Illinois Budget: Pat Quinn Wants 1% Education Income Tax Surcharge: Dan Rutherford Wants to Hit “Reset Button” on Priorities

(Springfield, IL) — March 10, 2010. Governor Pat Quinn today unveiled a proposed Illinois budget that cuts $1.3 billion from local education, but also calls for a 1% education income tax surcharge to reverse the proposed cuts.

In addition to the education cuts, Quinn proposed cutting another $1 billion, borrowing $4.7 billion, and deferring another $6 billion in unpaid bills until next year.

“We have a tough fight ahead of us. But I believe we can get through this difficult year together,” said Quinn. “And as we go forward, we must make a solemn promise to the people of Illinois to end these annual fiscal calamities once and for all.”

Quinn’s plan aims to grapple with the state’s $13 billion fiscal deficit while still meeting its most critical needs, however tattered the state safety net may be.

“If we enact this emergency rescue plan promptly, we can keep thousands of committed teachers from getting layoff notices,” Governor Quinn said.

State Senator Dan Rutherford (R-Chenoa), the GOP candidate for state treasurer, however, dislikes Quinn’s borrowing plan.

“We need to hit the ‘reset button,’ and figure out our state’s real priorities. This pattern of borrowing and failing to encourage job creation will only worsen our state’s ability to recover from this massive deficit.”

Rutherford, however, likes Quinn’s small business job creation tax credit of $2,500 for each full-time job created by businesses with 50 employers or less, a credit which could help create 20,000 jobs.

“I  support the $2500 tax credit for small business that create new jobs in Illinois,” said Rutherford. “It will take other factors to encourage a company to expand in our state, but this move by the Governor is good …”

Budget cut highlights include:

State Employees and Operations – The Governor’s plan includes more than $203 million in savings through employee furlough days, renegotiated employee contracts, employee health insurance savings and additional travel restrictions. The state will also change the way it does business, including reviewing, reducing or re-bidding all contracts over $1 million; historic procurement reform; and consolidating state office spaces.

Pension Stabilization – The state’s current public pension system costs are growing significantly, adding to the mounting deficit. Without bold reform, the system will fall apart, forever disrupting thousands of lives. Stabilizing the system so that existing employees and retirees will keep their current benefits, while new hires become part of a streamlined pension system will save approximately $300 million in the first year.

Health and Human Services – Services such as home care for older adults, child care and community mental health services will be reduced by $276 million. Scaling back prescription drug assistance and group health coverage for state retirees, combined with a managed care pilot program for seniors and adults with disabilities who are enrolled in Medicaid will save the state $325 million.

Education – Education will see approximately $1.3 billion cut from general state aid, special education, student transportation, grants and universities.

Borrowing: Better cash flow management and strategic borrowing can help ease the crush of paying nearly $5 billion in outstanding bills owed to vendors, providers, colleges and universities. Strategic, low-interest borrowing is a sound financial tool that will help ensure timely payments from the state and protect relationships with providers, suppliers, small businesses and non-profit partners providing good and services to Illinois.

Continued Federal Assistance: The state is working to get extensions on existing federal funding for health care and education. Illinois is working to extend the current 62 percent federal reimbursement on Medicaid spending that could otherwise decrease to 50 percent on Dec. 31. The state is also working to gain an extension on $1 billion in federal funds for education set to expire at the end of the school year.

“We can’t afford to deny reality or delay action any longer. We don’t have time for any more partisan battles, parliamentary maneuvers or political expediency,” said Governor Quinn.

“As we tackle this budget, let’s remember: We are fighting for our children, our communities, and the future of our state.”