What if there’s not a budget? 

Comptroller’s office predicts ‘meltdown

By DOUG FINKE

Monday, June 18, 2007

Illinois government faces a “full-blown crisis” with its finances by mid-July if lawmakers cannot agree on a new state budget, a memo prepared for Comptroller Dan Hynes says.

Thousands of state employees will miss paychecks, Medicaid payments to some hospitals and nursing homes will be delayed, grants to social service providers will be on hold, and even some road construction projects could be interrupted, the memo states.

Some state payments will continue even without a budget for the fiscal year that begins July 1, including income-assistance programs for the needy, food stamps, pension checks to retirees and tax refunds.

But millions of dollars in bills cannot be paid because, without a new budget, the state does not have the legal authority to issue checks.

“A fiscal meltdown would begin on July 9 and a full-blown crisis would ensue, by any standard, toward the middle of July,” Rick Cornell, Hynes’ assistant for fiscal policy, says in the memo.

Hynes directed his staff to prepare the report detailing the effect on the state’s ability to pay bills should the current budget impasse continue past July 1. He will deliver the report to Gov. Rod Blagojevich and the four legislative leaders today as the five men prepare for another round of budget talks.

“This is a way to emphasize that there are human consequences to missing budgetary deadlines,” Hynes said in a telephone interview. “I hope everybody realizes we cannot allow June 30 to pass us by without a budget. Either temporary or comprehensive, we can’t allow that to happen.”

Hynes said that if lawmakers approve some kind of spending plan by Friday, June 29, “with a great deal of work and a late night, we will be able to get it implemented smoothly. Anything past that will interrupt activities.”

About 4,900 employees of statewide elected officials could miss a payday if a budget isn’t in place by July 9, the report says. If a budget still isn’t approved by July 19, more than 8,100 employees of the Illinois State Police, Department of Transportation, Department of Central Management Services, Environmental Protection Agency and State Board of Education will miss a payday.

The deadlines continue throughout the month, culminating July 25, when 28,000 workers with the departments of Corrections and Human Services will go unpaid unless a budget has been approved by that date.

But the state employee payroll is only part of the problem, the report says.

More than $2 billion was paid out by the comptroller’s office last July for non-payroll expenses. For example, $270 million was paid in Department of Human Services grants to social service providers, $25 million for foster-care grants and $750 million in Medicaid payments. All of those would be affected by an ongoing impasse this July. Unlike state payrolls, there isn’t a specific schedule for making these payments, the report says, making it “impossible to assign a specific date at which services are disrupted.”

Court orders require the state to continue issuing checks for programs such as Temporary Assistance to Needy Families and Assistance to Aged, Blind and Disabled. A court ruling also requires that state judges be paid. Although not covered by a court ruling, pension payments to retirees, tax refunds and payments on College Savings bonds will be made even without a budget.

“By advising the leaders, at least they will know what the consequences are,” Hynes said.

Twice since 1990, the General Assembly has gone well into July before passing a new budget. In 1991, a budget wasn’t approved until July 18, resulting in thousands of state workers missing a payday. Then-Gov. Jim Edgar also warned that state services could be curtailed or halted because of the stalemate, but an agreement was reached before that happened.

In 2004, the legislature set a record for futility by not passing a final budget until July 24. However, state services weren’t disrupted or payrolls missed because lawmakers agreed to a one-month spending plan on July 1.

The Blagojevich administration has repeatedly warned that a new budget must be approved by June 30 to avoid a government shutdown. A spokeswoman for the governor declined to elaborate Friday on what a shutdown would entail.

“Our goal is to avoid a government shutdown,” Becky Carroll said in an e-mailed statement. “Our focus now is on passing a budget that meets the needs of the people of this state. ... In the event that the General Assembly doesn’t pass a budget by June 30 forcing a shutdown, everyone will ultimately be impacted.”

Many lawmakers, though, feel it will not come to that, either because a budget or at least a stop-gap measure to keep the state running will be approved.

“I’m not willing to believe they are willing to play that much hardball at this point,” said Rep. Raymond Poe, R-Springfield.

Mike Lawrence, director of the Paul Simon Public Policy Institute at Southern Illinois University, said it would be politically damaging to allow a shutdown of government services.

“In this situation, I think the public reaction is going to be a plague on all of their houses,” said Lawrence, who was Edgar’s press secretary during the 1991 overtime session.

“They’ve been busy pointing fingers at each other. I think the public is going to blame them all.”

Sen. Dale Risinger, R-Peoria, also believes a shutdown will be avoided. However, the former IDOT district engineer said that in the meantime, the impasse that is entering its third week will take a toll on state employees and others.

“It creates a lot of stress among the employees of government,” Risinger said. “It also creates stress among the people receiving services. ... It’s not good for anybody.”

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