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Halfway into fiscal year, Illinois still operates without a budget

by Katelyn Tye ~ January 2016 ~ Stateline Midwest »
As the new year began in Illinois, there was still seemingly no resolution in sight to a months-old problem: The state had no budget. But even without one in place, many parts of Illinois government continued to operate, as the result of a mix of judicial, legislative and executive actions.
“Government ‘shutdown’ is always in quotes because no government really shuts down,” notes Chris Mooney, director of the University of Illinois Institute on Government and Public Affairs. “It’s always a matter of to what degree — how much government activity is not being done.”
Illinois has been without a budget since July 1 because of a stalemate between the Democrat-led legislature and Republican governor.
Still, according to the Illinois comptroller’s office, 90 percent of state operations are being funded. For example, state employees get paid because of a court order; services for the disabled continue as the result of a consent decree; and other obligations, such as pension payments, are covered under “continuing appropriations” language in state statute. Illinois legislators also have passed emergency spending bills to fund K-12 schools and local governments.
“All states feel disruption without a budget,” says Brian Sigritz, director of state fiscal studies at the National Association of State Budget Officers, “but the level of disruption varies from state to state.”
Certain programs and services in Illinois, such as 911 centers and lottery prizes, are paid for out of special state funds, but others rely on appropriations from the general fund. Prior to passage of an emergency spending bill in December, domestic violence shelters reported having to cut back operations or even close their doors completely due to a lack of state funding.
And as of early January, one of the larger unfunded areas of Illinois government was higher education: Public universities were still waiting on payments from the state, and Illinois’ financial aid program had yet to receive appropriations. Schools such as Western Illinois University were considering major budget cuts and faculty layoffs.
Other affected groups include the state’s contract vendors — those third-party businesses that provide various services on behalf of the state. Smaller “mom-and-pop” providers have been struggling to operate without state funding, Mooney says, while larger contract vendors have chosen to provide services (such as electricity and food for prisons) in exchange for an IOU, plus 12 percent interest.
The ongoing impasse in Illinois only adds to the state’s current fiscal woes, which include an underfunded pension system, nearly $7 billion in unpaid bills as of the end of fiscal year 2015, and the expiration of a temporary tax increase.
“A budget is many things, but one of the things it is is a set of decisions about what the [state’s] priorities are,” Mooney says. “What should we spend more or less money on? How should we gather revenue?”
Without such a document to manage a complex organization such as state government, he adds, one of the potential risks is overspending. Illinois’ budget stalemate is one of the longest in recent memory, but fiscal standoffs and government shutdowns have occurred in states across the country at different times.
In 2011, Minnesota experienced a 20-day partial shutdown (the second in less than a decade) and received a court order to continue “critical state operations.” Although this court order covered about 80 percent of spending in the state general fund, 19,000 employees still had to be temporarily laid off, according to the Minnesota Management & Budget Agency.
A handful of U.S. states have statutory procedures to follow if a budget isn’t enacted by the beginning of a fiscal year, according to a recent 50-state study by the National Association of State Budget Officers. Wisconsin law, for instance, requires the state to continue appropriations at the same funding levels as the previous year until a new budget is enacted.

 

Capital Closeup is a regular series of articles produced by CSG Midwest that highlights institutional issues in state governments.