August 20, 2015
Even without an annual operating budget, the State of Illinois has already spent billions of dollars for the fiscal year that began on July 1, 2015. What remains unclear is how much the State is obligated to pay out for the entire year and how that compares with estimated FY2016 revenues.
The State is obligated to make numerous FY2016 payments due to continuing appropriations and court orders. In addition, although Governor Bruce Rauner vetoed most of the budget passed by the General Assembly, he signed an appropriation bill for elementary and secondary education.
Spending of $3.4 billion from general operating funds for FY2016 has already been cleared for payment by the Illinois Comptroller’s Office. This does not include lapse period spending—spending in FY2016 based on FY2015 appropriations.
The Governor’s Office has not yet made estimates of State spending obligations for FY2016 available to the public. Administration officials did not attend a hearing of the House Revenue & Finance Committee on August 17, 2015 in Chicago, which was held to address the issue. The Governor’s Office had requested the hearing be moved to Springfield and delayed until August 19, 2015, when the Senate would be in session.
The following table shows a breakdown of obligated and unobligated FY2016 State spending published by Senate Democrats on August 13, 2015. General Funds spending obligations are estimated at $34.5 billion, while spending pressures that the State is not required to fund are estimated at $4.2 billion. Despite the lack of a budget, the State is obligated to pay 89.1% of expected expenses of $38.7 billion, according to these calculations.
Expenditures covered by continuing appropriation include statutorily required pension contributions, retiree health insurance payments for public school teachers and community college employees outside of Chicago, debt service payments and tax payments to local governments. Continuing appropriation is statutory authority to spend funds for a specific purpose if the legislature fails to appropriate an adequate amount.
Group insurance costs, consisting mainly of State employee and retiree health insurance expenses, are included in the table but are not actually being paid. However, State law requires that the costs be covered and permits payment based on future years’ appropriations. If the expenses are not budgeted in FY2016, then the bills will accumulate, adding to the State’s backlog of unpaid bills.
The Comptroller plans to pay other bills because of court orders, which in some cases are related to federal consent decrees. For example, the Department of Healthcare and Family Services (HFS), the State’s main Medicaid agency, urged healthcare providers on July 10, 2015 to continue providing services even though payments for FY2016 would not be made until a budget was in place. On July 23, 2015 lawyers for the Sargent Shriver National Center on Poverty Law obtained a court order under a 2004 consent decree (in the case of Memisovski v. Maram) that the State must continue to pay doctors and hospitals that treat children in Cook County covered by Medicaid. HFS subsequently said it would make payments for Medicaid services for children throughout the State. Lawyers then asked the court to require payments for all Medicaid services under a 1993 consent decree (in the case of Beeks v. Bradley). In early August, HFS and the Department of Human Services (DHS) announced they would pay all Medicaid providers as if a budget had been enacted.
The State is paying employees’ salaries after a St. Clair County judge ruled in July that not paying workers would violate their collective bargaining agreements. The Illinois Attorney General had argued that only minimum wage and overtime payments to workers covered by the federal Fair Labor Standards Act could be made in the absence of a budget.
According to the analysis by Senate Democrats, the main areas of State government in which spending has not been committed are higher education and human services programs either not covered by Medicaid or not under the purview of HFS or DHS. The Department on Aging’s Community Care Program is partly covered by Medicaid, but the agency recently notified caregivers that it did not have authority to forward bills to the Comptroller’s Office without a signed budget. It remains to be seen whether lawyers for program participants will seek an order requiring payments to be made under a 1982 consent decree (Benson v. Blaser).
General Funds revenues in FY2016 are projected at between $32 billion and $33 billion, depending on the amount of federal reimbursements for State Medicaid spending and whether revenues diverted to fund education and human services are included in the total.
Governor Rauner has reportedly agreed that approximately $3 billion to $4 billion in additional revenue is needed in FY2016. However, the Governor has said new revenue will not be on the table until the legislature passes key components of his “turnaround agenda.”