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July 24, 2004

Governor Blagojevich Lauds Passage of Fiscal Year 2005 Budget That Invests in Key Priorities and Cuts Spending Across the Board
Tough budget negotiations result in balanced spending plan that fulfills Governor’s commitment to increasing investments in education and health care

For second year in a row, state closes historic deficit
without raising sales or income taxes
SPRINGFIELD – After more than seven weeks of intense overtime budget negotiations, Governor Rod R. Blagojevich tonight praised the legislative leaders and the members of the General Assembly for approving a budget plan for Fiscal Year 2005 that closes an anticipated $2.3 billion deficit while investing more than $1 billion in new funding into schools and health care.  The new spending plan fulfills the goals the Governor spelled out in his February budget address: balance the budget and invest more in critical areas that directly help children and families without raising the state’s income or sales taxes.
“This is a budget that helps people.  It’s a budget that means more children will be able to attend pre-school.  It’s a budget that means more families will receive health care, instead of going without and hoping they don’t get sick.  It’s a budget that means more prescription drug coverage for senior citizens.  It’s a budget that means putting more police officers on the streets.  And it’s a budget that eliminates a $2.3 billion deficit – not by sacrificing our investments in education, health care and public safety, and not by raising the income or sales tax – but by making government smaller, leaner and more efficient.  I’d like to commend the legislative leaders and men and women of the General Assembly for passing this budget,” said Governor Blagojevich.
The $43 billion general operations budget for FY05 closes a $2.3 billion structural deficit while increasing spending on K-12 education by $389 million, boosting spending on health care by $600 million, and launching a plan to put 500 new Illinois State Police officers on the streets.  The budget includes funding to send 8,300 children to pre-school, provide health care to 20,000 children and 56,000 adults who currently do not have any, and increases prescription drug coverage for senior citizens by $100 million.  It also provides funding to eliminate the DNA rape kit backlog, allows more than 1,000 students to receive college scholarships through the MAP program, increases funding for child care, AIDS prevention, and breast and cervical cancer screenings.
Spending increases are offset by nearly $1.3 billion in across-the-board reductions in operational costs, and by adding more than $440 million in new revenue to the state’s coffers by closing unfair tax loopholes, transferring surplus moneys from special funds and increasing some non-consumer fees and fines.
The final outcome of the weeks-long budget negotiations fulfilled Gov. Blagojevich’s goal of investing more in education, public safety and health care.
Education Funding
  • Boosts K-12 education funding by $389 million: 
o       $230 million for General State Aid, which will mean an increase in per pupil spending of $154
o       $30 million for Early Childhood Educations, allowing 8,000 more kids to attend preschool
o       $95 million more for mandated programs such as special education and student transportation
o       $12 million for Average Daily Attendance grants
o       $10 million more for Fast Growth Districts
o       $10 million more in transitional assistance
o       $2 million more for Bilingual Education
  • Improves MAP Grants: More than 1,000 additional low-income students will receive MAP grants in FY 05 due to changes in the program, including the shifting of 1% in funding from grants that went to higher income students. The Governor’s changes level the playing field by allowing more of the MAP funding to go to the neediest students.
Health Care and Human Services
  • Expands health coverage for children and working parents:  Includes a $600 million increase in health care spending, which will allow all current Medicaid patients to keep their coverage, and expands health coverage to 56,000 more working adults and 20,000 more children from low-income families.
  • Helps senior citizens with the cost of prescription drugs:  Adds $100 million for programs that help senior citizens afford their prescription drugs.
  • Improves services for developmentally disabled:  Increases funding for community services for the developmentally disabled by $40.1 million.  These funds will allow 200 more developmentally disabled individuals to receive in-home care and will provide a wage increase for personal assistants who help developmentally disabled individuals continue living at home.
  • Boosts funding for HIV/AIDS prevention:  Fulfills the Governor’s pledge to increase funding for the Department of Public Health’s AIDS Drug Assistance Program by more than $3 million to make life-saving medications available to more HIV clients, and provides an additional $2 million to improve the department’s outreach to minority populations that have seen the most dramatic increases in HIV/AIDS cases.
