four Illinoisans - kids, adults, seniors and individuals with disabilities or mental illnesses. The program is cost effective and provides taxpayers with a significant return on investment.
Pharmacy Now and Access Choice, a national coalition of consumers, local businesses and pharmacists, also expressed worry over the governor's proposed Medicaid reforms.
"Over the last two years, pharmacies and pharmacists who provide prescription and patient care services to Medicaid recipients have been repeatedly stricken with reductions in reimbursements under the 2012 SMART Act," reads a statement from PNAC. "Pharmacists share the state's concerns with our budget crisis, but additional cuts on pharmacists could impact the quality and access to healthcare that is desperately needed. Additional cuts, coupled with the continued delay in reimbursements, create problems for all pharmacies and the patients we serve. If pharmacists were allowed to provide medication therapy management and other pharmacist care services, such as other state Medicaid programs have established, pharmacists can be part of the solution in controlling Medicaid expenses and attaining positive health outcomes."
Rob Karr, IRMA's president and CEO, shared similar concerns about the impact on pharmacists and pharmacy providers:
Governor Rauner inherited an enormous budget crisis and pension obligation that presents many fiscal challenges to our state. IRMA applauds his desire to balance the budget and help turn the state's economy around. Our members - which include retail and mom and pop pharmacy providers- are more than a little concerned with the cuts to Medicaid. We hope to work closely with Administration and the legislature on issues impacting Medicaid in general and pharmacies in particular. Pharmacists, one of the nation's most trusted professions, have seen two rounds of cuts and three times more than any other provider is asking more than a fair share of pharmacy providers.
As far as other proposed health care-related cuts, the American Cancer Society Cancer Action Network (ACS CAN) is urging Rauner to take funding reductions targeting the Illinois Breast and Cervical Cancer Program (IBCCP) off the table as well as cuts to state tobacco prevention and cessation programs. Heather Eagleton, ACS CAN's Illinois government relations director, explained the importance of these programs in a statement:
IBCCP helps thousands of women get their doctor-recommended mammograms every year, connecting uninsured and underinsured Illinois women with potentially life-saving screenings. From 2007 to 2012, the state program detected 727 invasive breast cancers and 1,490 cervical cancers and precancerous lesions.
Maintaining funding and eligibility for IBCCP will preserve a critical safety net for thousands of women in our state who will not qualify for Medicaid this year. It's our hope the General Assembly will restore cuts to this program for the sake of all Illinois women.
Illinois' tobacco prevention and cessation programs have made great strides in reducing youth and adult smoking rates. However, the state currently spends only nine percent of the Centers for Disease Control's recommended funding level, jeopardizing lives that could be saved by reducing tobacco use.
Tobacco not only leaves a serious mark on our state's physical health. It also places a heavy burden on its economic health. This year, smoking will cost Illinois more than $8.3 billion, further straining its already difficult financial situation. Maintaining funding for tobacco prevention and cessation would be a wise use of state dollars. It would help prevent needless tobacco-related deaths and reduce the excessive costs of tobacco use.
We understand Illinois continues to face tough financial choices, but fighting cancer should always be a top policy priority. We look forward to reviewing Governor Rauner's complete budget proposal and working with lawmakers to restore funding to these critical programs.
The Illinois Coalition for Immigrant and Refugee Rights (ICIRR) is slamming Rauner's proposal to eliminate the entire $6.6 million Immigrant Services Line Item (ISLI) within the Illinois Department of Human Services budget. The line item, which funds services to assist immigrants, represents less than .01 percent of the state's overall budget, according to ICIRR.
"This cut is particularly ill-timed because many ISLI grantees are the same agencies where immigrants will turn for assistance with the [federal] expanded Deferred Action for Childhood Arrivals (DACA) program and the new Deferred Action for Parental Accountability (DAPA) program," ICIRR said in a statement. "While a federal judge has temporarily blocked these programs, we expect that this ruling to be overturned and these programs will proceed, allowing as many as 280,000 Illinois immigrants to stay in the U.S. without fear of deportation and to work, earn, and contribute more in taxes, helping to solve the State's revenue shortfall. Governor Rauner himself called the programs a 'great start' after they were announced last November, yet his budget would stall them in Illinois."
Controversy Surrounding Rauner's Budget Consultant
Rauner awarded a $120,000, four-month contract to his chief financial officer Donna Arduin's consulting firm for state budget advice. Arduin has pushed controversial spending cuts while previously serving as a budget adviser to GOP governors in California, Florida, Michigan and New York.
Arduin was tapped by Rauner "to preside over massive cuts to Medicaid and other social programs" and has a history of advocating for "privatization, dangerous cuts and having political appointees decide what drugs Medicaid recipients should and shouldn't get," says the progressive group United Working Families.
The group, which said Rauner's "heinous" budget proposal "represents a wholesale surrender of our state's future to corporate greed," sent out a memo to reporters listing a number of concerns about Arduin. Here are a few examples United Working Families flagged:
Cutting Medicaid for the sake of cutting, then hoping "for the best"
Before she became more polished in selling her massive cuts to Medicaid, Arduin experienced a rare moment of candor, explaining massive cuts to Medicaid acknowledging that there was nothing to support an argument that it produced efficiency.
In 1995, as a deputy budget director for New York Gov. George Pataki, she told the New York Times: "The first thing you can do is hope that the cut will force industries to create efficiencies. We can only hope for the best there."
("In New York The Dying Days of Expansive Government" The New York Times, May 8, 1995)
Replacing more effective drugs with down-brand, generic alternatives
Arduin proposed a cost-cutting plan for then-Florida Gov. "Jeb" Bush to replace effective drugs for Medicaid recipients with down-brand, less-effective generic alternatives. "If they started switching people from the new drugs to the old drugs, it would turn the clock back years," one critic told the St. Petersburg Times in 1999.
("Plans Push Cheaper Medicines" St. Petersburg Times, February 28, 1999)
Political appointees limit drugs to Medicaid patients
Arduin's radical plan for Jeb Bush included installing a politically-appointed panel that "would describe which drugs require authorization," according to the St. Petersburg Times.
("Medicaid Cost-Cutters looking to lose Viagra" St. Petersburg Times, April 19, 1999)
Getting "compassionate conservative" rhetoric down, Arduin begins to claim that limiting Medicaid drugs was to benefit other social programs
Where before Arduin provided no "compassionate conservative" justification, in 2000, she justified a draconian program to limit Medicaid drugs by claiming (falsely) that it was being done to expand other social spending. She told the Ledger that, "We're trying to manage our funds better so we can use the funds for other needs like developmental disabilities and improving student achievement."
("Bush Aims to Cut Medicaid Drug Costs" The Ledger [Lakeland, Fla] February 21, 2000)
United Working Families Executive Director Kristen Crowell added that the governor's plan "doesn't trim the fat of state government, it cuts limbs and will harm working families and the middle class just as they begin to emerge from a recession caused by the reckless greed of people like Rauner."
"This budget lays bare Rauner's true priorities," she said. "He'd sooner slash vital services and put Illinoisans' lives at risk than demand that his millionaire and billionaire friends pay their fair share."