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Illinois Budget State fiscal year: July 1 June 30 Appropriation: A legislatively-determined spending cap for a particular purpose Illinois Budget Facts.

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Presentation on theme: "Illinois Budget State fiscal year: July 1 June 30 Appropriation: A legislatively-determined spending cap for a particular purpose Illinois Budget Facts."— Presentation transcript:

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3 Illinois Budget

4 State fiscal year: July 1 June 30 Appropriation: A legislatively-determined spending cap for a particular purpose Illinois Budget Facts

5 What is a Balanced Budget? RevenuesExpenditures

6 What has Caused the States Financial Crisis? Spending Growth Has Outpaced Revenues Higher Level of Accountability Rates of Increase Inflationary growth rate is 13.4% General Revenues 11.2% K-12 Education 18.5% Debt Service 34.4% Medicaid Liability 46.3% Pensions 52.3% No pension holidays No debt deferrals into future years

7 General Funds Special State Funds Federal Trust Funds What Makes Up IllinoisBudget?

8 9.9% 46% 44% Special State Funds $14.8 billion General Funds $15.5 billion Federal Trust Funds $3.3 billion TOTAL: $33.7 billion How the States Budget Has Changed Over the Last 10 Years Fiscal Year 1995

9 8.5% 35.8% 55.7% Federal Trust Funds $5.7 billion Special State Funds $36.8 billion General Funds $23.6 billion Fiscal Year 2005 TOTAL: $66.1 billion How the States Budget Has Changed Over the Last 10 Years

10 RevenueS

11 General Funds 35.8% Fiscal Year 2005 General Taxes and Fees Discretionary Negotiated Spending $23.7 billion

12 Individual Income Tax Corporate Income Tax Sales Tax Public Utility Taxes Gaming Sources Other Taxes Other Transfers Federal Sources

13 Individual Income Tax Corporate Income Tax Sales Tax Public Utility Taxes Gaming Sources Other Taxes Other Transfers Federal Sources 32%

14 Individual Income Tax Flat tax rate: 3% First imposed: 1969 at 2.5% Permanently changed to 3% in % of collections goes toward income tax refunds Of the remainder, 10% goes to local governments

15 Individual Income Tax $ in millions Fiscal Year Steep rise: late 1990s Recession: 2002 and 2003

16 Individual Income Tax Corporate Income Tax Sales Tax Public Utility Taxes Gaming Sources Other Taxes Other Transfers Federal Sources 5%

17 Corporate Income Tax Flat tax rate: 4.8% First imposed: 1969 at 4% Permanently changed to 4.8% in % of collections goes toward income tax refunds Of the remainder, 10% goes to local governments

18 Fiscal Year Corporate IncomeTax $ in millions Change to single sales factor Decoupled from federal accelerated depreciation

19 Individual Income Tax Corporate Income Tax Sales Tax Public Utility Taxes Gaming Sources Other Taxes Other Transfers Federal Sources 24%

20 Sales Tax Goods taxed at 6.25%: 5% to state and 1.25% to local governments (services not taxed in Illinois) Food & Drugs taxed at 1%: All goes to local governments (value of this exemption is $1.12 billion) First enacted: 1933 at rate of 2% Increased several times: 6.25% reached in 1990 After distributions: 72% of total collections are considered general revenues

21 Sales Tax Fiscal Year $ in millions

22 Individual Income Tax Corporate Income Tax Sales Tax Public Utility Taxes Gaming Sources Other Taxes Other Transfers Federal Sources 4%

23 Public Utility Taxes Electric Excise –Residential: up to 1/3 ¢ per kilowatt –Non-residential: 5.1% Telecommunications Excise –Tax rate: 7% –1% for school construction Natural Gas Revenue –Tax rate: 5%

24 Public Utility Taxes Fiscal Year $ in millions Drop in land line phone use

25 5% Individual Income Tax Corporate Income Tax Sales Tax Public Utility Taxes Gaming Sources Other Taxes Other Transfers Federal Sources

