Walker's daring budget-balancing act
THE BUDGET that Gov. Dan Walker
submitted to the legislature on Wednesday, March 3, promised to achieve a
narrow balance without an increase in
taxes, but his defeat less than two weeks
later in the Democratic primary on
Tuesday, March 16 (see Elections),
raised doubts as to the ability of a lame
duck administration to perform in this area.
The budget proposed total appropriations of $9,908,524,000, a reduction
of $224 million from the appropriation
level for this year (including supplemental amounts to finish this fiscal year,
especially in the area of public aid). But
an appropriation is only a ceiling on
authorized spending, and the proposed
expenditure figure sin the bud get
document show it is planned that
spending in fiscal 1977 will total $8.41
billion, an increase of $403 million, or 5
per cent, over the current year. And the
budget falls shy of the funds sought by
the State Board of Education for state
aid to schools, so that efforts to raise totals can be expected.
Yet the governor pledged there would
be no tax increases. Instead he is
counting on receiving additional revenue from existing taxes because of
improved economic conditions (which
nobody can guarantee) and from a
speedup in tax collections, which the
legislature must authorize — and
nobody can guarantee that, either.
Illinois has an executive budget, and the
system depends for its success on a
strong executive. Walker's electoral
defeat has weakened the governor
politically, and it remains to be seen how
this will effect the budget outcome,
which is essentially a measure of the
strength of competing elements to press
their claims on the state's resources.
The budget document filed March 3 was
accompanied by a message delivered by the
governor in person. He emphasized, "For the fourth consecutive year of this administration, there will be no increase in taxes." The budget was submitted in a 317-page book. An Accountability Budget for Illinois, accompanied by a 280-page Appendix. It contained something for almost everyone to
like, dislike, agree with or disagree with. In a
state which now functions through more
than 90 agencies and with the governor's
proposal totaling almost $900 per capita in
fiscal 1977, its budget is so complex that any
attempt to summarize it is sure to omit facts
which some Will consider essential or even
misleading.
Increase in general funds
Increased spending
The state, he said, would then be paying 48
per cent of the cost of elementary and secondary education on the basis of per
pupil support. Illinois would then be No. 2 of
all big states in education funding - behind
New York, but ahead of California, Pennsylvania, Michigan, Texas, and Ohio.
For higher education, the governor
proposed $720 million, an increase of $36
million over 1976. He added, "There should
be no tuition increase. Tuition increases
would raise economic barriers for moderate
and low income families."
But the added spending for education falls
below the $1.89 billion sought by the Board
of Education and the $860.6 million sought
by the Board of Higher Education. The
governor sidestepped the responsibility for
allocating funds in this field, saying he had
asked the two boards to make recommendations for doing this.
In the case of elementary and secondary
education, he suggested the period for full
implementation of the state aid formula be
extended from four to five years and called
for reexamination of the formula. "With
many districts losing enrollment faster than
anticipated, the formula is not operating
fairly throughout the state," he said in his
message.
The budget calls for appropriations
totaling $1.994 billion for the Department of
Public Aid, compared with $1.907 billion for
fiscal 1976, an increase of $87 million. The
figure for fiscal 1976 includes a supplemental
appropriation of $143 million over what was
initially proposed a year ago for public aid.
The fact is that public aid needs keep rising,
and it is difficult to forecast future needs correctly, so this is another area of budgetary uncertainty.
"This is a tight budget," the governor said.
"It reflects the continuing effort of this
administration to reallocate resources."
Anticipating demands for another $250
million for education, he asked, "Where are
you going to get the money? If they say —
more taxes, I say no. If they say— by cutting
other programs, I ask: which ones?
"Are you going to close mental hospitals? "Are you going to cut public aid grants? "Are you going to cut down on law enforcement? Consumer protection? Economic development?"
These are questions the legislature now
faces as it begins its role in the appropriation process.
Where the cuts are
May 1976 / Illinois Issues / 25
The administration is counting upon an
increase in general fund revenue of $501
million. This will come from added revenues
from the income, sales, and public utility
taxes. While the increased revenue from
these taxes will result in part from improved
economic conditions plus inflated prices and
wages, almost $100 million is anticipated
from proposed changes in tax collection
procedures to move money more quickly
from the taxpayer to the state. Large
retailers would be required to turn over sales
tax collections sooner. Employers who
withhold more than $2,000 per month for
the income tax would be required to remit to
the state in three days, and the due date for
corporation tax returns would be advanced
to March 15 from the present deadline of
April 15. These tax collection changes wilt
require legislative action.
While the bad news about expediting tax
collections was explained on page 285 of An
Accountability Budget for Illinois, the
governor himself announced the good news
for education in his appearance before the
General Assembly and the television cameras. Walker said he was recommending $1.7
billion for elementary and secondary education, "an increase of $148 million — 9.5% —
over last year." He said per pupil support
would be up from $695 to $773, "an increase
of over 11%. That's over $23,000 for a class
of 30."
But the budget does make some cuts.
Secretary of State Michael J. Hewlett cut his
request so it's almost $8.8 million under his
1976 appropriation or about 9 per cent.
