Governor Ryan Announces More Budget Cuts

SPRINGFIELD -- Governor George H. Ryan today issued a second round of budget cuts in as many days as he seeks to close a state budget gap brought on by the September 11 terror attacks. The latest measures, announced after the Governor met with the General Assembly's four legislative caucuses, will save the state up to $136 million through the end of fiscal year 2002.

Gov. Ryan said further cuts are needed and he is asking for legislative assistance. Illinois faces a $500 million shortfall in its $23.4 billion General Revenue Fund budget. Like Tuesday's cuts, this new round can be accomplished administratively without legislative action. Gov. Ryan has repeatedly indicated that participation from the General Assembly would enable him to distribute cuts more fairly and reduce the severity of some cuts in some areas. Options include asking universities to shoulder the cost of some group health insurance for employees and spreading cuts across a wider range of health care providers. The General Assembly has thus far not considered legislation to provide the Governor with broader budget-cutting authority.

"It's not too late for the General Assembly to roll up its sleeves and show some leadership," Gov. Ryan said.

The spending reductions the Governor announced today focus largely on health care issues and will:

• Make adjustments to managed care contracts for Medicaid recipients resulting in savings of $30 million.

• Eliminate extra tertiary care payments to hospitals. By reducing the extra payments, the state will save $35 million for fiscal year 2002. Hospitals will receive normal diagnostic rates and added payments to that base rate.

• Eliminate extra outpatient payments to hospitals. This will save $55 million. Hospitals will be reimbursed at 1998 rate levels, prior to the pre-1999 incentive plan.

In the current budget, on April 1, 2002, human services providers are scheduled to receive a one-half of one percent cost-of-living adjustment. Gov. Ryan has said unless the revenue situation improves or there is legislative assistance, this $16 million increase may need to be cut.

Steve Schnorf, director of the Bureau of the Budget, said the total cuts, including the COLA adjustment, now stand at $383 million. This total includes the detailed cuts making up the previously announced 2 percent reserve in Agency budgets and restrictions on hiring and equipment purchases.