November 17, 2009
By Andrew Mitchell
It's generally safe to assume that the average college student does not know, nor really cares to know, much about Illinois's budget. But everyone, including them, is feeling the pinch of the current fiscal crisis gripping the state.
Take the recent controversy surrounding financial aid for low-income students. The summer before the fall 2009 semester, Governor Pat Quinn signed into a low the budget for fiscal year 2010. Roughly half of the funding for the Monetary Award Program, better known as MAP grants, was cut from the budget. This meant that many of the 138,000 students who depended on the financial aid in the fall, would have missed out on the funds the following spring, putting their college careers in jeopardy.
Students from all over the state, outraged by the cuts, organized to demand the money be reinstated. They wrote and called lawmakers. They gathered signatures and sent petitions. Their protests hit their climax on Oct.15, when bus loads of students, some estimates saying more than 2,000 students, teachers and activists from all over the state, rallied both inside and outside of the Capitol, chanting, “We want MAP!” to lawmakers inside, attending to veto session business.
Their calls were heard loud and clear that day, as lawmakers quickly passed an appropriation of $205 million to fund MAP grants for the spring. Even Governor Quinn praised the move and the students' to pass get the funding back – this despite him signing the budget that cut the program in half in the first place.
But students should not have gone home completely satisfied. Sure, the legislature approved use of millions of dollars, but actually getting the money to the schools? That was another problem, and not an easily solved one. Currently, the state's debt is more than $10 billion. Bills are still waiting to be paid. Other financial obligations, like funding Medicaid and the state's pension system are on shaky ground because of this. How can the government find the money to pay for college students?
“One day at a time,” is how Governor Quinn told reporters he would handle this. What about next year's MAP grants? “We'll work on next year when next year comes.”
Some students seemed even less likely to care about that detail as well. David Ballard, a senator-at-large for the UIS Student Government Association said in UIS video posted on Youtube, “I don't know how we're going to fund it, but that's my concern.”
And that, in a nutshell, is one of the bigger problems with the state's current state of finances. There is not enough money to pay for the services the state provides; yet the services are still in demand. Furthermore, when facing a problem of this magnitude, the state seems more likely to put a small band-aid (usually via borrowing money) on the problem, which only worsen things down the line.
Now the state's deficit is at an all time high, and with gubernatorial primaries on the horizon, candidates will expound on how they would fix the state's fiscal fiasco.
It is time to for students, and the rest of the state, to start paying attention.
State Budget for Dummies
In the same way an average family plans out how best to spend their money, so too does the state government organize its own finances. However, the annual budget proposal the governor presents each year is different, because it serves as political statement, showing how a particular administration wants to prioritize state programs.
Money comes to the state in a variety of ways, but the two largest sources of revenue come from the state income tax and the sales tax. Because of this, Illinois has seen its revenues shrink as the recession swept over the nation – because when people make less money, they pay less income tax, and when people want to save money, they spend less on goods, which means less sales tax revenue.
The state also gets money from the federal government, with the recent stimulus money being cited as one of the reasons things are not as bad as they could be economically, and legalized gambling. Kent Redfield, professor at UIS's Institute for Legal, Legislative & Policy studies says recent efforts to expand and rely more on gambling for revenue are misguided.
In fact, by looking at the data from the State Comptroller's office, the budgetary balance at the end each fiscal year, after lapse period spending (money spent on bills obligated during the fiscal year after it has ended), jumps from surplus to deficit with the economy.
“We've been here before,” Redfield said, “We have a revenue structure that doesn't keep pace with our services.”
Because of this, Illinois suffers from a “structural deficit,” as much as it does an economic one. It is a fair claim to make that much of the state's woes comes from the problems of the international economy. No one anticipated the credit collapse a year ago. “Even if we did everything right,” Redfield said, “we'd still be on the margins.”
But the state's seemingly inevitable decline was made worse by years of bad decisions.
UIS professor and political scientist Ronald Michaelson placed some blame in ousted Governor Rod Blagojevich. During his campaign, Blagojevich pledged that he wouldn't raise taxes, and did everything to keep that promise, even at the determent of the state. The previous administration of George Ryan had left a then-record $1.2 billion budget deficit for fiscal year 2002.
A more responsible governor might have gone back on the no-tax promise, Michaelson said. “He should've said, 'I had no idea things were this bad... we've got to do this.' He could have said it was Ryan's fault. I'm sure he could've sold that. But he didn't.”
Instead, Blagojevich expanded health care spending (Medicaid already being one of the biggest expenses in the state budget), and proposed one-time revenue sources, like selling the Illinois Lottery to a private company and forgoing payments to state worker's retirement pensions.
Other legislators and government officials only compounded the problem by not being more vocal about the problems. “You could see the wheels falling off,” Michaelson said. “but no one was saying, 'Hey, this is absurd.'”
Because of this, Governor Quinn entered office during a fiscal year with a new record $3.4 billion deficit. That it continues to multiply has people like Redfield and Michaelson tensely waiting to see who will fix it and how they will do it.
The “who,” will be answered soon enough in the upcoming primary and general elections for governor, and the “how,” sounds simple enough at first; cut spending, say no to any new spending and increase taxes. But that last particular point is especially difficult to sell in an election, and there isn't $9 billion of waste spending.
Such a message is difficult to convey to the public. In a recently released poll by the Paul Simon Public Policy Institute, based in Southern Illinois University in Carbondale, a majority of Illinois voters know there is a problem with the budget and think cutting out waste is the only way to fix things; they just have no idea what specific cuts should be made.
Nearly two-thirds of those polled opposed raising incomes taxes as well, which puts the state in a catch-22; people want the services and programs the state provides but do not want to see their taxes, which would pay for the programs, rise at all.
But many economic and political experts say that solving the state's fiscal problem requires both, no matter what the candidates say.
“Anyone that tells you that all we need is more revenue is just nuts,” Redfield said. “You can't raise enough money.”
Michaelson cited the governor's election of 1968, when the two candidate, Richard Ogilvie and Samuel Shapiro met and decided not to talk about income taxes in the campaign, so that whomever got elected would have an easier time raising it once elected.
However, the problem is perhaps far too big now to ignore in the general campaign, and the costs of fixing it are still not politically popular. “If you're really going to solve the problem, you need to acknowledge that you'll be a one-term governor,” Michaelson said.