26 First enacted: 1990 at flat rate of 20% of gross receipts Graduated tax rates since Current range: 15% to 70% Law allows 10 riverboat licenses. All 10 operational between 1991 and 1994 (1 closed in 1997 and remains inactive) 95% of collections are considered general revenues (Education Assistance Fund) Gaming Sources First authorized: /3 of sales goes to state general revenues (Education Assistance Fund) 38 other states have lotteries; Illinois ranks 8th in net receipts Lottery Riverboats

27 Gaming Sources Fiscal Year $ in millions Lottery Riverboats Tax rate increase and dockside gaming Tax rate increase

28 Individual Income Tax Corporate Income Tax Sales Tax Public Utility Taxes Gaming Sources Other Taxes Other Transfers Federal Sources 5%

29 Cigarette Tax: 98 ¢ per pack Estate Tax: Imposed on an estate in excess of $1.5 million before distribution to heirs Insurance Tax: Vary by type of insurance sold Franchise Taxes: Based on paid-in capital Liquor Taxes: Per gallon basis; varies on type of liquor Other Taxes

30 Other Taxes Fiscal Year $ in millions Estate Insurance Cigarette Corporate Franchise Liquor

31 Individual Income Tax Corporate Income Tax Sales Tax Public Utility Taxes Gaming Sources Other Taxes Other Transfers Federal Sources 9%

32 Other Transfers Governors Initiatives –Administrative chargebacks –Fee transfers –Fund transfers Intergovernmental Transfers –Cook County: Local aid for Medicaid costs –U of I: Aid for hospital services

33 Other Transfers $ in millions Fiscal Year Beginning of Governor Blagojevichs administrative chargebacks, fund transfers, and fee increases

34 Individual Income Tax Corporate Income Tax Sales Tax Public Utility Taxes Gaming Sources Other Taxes Other Transfers Federal Sources 16%

35 Federal Sources Reimbursements for state Medicaid spending Food stamp assistance Miscellaneous human services reimbursements

36 Federal Sources Fiscal Year $ in millions Temporary increase in federal reimbursement rate from 50% to 52.95%

37 10-Year General Funds Total

38 Expenditures

39 Types of State Spending Mandatory Priority Discretionary

40 Medicaid Debt Service Pensions Constitutional Mandates Mandatory Spending

41 Medicaid Principle factors driving Medicaid spending include: Rate: amount paid for services provided (rates set by the state) Population: number of people eligible for and enrolled in program Utilization: amount of services used by enrollees

42 Medicaid The federal government mandates that all states provide basic healthcare for the following low-income individuals: Elderly over age 65 Blind and Disabled Children up to age 18 Pregnant Women

43 Illinois provides and covers optional services and populations: Note: FPL for a family of 3 is only $15,670 a year. KidCare: offers healthcare coverage to children up to age 18 whose families make up to 185% of the Federal Poverty Level (FPL). FamilyCare: offers healthcare coverage to parents of children enrolled in KidCare up to 133% of the FPL. Dentistry, podiatry, and chiropractic services. Prescription drug coverage: fastest growing portion of Medicaid budget. Medicaid

44 68% 30% 15% 43% 11% 6%24% Children, Pregnant Women, and Parents Blind and Disabled Elderly SeniorCare 3% Persons ServedPayments Medicaid Utilization Fiscal Year 2003

45 Medicaid Liability + 15 Fiscal Year $ in millions Medicaid costs have risen at an average rate of 8% since FY 99. At this rate, the program will double every 9 years.

46 Medicaid Debt Service Pensions Constitutional Mandates Mandatory Spending

47 Debt Service Types of State Debt General Obligation: bonds issued are backed by full faith and credit of state. Debt service paid from general funds. Revenue: bonds issued for a particular purpose with a dedicated revenue stream.

