The second budget: the other $9.8 billion

Imagine a report from Comptroller Roland W. Burris that said Illinois ended a month with an available balance of $2.06 billion, a balance $345 million or 20.2 percent higher than one year before. Imagine that revenues for the first seven months of this fiscal year were 5.8 percent above last year. You don't have to. It happened. This year. According to the comptroller's monthly report Illinois ended January with an available balance in all funds of $2.06 billion. The total for all funds stood in sharp contrast to the situation in the general funds, which continued to limp along barely in the black. At the end of January the general funds balance was a much more modest $145 million. That was $104 million less than on January 31, 1986, and Burris noted that the general funds balance had crept above $100 million but remained below the $200 warning zone for the sixth consective month.

An explanation requires a trip through the state's spending from all funds — a look at money raised by university tuitions, fees, fines and smaller taxes. Such an examination will explain some apparent contradictions. For example, the Department of Transportation can see its general funds appropriations reduced and its total spending increased more than any other department in the budget proposed by Gov. James R. Thompson for the fiscal year that begins July 1. It explains differences between reports that put the state budget at $22.1 billion and $12.3 billion. That's what this tale is about. The second budget. The "other" $9.8 billion.

The state collects money — whether called taxes, fees or fines — from lots of people and counts all of it in the category termed "revenue." Much of it goes through accounts other than the general funds. Gasoline taxes go to the Motor Fuel Tax Fund.

The bingo tax is split between the Mental Health and Common School funds. Duck stamp sales go to the Migratory Watetfowl Fund. And sales taxes go to lots of funds — to the Build Illinois, Common School Special Account, Motor Fuel Tax and General Revenue funds. In total the state has more than 325 separate funds to which a wide variety of taxes, fees and fines are paid. In turn the General Assembly appropriates — provides authority to spend, from all those funds — and the administration draws on them to cover its obligations.

That doesn't mean all that money is spent. It seldom is. An appropriation is simply an authority to spend not a requirement that money be spent. And when undertaking a multiyear project like building a stretch of highway, the General Assembly appropriates money for the entire project at its inception, then reappropriates each year what must still be spent. Because large construction projects typically extend more than one year, appropriations exceed spending, particularly in funds with large construction budgets.

We are getting ahead of ourselves though. Let's start at the beginning with the general funds. There are three specific funds: the General Revenue Fund, the General Revenue-Common School Special Account Fund and the Common School Fund. They are sometimes called the state's operating funds and together comprise the general funds. In the year that ended June 30, 1985, the last for which a complete detailed accounting was available in mid-March, the general funds received $9.5 billion in revenue. The largest was the General Revenue Fund which receives state income taxes, most of the sales tax and smaller taxes like utility, cigarette, liquor and inheritance taxes, for a whopping $7.2 billion in 1985. Next largest was the General Revenue-Common School Special Account. Into it was paid 25 percent of the motor vehicle use tax and 25 percent of 98.45 percent of sales tax collections. Its fiscal 1985 collections were $779.3 million. Bringing up the rear is the Comon School Fund, whose collections included the bingo tax, a $31 million item in 1985. In 1985 the Common School Fund also received $75.6 million in receipts from the state's tax amnesty program, which boosted its total to $79.2 million. (Additionally, at least 40 percent of lottery proceeds are transferred into the Common School Fund, along with the 1985 cigarette tax increase, but neither shows up in the 1985 cash receipts.) Rounding out the 1985 general funds receipts was $1.5 billion in federal revenues, most of it for the Department of Public Aid.

10/April 1987/Illinois Issues

The 325 plus accounts outside the general funds are divided into eight categories. Each extracts taxes or fees from different users, be they motorists, college students or hunters. They are:

• Highway funds, which draw revenue from fuel taxes and license plate fees and driver's license fees and pay for roads, bridges and some police.

• University income funds, primarily the tuition paid by students at public universities, supplemented by general funds to pay the costs at those universities.

• Special state funds, fed by an assortment of fees, taxes and transfers for specific programs. License fees paid by dentists into the Dental Disciplinary Fund, for example, pay the costs of the Department of Registration and Education which is charged with overseeing those professionals.

• Bond financed funds, which receive proceeds from the sale of bonds for roads and buildings.

• Debt service funds that receive the money, either federal funds or transfers from other accounts, to pay off those bonds.

•Federal and state trust funds that hold money the state is keeping for others and which are not available for state use. Employee pension payments are held there until they are turned over to the trustees of the pension system.

•Revolving funds that draw their revenue by payments from other funds.

Outside the general funds the most spending came in what are called the highway funds. They include the Road Fund, the State Construction Account Fund and the Motor Fuel Tax Fund. The money in them comes from an assortment of sales taxes, fuel taxes, license plate and drivers' license fees.

Drawing plenty of attention, because of Gov. James R. Thompson's proposal to hike gasoline taxes, is the Motor Fuel Tax Fund, through which flow the current 13 cent per gallon tax on gasoline and 15.5 cent a gallon tax on diesel fuel that motorists pay at the pump. That money is collected by the Department of Revenue, and along with 2.5 percent of state sales tax collections (unrelated to the sales tax collected on gasoline sales) is shipped over to the Department of Transportation for allocation among state and local governments. For calendar year 1986 the total for sales and motor fuel taxes so distributed was $781.6 million. The distribution came via a complex formula written into law when the General Assembly hiked fuel taxes in 1983. The statutes sought to insure that the increase was used for new construction, not operations. They require distribution of the increase to local governments and to state accounts used only for construction.

