Governor Quinn Battles State's Fiscal Crisis With "Fighting for Illinois" Budget Plan

SPRINGFIELD – March 10, 2010. Governor Pat Quinn today unveiled a fiscal year 2011 budget that will confront Illinois’ unprecedented financial crisis by getting the state on the road to recovery and prosperity. In his budget address to the Illinois General Assembly, Governor Quinn said he is Fighting for Illinois by creating jobs, making significant cost cuts and proposing to enhance state revenues.

“We have a tough fight ahead of us. But I believe we can get through this difficult year together,” said Governor 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.”

Fighting for Illinois is Governor Quinn’s plan to attack the state’s $13 billion fiscal deficit while still meeting its most critical needs for the people. Governor Quinn’s plan centers on Five Pillars of Recovery: Creating Jobs, Cutting Costs, Strategic Borrowing, Continued Federal Assistance and Increased State Revenues.

The budget also includes more than $2 billion in proposed cuts, including a deep reduction in education funding. In his budget address, Governor Quinn called on the General Assembly to rescue education from devastating cuts by passing a one-percent income tax surcharge for education. The surcharge for education would restore the education budget to its current level.

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

Governor Quinn’s Fighting for Illinois budget plan calls for:

Creating Jobs

Building Good Jobs – More than $6 billion in Illinois Jobs Now! projects are expected to get underway during the upcoming construction season, putting tens of thousands of people to work building Illinois roads, bridges, highways and schools. Illinois Jobs Now! is the state’s first job creation and capital improvement program in more than a decade and will create or retain 439,000 jobs over the next six years.

Small Business Job Creation Tax Credit – Because small businesses are the heart and soul of Illinois’ economy, companies with fewer than 50 employees will receive a $2,500 tax credit for each full-time job created over the next year. This credit, which is capped at $50 million, will help create 20,000 jobs for small businesses such as manufacturers, service companies and technology firms. It will also assist small companies that are developing “green” jobs, positions that are less likely to be exported to other countries.

Business Investment Packages – Since January 2009, 63 investment packages have created or retained nearly 12,000 jobs and generated over $1.2 billion in private investment. Ford Motor Company recently announced 1,200 new jobs coming to Illinois for the production of the next-generation Explorer SUV. And, thanks to a $24 million investment package, Illinois saved at least 3,000 UPS jobs this December.

High-Speed Rail – Projects financed through the American Recovery and Reinvestment Act (ARRA) continues to create jobs. Illinois will become the high-speed rail hub of the Midwest with $1.2 billion in federal funding for a new high-speed rail corridor to connect Chicago to St. Louis. The project will create 6,000 Illinois jobs.

Cutting Costs

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.

Performance Metrics – The state will implement rigorous performance metrics that will improve accountability and performance, and will make sure programs run more efficiently. A new Web-based system will be designed for collecting and reporting performance updates.

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

Strategic Borrowing

Cutting costs is only part of the equation; the state must also be able to pay its existing bills. 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

Over the past year, Illinois has benefitted from significant federal funding for transportation, health care and education, which has been put to good use throughout the state. Illinois was recently named a finalist in the U.S. Department of Education’s ‘Race to the Top’ grant program.

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.

Increased State Revenues

Illinois desperately needs more revenue in order to fund vital services like education. Without new revenue, thousands of teachers will be laid off; schools will become over-crowded; and college tuition levels will increase dramatically.

Governor Quinn challenged lawmakers to pass a 1 percent income tax surcharge to support education. The surcharge will help restore educational funding, while also enabling the state to get caught up on the millions of dollars owed to public schools, community colleges and universities.

“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.”

Recognizing the importance of an interactive budgetary process, Governor Quinn reformed the process so that, for the first time, all Illinoisans could participate. The Governor launched Budget.Illinois.gov, which allowed everyday residents to learn about the state budget and make suggestions. The site has received more than 12,000 comments to date.

To view the fiscal year 2011 budget plan or to propose a solution for solving the state’s budget crisis, visit Budget.Illinois.gov.