Governor Proposes Deep Budget Cuts - Open Letter from CEO John Lipscomb

Fix for FY15 Budget Shortfall Uncertain

Last Spring, the legislature passed a $35.7 billion budget for FY 15 that didn't allocate enough money for the entire fiscal year. The crafting of that budget was a political decision to avoid a debate on whether to extend the state's income tax increase until after the November election. The legislature didn't address the issue in their fall veto session and the tax increase rolled back on Jan. 1. Now, this roughly $2 billion chicken is about to come home to roost.

Before this backdrop, Governor Bruce Rauner delivered his first budget address to the Illinois General Assembly on February 18, 2015. With his $31.5 billion FY 2016 budget proposal, the Governor made his opening move in what will be a three month budget making process between the legislature and administration. It's a process that might see the legislature working with the administration on pension and other reforms in exchange for new revenue. Speaker Madigan has expressed his willingness to look at a combination of cuts and new revenue to solve the FY 16 fiscal problem.

State law requires Governor Rauner to present a budget request based on existing revenues. In his address, the Governor provided a broad overview of his budget proposal for dealing with next year's estimated $6.7 billion revenue shortfall and signaled that his administration and the legislature are close to agreement on a plan to deal with this year's $2 billion dollar deficit.

Regarding the FY 15 crisis, Speaker Madigan echoed the Governor stating there would be an 'agreement within days'. However, it now appears negotiations between the legislature and the administration have hit an impasse. Several members of the Senate Democratic Caucus have voiced their alarm at the size of the cuts contained within the Governor's FY 16 budget proposal. For this reason, members are skeptical about granting additional Emergency Budget Authority to the Governor to deal with the current fiscal year.

As for those cuts, the Governor's budget proposal represents a $6.7 billion reduction from projected spending in the next fiscal year. The Governor's budget makes deep cuts to social services and higher education to achieve most of the reductions. However, the Governor's budget math also relies heavily on an estimated $2.2 billion savings from pension reforms. Such reforms, if passed, would likely be challenged in court as unconstitutional.

The Governor's budget request for the Department of Developmental Disabilities represents a $69.8 million net decrease from FY 15 levels. Most of the decrease in funding comes from a 12.5% rate cut for services provided by Intermediate Care Facilities, a $41.6 million reduction. His budget request also reduces funding for non-Medicaid grant programs by $17.8 million, eliminating outright programs such as Respite Care, the Arc of Illinois, Project Autism, epilepsy services and dental services. No Medicaid waiver cuts were included in the Governor's budget request, which means DT and CILA rates will be maintained at FY 15 levels.

On the plus side, the Governor's FY 16 budget proposal includes $5.3 million to annualize FY15 transitions from institutional settings and funds 100 new transitions from State Operated Developmental Centers in FY16, as well as $16.7 million for Ligas expansion.

Final thoughts: It is undeniably good news that the Governor's FY 16 budget proposal does not contain rate cuts to our core programs, which would have been devastating. However, cuts to key grants, as well as a rate cut to ICFDDs and eliminations of entire programs such as respite services will further destabilize an already shaky community system. Of particular concern are the cuts to ICF/DD rates. The impact on Search would be a $250,000 reduction in base revenue.

Given the fiscal crisis in Illinois, the best case scenario would be for the Governor and legislature to come to some sort of agreement that hinges on passing pension and other reforms in exchange for new revenue.

- John Lispcomb, CEO, Keystone Alliance