If you drove 10,000 miles in 1986 and had a car that got 20 miles to the gallon, you would have paid about $66 in motor fuel taxes. That money was used to build and maintain state and local highways, maintain a state building in Springfield and protect the air quality in Chicago and East St. Louis. Here is where your $66 would have gone under a distribution formula so complex it defies comprehension:

•  $1.57 of what you paid went for refunds that totaled $18.6 million that year. That money was returned to farmers, industries, railroads and other individuals and businesses that had paid a gasoline or diesel fuel tax for off-highway use.

•  $.34 would go to the State Boating Act Fund, run by the Conservation Department, where it was available for programs and construction projects that benefit boaters. The fund is a way of providing a benefit to boaters because there is no provision in state law to exempt marine use from the motor fuel tax.

•  $.92 would be retained by the Department of Revenue to cover its costs for collecting the tax money and shipping it over to the Department of Transportation for allocation.

•  $.48 would go to the Transportation Department to cover its costs of apportioning motor fuel taxes to local governments.

•  $20.72 of the taxes you paid would have gone into the State Construction Fund, the account created in 1983 to receive 70 percent of the increase from the 1983 fuel tax hike. The other 30 percent is returned to municipalities, counties and road districts under a set formula. The state money must be used on state highways and cannot pay state workers' salaries. The Department of Transportation will draw on the State Construction Account Fund to pay $4.9 million to complete 1.65 miles of Interstate 255 around East St. Louis. It will turn to the same account for $275,000 to resurface .86 miles of Route 76 in Belvidere.

•  $12.06 would go to the Road Fund, from which the department pays its own forces, provides money for work on local roads (such as the state share of a project with local and federal funding) and for its own operations. The Department of Transportation draws on the Road Fund for large and small projects, too. It is paying for a $6.9 million project to reconstruct and build two bridges on 3.7 miles of Rte. 67 between Good Hope and Macomb. At the other end of the spectrum it is being tapped for a $15,890 project to rebuild a railroad crossing on Maple Street in Urbana. The Road Fund does not receive funds only from the motor fuel tax. It also receives money from motor vehicle and drivers' licenses, fines for over-weight vehicles, sign permits and the federal government. It the largest Department of Transportation fund and its work-horse.

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• $.97 would go to the Grade Crossing Protection Fund, an account that the Illinois Commerce Commission can tap for a state share of work at railroad crossings.

• $.03 would go to the Secretary of State to cover a portion of the cost of maintaining the Willard Ice Building, the head-quarters of the Revenue Department. That cost is shared between the motor fuel and lottery funds, because the Revenue Department collects that money.

• $13.72 would be returned to municipalities to run their road programs.

• $5.10 would be returned to downstate counties for their highways.

• $4.68 would be distributed to Cook County for local streets.

• $4.44 would be distributed to townships and road districts for their programs.

•  $.95 would be distributed to the Vehicle Inspection Fund. The Illinois Environmental Protection Agency draws money from that fund to pay for vehicle emissions testing it does in East St. Louis and Chicago. Because failure to meet federal standards for carbon monoxide and ozone in Chicago and for ozone in East St. Louis threatened highway funds, the motor fuel tax was selected as the source for the money to test 2.5 million cars a year.

The highway funds are the largest, but by no means the only nongeneral funds. The other large nongeneral fund is the University Income Fund, a grouping of the state's public universities. It has been growing at a rate faster than either general fund or total state spending, as college students and their parents have been asked to pick up an increasing share of the cost of their education. The account receives the tuitions paid by students at each of the state's 12 public universities along with fines, fees for things like issuing transcripts and profits from cafeterias and bookstores.

Over the last decade tuitions have climbed steadily and have covered an increasing amount of the cost of instruction. The average tuition at the 12 public universities — from the University of Illinois to Governors State — climbed from $444 in 1976-1977 to $1,173 in 1985-1986. Over the same period the fall enrollment, converted to measure the full-time eqivalents of part-time students, slumped slightly from 166,779 to 161,533. During that decade the tuition paid more and more of the instructional costs at the universities. In 1976-1977 it covered 23 percent. That figure reached a decade long low of 22.8 percent of costs in 1978-1979 and climbed since to 31 percent in 1985-1986.

Among the fastest growing state funds are the special state funds, accounts that draw money from things like licenses or small taxes and spend it for projects related to the revenue source. Snowmobile licenses fund the Snowmobile Trail Establishment Fund and build and acquire new trails. The hotel tax funds tourism promotion. Parking fees maintain state parking garages.

Typical is the Salmon Fund, used by the Department of Conservation to pay the cost of raising and stocking salmon and trout in Lake Michigan and downstate waters. Since 1976 anglers who want to fish for salmon and trout are required to buy a $2.50 salmon stamp. The money, about $250,000 per year, is used to raise nearly one million chinook and coho salmon and lake, brown and rainbow trout at the Jake Wolff Memorial Fish Hatchery, south of Pekin. The fish are stocked in the spring and fall in Lake Michigan and selected downstate waters, including the lake behind the Department of Transportation, Axehead Lake in Cook County, Clear Lake near Danville, and Ferne Clyffe Lake in Johnson County and Siloam Springs near Quincy. All are "release and catch" fish because Illinois does have waters that will sustain a trout population. Without the salmon stamp program the department would have to cut back on its production of fish or look elsewhere for money, says James Allen, program manager for the fisheries division. And he says there are few complaints from fishermen who have to buy the stamps. "I think that they're well satisfied with the program and see a direct benefit," Allen says.

Although the state's hidden budget traditionally garners less attention than does the general funds spending plan, Gov. Thompson's tax increase package may spark increased attention this year. Both Secy. of State Jim Edgar and Comptroller Roland W. Burris have challenged motor fuel tax and license fee increases at a time when the highways funds are running healthy balances. As the ensuing tax debate unfolds, Illinois citizens can expect to hear more and more about the state's "other" $9.8 billion budget proposed for fiscal 1988.

12/April 1987/Illinois Issues