Springfield, Ill. – Gov. Pat Quinn delivered a State of the State address on Feb. 1 that left many lawmakers scratching their heads, as State Sen. Sue Rezin (R-Morris) said the Governor painted a rosy picture of state finances, while glossing over projections that within five years the state is on track to face deficits exceeding the state’s entire annual General Funds budget.
The Governor’s address followed on the heels of a Civic Federation study released this week outlining a bleak financial future for Illinois. The Civic Federation study is at least the third major report in recent weeks to independently verify what Senate Republicans have warned for years—Illinois must take decisive steps to rein in spending, or the state will face multi-billion dollar deficits before the end of the decade.
And even as state budget projections show that in Fiscal Year 2017, the state’s Medicaid backlog could reach $21 billion, lawmakers discovered this week that the Quinn Administration is actively pursuing an expansion of Medicaid in Cook County.
Despite the state’s well-documented budget woes, on Feb. 1 Quinn proposed a number of costly “incentive” programs, yet provided no insight into how the proposals would be funded. The new spending and tax breaks advocated by the Governor are estimated to total more than $500 million.
“Gov. Quinn had some great ideas, but he left out key points such as how to pay for the new programs he is proposing, and didn’t touch on the biggest topic of all – the budget,” Sen. Rezin said. “He spoke of having the government create jobs, but we all know that is not the best way to employ people in Illinois. If government creates jobs, it’s the taxpayers who pay for that whereas if it’s left to the private sector, the free market reigns.”
Gov. Quinn also advocated for income tax relief for working families that would amount to approximately $100 for families of four. Senate Republicans pointed out that more dramatic relief would come from eliminating the 67 percent income tax increase Quinn signed into law last year. Repealing the tax increase would put a week’s pay back in the pockets of all Illinois taxpayers—far more than the $100 credit Quinn is touting.
Many lawmakers were surprised that despite massive red ink in the state's Medicaid and public employee retirement programs, the Governor gave only glancing nods to the problems. Although his own Health and Family Services Department (DHFS) projects a $21 billion bill backlog within five years, the word Medicaid appeared only twice in his speech and he offered no specifics on how he plans to control costs.
Senator Rezin was further disappointed to learn that even as the Medicaid program is legitimately facing bankruptcy, last week it was made public that even though the Quinn Administration has failed to implement bipartisan Medicaid reforms passed in 2011—including a moratorium on Medicaid expansion that took effect on January 25, 2011—the Director of DHFS is seeking a waiver to expedite expansion of the Medicaid program in Cook County.
Senate Republicans have been long-time advocates for Medicaid reform in Illinois, pushing for commonsense changes to ensure the preservation of the program. Continued expansions have jeopardized the longevity of the entire program, which is teetering on the brink of insolvency. Practical reforms, like stricter verification of income and residency, are needed to ensure Illinois is still able to offer a medical safety net for those individuals who truly need assistance.
While the Governor’s Administration insists the state wouldn’t be on the hook for the expansion, Senate GOP lawmakers are skeptical a Medicaid expansion of this magnitude could be implemented at no cost to taxpayers. Additionally, if the federal Affordable Care Act is struck down by the courts after the 100,000 Cook County residents are added to the Medicaid program, it is reasonable to assume Cook County would turn to the State to fill the funding hole. Financing the expansion would cost the state an estimated $125 million annually.
Indications that the Quinn Administration is aggressively pursuing Medicaid expansions are shocking when considering just two days before the Governor's speech, the widely respected Civic Federation issued a stunning report. The Civic Federation confirmed what Senate Republicans have been saying for the past year: despite a 67 percent tax increase, Illinois continues along an unsustainable spending path that could wipe out basic state services and leave generations indebted just to cover the cost of today's programs.
Still, in the face of that bleak news, the Governor proposed expanded spending in other areas. Quinn promoted increased financing for a college scholarship program, but failed to mention the scandal-plagued Legislative Scholarship Program. Senate Republicans have voluntary and unanimously decided to quit participating in the program. Despite claiming to oppose the political perk, Quinn was silent on the topic.
Members from both parties expressed disappointment that the Governor was not more honest and forthright about the major financial problems facing Illinois. One of the most jaw-dropping figures contained in the Civic Federation report is the projection that the state's backlog of unpaid bills could rise to $34.8 billion by July, 2017—just over five years from now. That is even higher than the $22 billion cumulative deficit that the Reality Check plan foresaw last March.
The Civic Federation's $34.8 billion backlog was just one in a series of bad news projections contained in the report. Out-of-control Medicaid costs are projected to increase by more than 40 percent over the next five years, going from $8.6 billion to $12.1 billion. Significantly, the Civic Federation relied on figures provided by the Governor's own human services agency to arrive at that projection. In recent years, Medicaid has overtaken education as the largest expenditure in the state budget.
The state's pension obligations are expected to rise by 35 percent over the next five years, while the cost for state employee health insurance could go up by 39 percent.
The Civic Federation warned that absent major cost controls, Illinois is not only on a path to make the 67 percent income tax increase approved by Quinn and legislative Democrats last January permanent, but uncontrolled growth could require even higher tax hikes.
“At the end of the day, he didn’t speak about the out of control spending that state can’t seem to get away from, the massive unfunded liabilities or the state’s backlog of bills,” Sen. Rezin said. “Gov. Quinn mentioned that the state is back on track. I’m not sure where he’s drawing that conclusion from, but we are not even close to being back on track. We’re projected to have a backlog of $34.8 billion in five years. I wouldn’t consider that being back on track.”
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