United Way of Illinois
Springfield Update

Governor Quinn enacted legislation yesterday that will increase the value of the Earned Income Tax Credit for low and moderate income working families in Illinois.  For details click here.

In the waning hours of the 96th General Assembly a bill passed the legislature that combines spending caps and increases in income tax rates with mixed results for human services.

SB 2505, signed into law as Public Act 096-1496 on Jan. 13, raised the personal state income tax rate to 5% and the corporate income tax rate to 7% through 2015. As a result, annual revenues are projected to increase by approximately $7 billion. From 2015 to 2025, the personal income tax rate will fall to 3.75% and the corporate income tax rate will drop to 5.25%.

Beginning in 2015, .25% of the personal income tax increase will go towards human services and education through two newly established trust funds: The Commitment to Human Services Fund and The Fund for the Advancement of Education. The fund for human services, estimated to bring an additional $400 million to programs, represents the first time the sector has received a set aside. Still, it is unclear if human services funding will actually increase given past cuts and those anticipated in fiscal year 2012.

At the same time, SB 2505 imposes hard spending caps on future budgets. General fund spending growth will be limited to 2% annually between fiscal years 2012 and 2015. Because of pension contributions and Medicaid obligations the spending cap will result in cuts to state programs – including human services. With pension and health care costs growing about 8-10% per year, the spending cap will force legislators to cut about $800 million in the 2012 fiscal year and $2.2 billion from fiscal years 2012 to 2015 combined.

Based on recent appropriations, there is reason for concern about the impact on human services funding. For the current fiscal year, $576 million has been slashed from the Department of Human Services. Human services cuts in this year alone accounted for almost $1 of every $5 cut over the past two years, or 19.2% of $3 billion in total reductions. The state’s human services budget fell from about $4.05 billion in fiscal year 2010 to about $3.47 billion in fiscal year 2011. Grants worth $515.7 million were cut, reducing or eliminating non-Medicaid programs in mental health, developmental disabilities and rehabilitative services. Furthermore, there is still the very real possibility of further cuts to human service programs for the current fiscal year under the Governor’s Emergency Budget powers.

In a recent survey by Illinois Partners for Human Service, more than 95% of the 282 human services agencies responding reported negative effects of state budget cuts. The survey showed half of organizations reduced hours or their level of service. More than 40% saw their waiting lists grow and almost 30% had to refer clients to other providers with no guarantee they would be served. Almost 30% shut down programs, which eliminated essential services and jobs in the community. Survey results also are broken down by Cook County, northern counties, north-central counties, south-central counties and southern counties.

Another budget reform bill, HB 5424, will implement “budgeting for outcomes,” a set of policies that requires the Governor and state agencies to prioritize outcomes and undergo performance measurement, allowing the state to make funding decisions based on sound evidence about the most effective programs. United Way of Illinois will work with other stakeholders to ensure priority setting takes into account the expertise of the philanthropic and nonprofit sectors in Illinois.

Illinois Partners for Human Service, the statewide coalition in which we played a founding role just a few years ago, now has over 600 members in every county and legislative district representing the full range of human services. The advocacy and active engagement of its members has had a dramatic impact on a number of issues affecting the sector and resulted in major achievements including the human service funding set aside in the recent tax bill signed into law. During the fall gubernatorial campaign, Governor Quinn and representatives of Sen. Bill Brady both responded to specific questions concerning the human services sector during the coalition’s special call-in meetings. The coalition also worked closely with the Governor’s Office of Management and Budget to expedite payments to providers and market a new vendor payment program to reduce the delay in payments. Conducted in the fall, the state budget impact survey referenced above demonstrated the dramatic impact that funding cuts continue to have on programs and employment. The survey resulted in extensive statewide press coverage and a story in The Washington Post.