In an attempt to end Illinois’ longest-ever budget stalemate, Republican State Senators Kyle McCarter and Dan McConchie unveiled a multi-point ‘Taxpayer Bargain’ plan for a balanced state budget Tuesday, April 4. The Fiscal Year 2018 plan includes a mix of traditional money management principles and new ideas.
“Today, we are putting forth a bargain for the taxpayers that does not punish them for what legislatures in the past have done, but rather rewards them with a balanced budget that provides real spending reductions, modernizes Illinois’ public pension systems, improves the way Illinois government does business, and creates an environment for job creation,” said State Sen. Kyle McCarter (R-Lebanon). “This ‘Taxpayer Bargain’ includes a no-nonsense spending cap and accomplishes its goals with no new taxes and no tax increases.”
Sen. McCarter said the balance budget prioritizes spending and requires the state to live within its means.
“Illinois didn’t get into this problem overnight and we won’t get out of it overnight,” said McCarter. “There are spending reductions of 10 percent at state agencies. Universities will be asked to reduce spending by 5 percent and retailers will see a reduction in the discount rate for sales tax collections from 1.75 percent to one percent. Funding for elementary and secondary education will be protected as will Medicaid services for the most vulnerable and scheduled pension payments.”
McCarter said the plan requires leadership and fiscal responsibility –
- Executive Branch must manage/Contains some of the Governor’s own ideas/Sen. Christine Radogno’s Senate Bill 2063 – Unbalanced Budget Response Act
- Governor must negotiate changes to employee group health care and AFSCME contract wages
- Imposes real spending cap, which is tied to legislative salaries. If the General Assembly violates the spending cap they lose their pay for that fiscal year.
- Borrow $7 billion and reform Prompt Pay Act – Pay off past due bills and reform Prompt Payment Act to Federal level. Could realize savings of $500 million by eliminate late charges.
- Borrowing must include a spending cap guideline set at CoGFA’s projected revenue. Any revenue increase over projected revenue is distributed as follows: 25% to education 25% for roads & bridges, 10% towards pension legacy costs and 40% to payoff unpaid bills.
The ‘Taxpayer Bargain’ budget includes modernizing the state’s public pension systems, estimated to be $130 billion underfunded, the worst underfunded public pensions of any state.
- Ends pensions for legislators before reforming pensions for other state employees.
- Keeps promises to current retirees and employees, and protect taxpayers going forward.
- Moves new state employees to a modern, hybrid pension plan. (President Cullerton’s legislation)
- Public pension cost shift to schools, universities and local governments in exchange for financial relief from unfunded state mandates.
- K-12 Pension Cost Shift – 5 year phase-in ($200 million/year – $1 billion after 5 years) –
- Refinancing current pension bonds – interest savings ($600 million) goes to paying off old bills
While Medicaid spending for the most vulnerable is protected, the budget plan includes basic common sense reforms –
- Smart Card Pilot Program
- Prosecution of vendor fraud and 3rd party vendor verification
- Drug Screening for recipients
- Ending taxpayer support for those with a criminal warrant
- LINK Card photo
- Upgrade Medicaid Redetermination Project – Check recipient status every 3 months instead of currently 6 months
- Managed Care Changes
The multi-point plan is a wakeup call for government, according to State Sen. Dan McConchie (R-Hawthorn Woods).
“For years, taxpayers across the state have been asking us to get our financial mess in order,” said Sen. McConchie.“It is time we start listening to them and start living within our means. Even though making spending cuts will be difficult and painful, it is necessary if we want to move toward a path of prosperity. This budget proposal is the first, that I am aware of, that reins in government spending, and is something we need to approach on a bipartisan basis. Taxpayers are demanding fiscal responsibility and it’s about time we give that to them.”
Sen. McConchie said the plan includes reforming how Illinois does business –
- Reduce the Local Government Distributive Fund (money to local governments) by about 4% in exchange for financial relief from unfunded state mandates, government consolidation and limited “home rule.”
- Making sense of rules for purchasing goods and services – changing procurement
- Overtime rule changes – Increased hiring in Corrections to reduce overtime costs
- Reorganizing state government agencies – Historic Preservation into Natural Resources
Sen. McConchie adds that the ‘Taxpayer Bargain’ budget also addresses Illinois’ slow-to-recover business/jobs climate by providing certainty and predictability about rules, regulations and taxation expected of employers.
- Workers’ Compensation Reforms – As currently being negotiated
- New funding formula for schools
- Permanent Property Tax Freeze on Education only and shift education funding from the property tax to state government. – Sunshine provision requiring copy of property tax bill to mortgagee
- Local government mandate relief
Sen. McCarter said Illinois is at a crossroads, with two paths before it: further economic decline or renewal and recovery.
“Illinois government must live within its means just like Illinois families and businesses do,” said McCarter. “If Illinois families can’t afford to overspend year after year then state government can’t afford it. If Illinois families are tightening their belts in order to be responsible, we should expect no less from state government. Today, we are spending the wealth of future generations. What legacy do we want to leave our children and grandchildren? Prosperity or poverty? Blessing or burden?”
There are 17 separate pieces of legislation that make up the “Taxpayer Bargain” budget plan. Some legislation is already working its way through the legislative process. The remaining measures will be introduced in the coming days.