Frank Manzo IV is the Policy Director of the Illinois Economic Policy Institute (ILEPI). Visit ILEPI at www.illinoisepi.org or follow ILEPI on Twitter @illinoisEPI.
Last week, ILEPI fact-checked claims made by Governor Rauner that were most important to his policy agenda. Governor Rauner has now put some of his untrue and misleading claims into action in his budget proposal.
This afternoon Governor Rauner proposed a $4.18 billion reduction in state spending, an 11.7 percent cut from last year (without adjusting for inflation). The budget proposal comes after Rauner paid $120,000 to consultant Donna Arduin for four months of service. Keep in mind that Rauner has (incorrectly) asserted that state employee salaries are out-of-control while increasing the salaries of his top officials by 36 percent higher than their predecessors were paid under former Governor Quinn.
Among the $4.18 billion in proposed cuts, the Rauner budget reportedly includes:
-Shifting all state employees and teachers (except public safety employees such as firefighters and police officers) into the Tier 2 pension plan as of July 1, 2015. This would increase the “retirement age” of state workers to 67 years old with ten years of service, up from 62 years old with five years of service. More importantly, it reduces annual benefits paid out to retirees. This proposed change may or may not be constitutional in Illinois.
-Cuts of over $200 million for public transit systems across the state. This includes cuts to the Regional Transit Authority in the Chicago area (including the Metra and CTA systems), cuts to “downstate” systems such as those used by students of state universities, cuts to Amtrak, and cuts to Pace Paratransit. Of course, low-income workers, middle-class residents, students, and the elderly disproportionately use public transit on a daily basis. Instead, more money from the Road Fund will be diverted to the General Revenue Fund. Thus, money paid for by taxpayers in Motor Fuel Tax revenues will not go to fund transportation infrastructure improvements, as intended. If the $200 million were all put toward constructing and repairing public transit infrastructure, ILEPI estimates (using an economic impact analysis) that the cuts would equate to laying off 2,800 workers, including 1,700 direct construction workers and 1,100 other workers in jobs supported by infrastructure investment.
-Cuts of $600 million to local governments (a 10 percent reduction from last year), limiting the ability of cities and counties to pay for public services such as fire departments, police departments, and public parks. The proposal could actually force local governments to raise property taxes, even though Rauner advocates cutting property taxes.
-Cuts of almost $400 million to higher education funding, a 31 percent reduction in funding and a total revenue drop (after accounting for other sources) of 6 percent to universities. This raises tuition for students and makes the ability to attend college more difficult for low-income and middle-class young adults. Meanwhile, economic research is nearly unanimous that the strongest drivers of economic growth, higher productivity, income growth, and poverty reduction are increasing levels of education and technological innovations (which tend to come from highly-educated workers). Cutting higher education spending hurts students, low-income families, and the middle class.
-Cumulative cuts of over $3 million to special education and orphanage tuition. It should almost go without saying how much harm this could do to disadvantaged Illinois residents.
-A reduction of $1.5 billion in Medicaid spending, including cuts for nursing homes, mental health facilities, and programs for breast and cervical cancer. So if you’re one of the 14.1 percent of Illinois residents below the poverty line and also either one of the 13.5 percent over 65 years old or one of the 18.2 percent with a mental illness or one of the 6 percent (male and female) with breast cancer… good luck.
-Cuts of nearly $7 million to the infant mortality program, $140 million to the Department of Children and Family Services, and $22 million to the Department of Public Health (including cuts to the Sudden Infant Death Syndrome Program and Multiple Sclerosis Task Force).
-Between $500,000 and $1 million cut to the Illinois Military Family Relief Fund, which helps military families cover living and medical expenses when a wage-earner temporarily leaves his or her job to be placed on active military duty.
There was one good budgetary proposal that Rauner outlined, however. This was a $290 million increase in funding for preschool through 12th grade education. On the other hand, including reductions in higher education means total public education funding will be cut by around $100 million. It is also unclear how Rauner will allocate his $290 million increase in school funding, but it likely will include non-union charter schools. Rauner has openly advocated for charter schools, though the evidence for their effectiveness is mixed and inconclusive. Finally, Rauner’s altering of the benefits package paid to teachers will encourage some current and potential high-skilled educators to seek employment in other industries where they can earn higher levels of compensation. This would simultaneously increase the (already high) turnover rate among teachers and reduce the quality of teachers in Illinois, which would have substantial long-term impacts on the state economy.
The key takeaway from Rauner’s proposed budget for Illinois is that it has a significantly negative impact on low-income and middle-class families. The proposal includes zero cuts to loopholes or subsidies that benefit the wealthy and includes zero tax increases on the rich, even though 60.0 percent of Illinois voters support a 3 percent tax on annual income over $1,000,000 to fund education. The introduction of policies which hurt working families and empower wealthy owners in Illinois is quickly becoming the story of Rauner’s first year in office.
The Illinois Update 