  • Maximizes federal Medicaid funds: Implements changes proposed by Gov. Blagojevich to get the maximum benefit from the federal Medicaid program.  Currently, when the state gives a grant to a human service provider, it generally does not collect enough information about the services being provided to determine if, in some cases, they may be eligible for federal Medicaid reimbursements.  By switching to a fee-for-service model, Illinois is expected to receive approximately $60 million more in federal funds.
  • To bring accountability to the process of awarding contracts to social service providers, the state will require agencies that do business with the state to submit competitive proposals.  Social Service providers who receive state grants will also be required to account for how they spend state money.
  • Increases child care eligibility: Allows 170,000 low-income working people to maintain their eligibility and keep the child care services they need.
Public Safety
  • Eliminates the existing DNA case backlog:  Dedicates an additional $3.3 million to training new forensic scientists and outsourcing a portion of the existing DNA backlog so that the current backlog will be eliminated by December 31, 2004.  In addition, the funds will allow the state crime labs to continue processing 105,000 DNA samples from convicted felons annually and adding them to a centralized database.
  • Increases Frontline Positions:  Over the next four years, 500 more State Police officers will be put on the frontlines by moving current officers from desk jobs back out onto the streets, and by hiring at least two new classes of cadets.  
  • Expands programs that deter crime:  Builds on last year’s increase for Operation Spotlight – the Governor’s long-term effort to double the number of parole officers.  This year he will add new parole agents, supervisors, and casework supervisors who will help parolees find employment and other services that will keep them out of the correctional system.  In addition, the newly-reopened Sheridan drug rehabilitation facility that offers comprehensive substance abuse treatment services to non-violent offenders will be fully funded.
In his original budget proposal, Blagojevich recommended reducing operational costs by $860 million dollars.  The final budget plan includes an additional $409 million in cuts across the board as well as other reductions.  The nearly $1.3 billion total reduction in spending will be achieved by consolidating government agencies and streamlining departments to reduce administrative costs, decreasing the number of non-frontline state employees, and reducing or eliminating some grants.  Reductions in operational costs include:
Streamlining Government
·        Mergers:  Governor Blagojevich announced plans to merge various agencies and functions for a total estimated savings of $15 million.  The Departments of Professional Regulation, Financial Institutions, Banks and Real Estate and Insurance into the new
Department of Financial and Professional Regulation.  He will merge the Circuit Breaker program into the Department on Aging and the Low-Income Energy Assistance Program into the Department of Public Aid, Child Health Insurance Program into the Department of Revenue and the Illinois Building Commission into the Capital Development Board. Finally, the Governor will consolidate the press offices of nearly 25 different state agencies and boards into one, at an estimated savings of $1 million.
  • Reduces State Employee Headcount: Includes a new non-pension inducing severance plan for employees who may chose to seek new opportunities in the private sector or retire. This plan will be available on a first-come, first-served basis and limited to 3,000 non-frontline employees. The limited severance plan is expected to save $81 million.  Overall, the budgeted headcount for FY2005 authorizes 60,000 full-time employees, which is the lowest level since 1972, the earliest period when data is available. The severance plan will reduce this headcount further. 
·        Illinois State Police Reorganization and Consolidation:  Reorganization will be achieved through command staff participation in the severance plan, moving desk officers to frontline positions, and reducing administrative staffing.  It’s estimated the reorganization will save $10 million.  Governor Blagojevich also proposed to consolidate CMS Police into the Illinois State Police force, at an estimated savings of $1 million.
Revenue: Corporate Tax Loopholes
The FY05 budget generates $151 million by closing several tax loopholes that unfairly benefit wealthy individuals and corporations.  This represents a little less than half of the loopholes the Governor proposed closing during his budget address.
·        Tax all corporate income as business income: $30 million
·        Compliance with federal tax shelter enforcement: $100 million
·        Enforcement of offshore tax havens (the 80/20 rule): $15 million
·        Eliminate private watercraft use tax loophole: $6 million


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