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February 15, 2004

Governor proposes balanced budget act
Governor’s Bill Would Require Any New Spending to Match Revenues In Every Piece of Legislation Considered by the General Assembly

CHICAGO – During a preview of his upcoming budget address, Governor Rod R. Blagojevich today unveiled the Balanced Budget Act – legislation he will unveil on Wednesday that would require every spending increase considered by the General Assembly to identify corresponding revenues or spending cuts in order to help keep state spending in check. 
While the Illinois constitution requires the budget to be balanced, there are no ways to enforce that spending actually matches revenues.  Under the Governor’s proposed Balanced Budget Act, if the General Assembly, the Governor or anyone else in government proposes new spending, they would be required to identify a way to pay for it – either through new revenues or through spending cuts.  The imbalance between spending and revenues has contributed heavily to the state’s fiscal problems.  The Balanced Budget Act would help put an end to that practice.  
Last year, after the Governor and the General Assembly agreed on ways to address a record $5 billion budget deficit, dozens of bills requiring significant spending increases – without any way identified to pay for them – were passed and sent to the Governor.  Many were vetoed because they were unaffordable.  The Governor’s proposal would eliminate this problem by ensuring that every proposed spending increase considered by the General Assembly automatically be accompanied by a proposed revenue enhancement or spending cut to pay for the new spending.
“When families decide they need to buy something like a new car, they figure out how they’re going to pay for it.  Maybe they don’t take a vacation.  Maybe they stop going out for dinner.  Maybe they take on another job.  Whatever they do – they identify a way to pay for it.  Government shouldn’t be any different. 
“When we decide to increase spending, we should know exactly how we’re going to pay for it.  It should have been the law years ago.  It probably would have spared us some of the hard choices we now have to make.  If we take this step, and if we start living within our means, we can finally begin treating the taxpayers’ money as carefully as we treat our own,” Blagojevich said.
In addition to proposing the Balanced Budget Act, the Governor said that the following principles and proposals would highlight his budget address on Wednesday:
  • No increase in the income tax;
  • No increase in the sales tax;
  • Reducing the size of the state workforce to the lowest level in thirty years
  • Offering a targeted Early Retirement Initiative for 2,000 employees in administrative, non-frontline positions;
  • Consolidating state offices and agencies, including merging the Departments of Insurance, Professional Regulation, Banks and Real Estate, and Financial Institutions into one, new Department of Financial and Professional Regulation;
  • Reorganizing the Illinois State Police to move officers from behind desks onto the frontlines, adding 400 new officers over the next 4 years, and providing new technology, training and equipment for public safety;
  • Requiring social service providers who receive state grants to start accounting for how they spend state money;
  • Closing corporate loopholes that allow major corporations to hide their income and cheat taxpayers; and
  • Proposing five major structural reforms (including the Balanced Budget Act) to help the state get its fiscal house in order, including:
(1)Requiring all new spending considered by the General Assembly to identify new revenues or spending cuts to pay for it, so that the state stops spending more money than it has;
(2) Requiring every state agency to submit monthly spending plans and quarterly budgets, so that budgets reflect real life, and not just one-time estimates;
(3) Requiring every state agency to set aside 2% of their budget for emergencies;
(4)Requiring the state to pay its bills within 60 days and create a revolving loan of credit to reduce interest costs;
(5)Requiring that every billion dollar increase in the state budget be accompanied by a new, $50 million investment in the Rainy Day Fund;
“If we’re willing to discipline ourselves and cut out the things we don’t truly need, we can get our fiscal house in order without raising the income tax, without raising the sales tax, and while protecting our investments in education, health care, and public safety.  Those are the priorities of the people of this state, and it’s exactly what my budget will propose,” Blagojevich said.    


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