QUINN IGNORES FISCAL REALITIES
In his State of the State address February 1, Governor Pat Quinn painted a rosy picture of state finances, while glossing over projections that the state is on track to face deficits exceeding the state’s entire annual General Funds budget.
Despite the state’s well-documented budget woes, Governor Quinn proposed a number of costly “incentive” programs, yet provided no insight into how the proposals would be funded. The new spending and tax breaks advocated by the Governor are estimated to total more than $500 million.
Governor Quinn also advocated for income tax relief for working families that would amount to approximately $100 for a family of four. More dramatic relief would come from eliminating the 67 percent income tax increase Governor Quinn signed into law last year. Repealing the tax increase would put a week’s pay back in the pockets of all Illinois taxpayers, far more than the $100 credit Governor Quinn is touting.
Despite massive red ink in the state’s Medicaid and public employee retirement programs, the Governor only brief mentioned the problems in his speech. Although the Department of Health and Family Services (DHFS) projects a $21 billion bill backlog within five years, the word Medicaid appeared only twice in his speech and he offered no specifics on how he plans to control costs.
QUINN WANTS TO EXPAND MEDICAID
And even as state budget projections show that in Fiscal Year 2017, the state’s Medicaid backlog could reach $21 billion, the Quinn Administration is actively pursuing an expansion of Medicaid in Cook County.
Lawmakers learned this week that even though the Quinn Administration has failed to implement bipartisan Medicaid reforms passed in 2011—including a moratorium on Medicaid expansion—the Director of DHFS is seeking a waiver to expedite expansion of the Medicaid program in Cook County.
I support commonsense changes to Medicaid to ensure the preservation of the program. Continued expansions have jeopardized the longevity of the entire program, which is teetering on the brink of insolvency. Practical reforms, like stricter verification of income and residency, are needed to ensure Illinois is still able to offer a medical safety net for those individuals who truly need assistance.
The Governor’s Administration insists there would be no cost to the state, but it is hard to believe that a Medicaid expansion of this magnitude could be implemented at no cost to taxpayers. Additionally, if the federal Affordable Care Act is struck down by the courts after the 100,000 Cook County residents are added to the Medicaid program, it is reasonable to assume Cook County would turn to state government to fill the funding hole. Financing the expansion would cost the state an estimated $125 million annually.
CIVIC FEDERATION PAINTS BLEAK PICTURE
Two days before the Governor’s speech, the Civic Federation issued a stunning report indicating that, despite a 67 percent tax increase in January 2011, Illinois continues on an unsustainable spending path that could wipe out basic state services and leave future generations indebted.
The Civic Federation report projects that the state’s backlog of unpaid bills could rise to $34.8 billion by July, 2017—just over five years from now. That is even higher than the $22 billion cumulative deficit that the Reality Check plan foresaw last March.
Out-of-control Medicaid costs are projected to increase by more than 40 percent over the next five years, going from $8.6 billion to $12.1 billion. Significantly, the Civic Federation relied on figures provided by the Governor’s own human services agency to arrive at that projection. In recent years, Medicaid has overtaken education as the largest expenditure in the state budget.
The state’s pension obligations are expected to rise by 35 percent over the next five years, while the cost for state employee health insurance could go up by 39 percent.
The Civic Federation also warned that absent major cost controls, the 67 percent income tax increase approved by Quinn and legislative Democrats last January will likely be permanent, and uncontrolled growth could require even higher tax hikes.