Howlett was Walker's successful opponent
in the primary election contest for the
Democratic gubernatorial nomination.
The main budget book revealed other reductions in the following agencies; Office of State Comptroller, Departments of Business and Economic Development, Conservation, Financial Institutions, Public Health, Transportation, Veterans Affairs, Commissioner of Banks and Trust Companies, Commissioner of Savings and Loan Associations, Capital Development Board, Dangerous Drugs Commission, Environmental Protection Agency, proposed Energy Agency, Governor's Traffic Safety Coordinating Committee, Human Relations Commission, State Board of Elections, Local Government Law Enforcement Officers' Training Board, State Fair, Division of Vocational Education, Pollution Control Finance Authority, and two local authorities. A few budget lines were dropped or left blank: State Board of Investments, Metro-East Exposition Authority, and Wabash Valley Commission.
If any provision is made for salary increases for state employees, the budget document makes no mention of it.
In constant dollars
General fund expenditures are at the heart
of any Illinois budget. This budget shows
general fund spending growth from 1973 to
1977 in terms of both current dollars (the
kind that lose buying power because of
inflation) and in constant dollars (calculated
here to show prices at 1973 levels). These
changes are:
|
|
Current |
Constant |
|
|
dollars |
dollars |
|
Operations |
+ 35.2% |
- 2.4% |
|
Grants |
+ 47.1 |
+ 6.2 |
|
Other |
+ 7.4 |
-22.2 |
|
Total |
+42.4 |
+ 2.8 |
Since 1973 was the last fiscal year for an Ogilvie administration budget, what this comparison apparently seeks to show is that, in terms of uninflated dollars. Walker has kept the increase in overall spending at less than 3 per cent and has actually reduced spending for state government operations.
But what it also demonstrates is the tremendous cost of the inflation of recent years where a dollar increase of almost 50 per cent in grants has benefited the recipients by an increase in purchasing power of only 6.2 per cent, and a dollar increase of more than a third in operating costs has, in actuality, represented a small reduction.
The Walker administration's most highly placed fiscal critic has been the state's comptroller, George W. Lindberg. He conceded that the budget "is probably as good as can be expected, given the state's financial health" but termed it a "deficit budget" and charged that fiscal 1976 would also end with a deficit.
"On page 11 of his budget document, he [Walker] states that the available balance on June 30, 1976 will be $133 million and that unpaid bills at the time will be $221 million. This means an $88 million budgetary deficit for 1976 — the first such deficit in the last 25 years. To avoid this embarrassing position, the Governor has reverted to awkward gimmickry and has created an 'accounts receivable' fiction of $90 million. This departs from prior budget practice and is so obviously a gimmick, the Governor should be embarrassed on behalf of the state."
The accounts receivables total $90 million and consist of $75 million in federal aid owed to the state, $7 million owed by the Regional Transportation Authority in northeastern Illinois, and $8 million in inheritance tax collections owed by county treasurers.
Howlett also criticized the use of accounts receivable and asserted that Walker was inconsistent in saying he is opposed to higher taxes "yet he favors moving up the tax collection schedule so that Illinois businesses will pay nearly $100 million more in taxes next year."
Shape of state government
The appendix reveals that there are 94
state agencies that are sufficiently important
to be listed as receiving appropriations: the
General Assembly and eight legislative
agencies, six judicial agencies, the governor
and five other constitutional elected officers,
23 departments, 31 other executive agencies,
and 19 educational agencies including the
state universities. The main document was also the vehicle
for proposing changes in the structure of
state government: a new Illinois Energy
Agency, formerly in the Department of
Business and Economic Development (see
also p. 18); shifting a drug abuse program
from the Department of Mental Health and
Developmental Disabilities to the Dangerous Drugs Commission to combine two
programs: consolidation of three scientific
survey agencies — Geological, Natural
History, and Water — with the Environmental Quality Institute; and shifting the State Museum to the Department of Conservation. The three survey agencies and the museum are now part of the Department of Registration and Education; if the proposed shifts are made, R & E will be left as basically an occupational licensing agency (everything from MD's to horseshoers). In
addition, the powers of the Medical Center
Commission, created to develop the Medical
District Center in Chicago, would be shifted
to the Capital Development Board, the
agency which manages practically all state
capital projects except highways, bridges
and waterways. Legislative approval of these
changes will be needed. What the state government does is also
demonstrated by how the state dollar is spent as shown in summary charts: elementary and secondary education, 23 per cent; higher education, 10 percent; public aid and public health, 21 per cent; transportation, 19 per cent; environment and natural resources, 5 per cent; mental health, 4 per cent; all other, 18 per cent. Copies of the budget book can be obtained, without charge, as long as the supply
lasts, from the Bureau of the Budget, State
House, Springfield, 111. 62706. Leonard
Schaeffer is director of the Bureau, but his
name nowhere appears on the documents.
He and his staff deserve credit for exceptional professional competence./ W.L.D.
While the unveiling of a new state budget
always draws fire from those who take issue
with its spending and financing proposals,
the budget document itself affords an
excellent blueprint of the structure of state
government and what it does.
26 / May 1976 / Illinois Issues