With just a few weeks left until Illinois’ new fiscal year begins, Republican lawmakers and the Governor remain motivated to reach some sort of budget deal before July 1.
The need for a fiscal plan was further underscored June 9 when Moody’s Investors Service and Standard & Poor’s both downgraded Illinois’ credit rating, citing the political gridlock that has led to the state’s year-long budget gap. That same day, Comptroller Leslie Munger stressed the need to pass a budget to address those services and programs that have gone unfunded for the last year, and for lawmakers to come together on a bipartisan spending plan to ensure critical services remain funded.
Members of legislative budget working groups have been working rigorously to create at minimum a fully-funded, short-term “stopgap” measure to fund K-12 schools, universities and social services, and keep state operations going for the next six months. Unfortunately, the majority Democrat leaders have indicated they are unwilling to discuss a full budget, accompanied by structural reforms, until after the November election.
However, lawmakers from both parties have expressed concerns over passage of K-12 education funding to ensure schools can open on time in the fall. Republican lawmakers stressed schools shouldn’t be held hostage to budget talks—attempts by Democrats to bail out Chicago Public Schools. In response, Senate and House GOP legislators have joined the Governor in pushing for legislation they have sponsored (SB 3434/HB 6583) that would fully fund K-12 education so students can head back to school on time this fall.
Short-term budget deal status
When it became clear the scheduled adjournment date of May 31 would come and go without a balanced budget deal for the next fiscal year, Senate and House Republican Leaders joined the Governor in urging their Democrat counterparts to move forward with a fully-funded, short-term budget to keep state operations going and fund schools. Though Democrat leaders refused to negotiate a stopgap measure prior to the May 31 adjournment, rank-and-file Republicans and Democrats have continued working together to try and settle on a short-term budget plan.
Republican legislators are trying to remain optimistic that a deal can be reached before the new fiscal year begins July 1. A short-term budget becomes even more critical in light of recent comments from Senate Republican Leader Christine Radogno that it is unlikely there will be any movement on a full budget prior to the November elections. Radogno said she doesn’t expect the Democrats to agree to reform items or revenue increases that their respective constituencies might not like before heading to the polls in November.
School funding: the driving force behind the stopgap plan
With no state budget in place, public schools won’t receive any state funding unless lawmakers work out a deal. Republican lawmakers and the Governor have stressed that ensuring schools can open in the fall is the most pressing issue currently facing the state, and have introduced several measures (SB 3434/HB 6583) that would fully fund K-12 education for the next school year.
The proposals would also “hold harmless” Illinois’ schools, meaning schools would receive the same level of funding they did for the last school year. The measures would also end the practice of “proration”—the deliberate underfunding of the General State Aid that schools should receive—that has taken place the last seven years.
Moody’s Investors Service, S & P lower Illinois’ credit rating
Moody’s Investors Service and Standard & Poor’s on June 9 further downgraded Illinois’ credit bond rating, Fitch Ratings placed the state on negative watch. The bond ratings agencies all pointed to the political gridlock that has led to the ongoing budget impasse and lack of action to address the state’s significantly underfunded pension system.
Bonds are a tool the state uses to borrow money. The lower Illinois’ credit rating, the higher the interest rate the state will pay on a loan. Moody’s projected that the state’s bill backlog will surpass prior peak levels of about $10 billion in the coming months unless a budget deal is reached. Moody’s also cautioned that another downgrade could be imminent, and noted the state has a negative outlook, even with the downgrade.
Comptroller stresses need to act
On June 9, Comptroller Munger said the “hardship caused by the state’s ongoing budget impasse will grow significantly if Illinois enters a new fiscal year on July 1 without further action in Springfield.” Though much of the state’s expenses are being funded through court orders, consent decrees and ongoing appropriations, many other important state services and programs rely on action by the General Assembly and the Governor.
The Comptroller stressed the need to end the budget impasse to allow schools to open, ensure vendors are paid, and to keep state government operations running. Without new legislation, Munger said $23 billion in existing spending for schools, 9-1-1 call centers, domestic violence shelters, federally-funded social and human services and higher education will stop next month.