Editor’s Note: State Rep. Greg Harris (D-Chicago) is the Chairman of the Illinois House Human Services Committee and a member of the House Appropriations Public Safety Committee.
By Greg Harris
Last week, the Illinois House voted to pass House Joint Resolution 69 and House Resolution 706, which are the House proposals to divvy up available Fiscal Year 2013 revenues of $33.719 billion among anticipated expenses.
Last year, there was a difference between the House, Senate, and Governor’s projected revenues, with the House Fiscal Year 2012 estimate being the more conservative. For FY 2013, the others have yet to settle on a revenue number; however, the actual FY 2012 revenues so far have been closer to the House estimates.
This year, our initial spending plan took a very different approach.
The purpose of this was to set aside sufficient funds for non-discretionary obligations of the State to be sure they were paid before anything else. In other years, some of these obligations were deferred into subsequent year’s budgets in order to avoid making painful choices, and contributed to the financial hole in which we now find ourselves. Here is a list of the obligations for which revenues are being set aside off the top:
- Debt Service: $2.218 billion
- Paying down unpaid Medicaid bills: $1 billion (half from Federal matching funds)
- Paying down other unpaid bills: $300 million
- Pension Payments: $5.1 billion
- Group Insurance Payments: $1.171 billion
- Statutory Transfers Out: $2.142 billion (payments due to local municipalities, etc.)
- Medicaid Costs: $6.639 billion (this number assumes the Governor’s cuts of $2.7 billion)
This plan would mean that for the first time in many years, Illinois is paying–rather than skipping or borrowing–our pension bills–and is making major headway in paying down the $8.5 billion backlog of unpaid bills for services already rendered.
Getting ourselves out of this hole will take a few years, and will require many difficult and painful choices. As we reduce expenses to equal income, we can no longer live beyond our means.
This means that after the set-asides listed above, and assuming a $650 appropriation lapse from this fiscal year, we will have $16.299 billion to spend in FY 2013. Based on the historical breakdown between appropriations areas, here is how that will look. For comparative purposes I am also showing the breakdowns for the current 2012 fiscal year:
Every area of government will have substantial cuts under this proposal. The next steps include determining if the Illinois Senate agrees with this spending outline or wishes to make adjustments up or down. Then the various appropriation committees will start allocating available funds to programs and services, and also deciding what to cut or eliminate.
No matter what priorities or system is used to allocate monies, this is going to be a terrible year with many programs cut.
As I have said before, the two biggest line items that could still change and force major shifts–either for the good or bad–in the coming weeks are Pension and Medicaid liabilities. There is also interest from some in closing certain corporate tax loopholes and other revenue sources. We need to keep our eyes on these.
Should we fail to meet the $2.7 billion in Medicaid liability reductions, then further draconian cuts would have to be spread among education, human services and public safety. As a result, there might then be a chance to have a serious discussion about loophole closings instead.
The Governor has proposed $2.7 billion in Medicaid cuts and the Department of Healthcare and Family Services has proposed a menu of ideas to get there. I think the general consensus is that some of their proposed were doable, some were undoable and would only result in cost-shifting, while others were unthinkable. More and different ideas are required.
The Joint Medicaid Committee is working diligently on better options. During Thursday’s floor debate on the spending resolutions, I asked the House to consider not just the Department’s proposed cuts and reforms but also such things as:
- Savings achieved through stricter eligibility verification
- Recapture audits of providers to recover fraudulent or duplicate payments
- Screening to be sure that Medicaid is the payer of last resort, so that it will be available to those truly in need.
- Maximizing capture of Federal Medicaid dollars by looking at how other states use provider assessments on Managed Care Organizations and pharmaceuticals to obtain federal match
- Better utilization review and care management for seniors, the disabled and other high-cost populations.
- Working with hospitals and other providers to develop Accountable Care Organizations for chronic care management and high cost populations.
- Sensible phase-in of reform to payment models to avoid jeopardizing our rural critical access hospitals and urban safety net hospitals.
The choices before us are dire, and the consequences for families, our network of hospitals, doctors, clinics, pharmacies, nursing homes and other healthcare providers are grave. We cannot afford to be wrong.
Please send comments to State Rep. Greg Harris at [email protected]