48 Debt Service –General Obligation Bonds $9.6 billion Anti-Pollution Capital Development Coal Development School Construction –Pension Obligation Bonds $10.0 billion –Build Illinois Bonds (Revenue Bond) $2.1 billion Unused debt service transfers to General Revenue Fund

49 Debt Service Payments + 15 $ in millions Fiscal Year $10 billion in Pension Obligation Bonds

50 Medicaid Debt Service Pensions Constitutional Mandates Mandatory Spending

51 The 5 State Pension Systems Teachers Retirement (not Chicago) : 51% State Employees Retirement: 32% State Universities Retirement: 15% Judges Retirement: 1.7% General Assembly Retirement: 0.3% Current Unfunded Liability = $35.1 billion

52 Pension Funding Taxpayers will contribute $286.6 billion to the 5 pension systems. 40% will cover benefits paid; and 60% will make payments on past years unfunded liability

53 State Contributions Fiscal Year Pensions + 15 $ in millions $2,609 $5,585

54 Medicaid Debt Service Pensions Constitutional Mandates Mandatory Spending

55 Court System $326 million Constitutional Officers $253 million General Assembly $68 million Constitutional Mandates Fiscal Year 2005

56 Types of State Spending Mandatory Priority Discretionary

57 Priority Spending Education Criminal Justice Human Services

58 Higher Education vs. Tuition Fiscal Year

59 Elementary & Secondary Education State Spending on Elementary & Secondary Education (Average of Past 5 Years ) Other Grants 5% Mandated Categoricals 24% Early Childhood 4% Administrative 1% General State Aid 66% General State Aid and Mandated Categoricals combined make up 90% of state education spending

60 Percent Change in Illinois K-12 Public Schools Enrollment State Employment CPI (Inflation) Total Funding Growth 13.1% 157.8% 57% 20.4% : Illinois ranked 11 th in Nation for average expenditures per student in public K-12 schools. Source: NEA Rankings and Estimates 2004 Percent

61 Priority Spending Education Criminal Justice Human Services

62 Corrections Operations vs. Inmates Fiscal Year

63 Priority Spending Education Criminal Justice Human Services

64 Mental Health, Developmental Disabilities, & Substance Abuse Children & Family Services Child Care Assistance Rehabilitation Services Aging Public Health Other Human Services Fiscal Year 2005 $2,003.0 $780.9 $562.9 $417.1 $411.5 $308.1 $148.8 $120.9 $ in millions Total: $4,753.2

65 Types of State Spending Mandatory Priority Discretionary

66 Discretionary Spending Natural Resources –state parks, conservation areas Commerce & Economic Opportunity –economic development, business grants Agriculture –food inspection, animal livestock Veterans Affairs –hospitals, veterans benefits

67 Types of State Spending Mandatory Priority Discretionary

68 Spending Priorities 13.5% Discretionary $2.1 billion 58.5% 12.0% 29.5% 24.8% 61.8% Priority $13.9 billion Mandatory $3.8 billion Mandatory $7.0 billion Priority $9.6 billion Fiscal Year 2005Fiscal Year 1995 Discretionary $2.8 billion

69 Revenues State Sources$17,163$17,892$18,529 Federal Sources$3,940$5,189$4,688 Subtotal Revenues$21,103$23,081$23,217 Transfers Transfers In$1,827$2,109$2,385 Pension Obligation Bonds$300$1,489$0 Subtotal Transfers$2,127$3,598$2,385 Short Term Borrowing$1,675$0 Total Cash Receipts$24,905$26,679$25,602 Appropriations$22,335$23,483$23,685 (Less Permanent Lapse)($442)($851)($681) Plus Transfers Out$2,741$3,459$2,598 Plus Rainy Day Transfer$0$50$0 Plus Accounts Payable from Previous Year$1,476$1,266$593 (Less Accounts Payable at End of Current Year)($1,266)($593) Total Expenditures$24,844$26,814$25,602 Revenues vs. Expenditures$61($135)$0 General Fund Balance Expenditures Cash Receipts FY 03 Actual FY 04 Actual FY 05 Est

70 A L K Ahead Fiscal Year 2006

71 Walk-up: FY 2006 Budget Hole Expenditures Cash Receipts Revenues State Sources$18,529 Federal Sources$4,688 Subtotal Revenues$23,217 Transfers Transfers In$2,385 Pension Obligation Bonds$0 Subtotal Transfers$2,385 Short Term Borrowing$0 Total Cash Receipts$25,602 Appropriations$23,685 (Less Permanent Lapse)($681) Plus Transfers Out$2,598 Plus Rainy Day Transfer$0 Plus Accounts Payable from Previous Year$593 (Less Accounts Payable at End of Current Year)($593) Total Expenditures$25,602 Increase (Decrease) in End-of-Year Balance$0 FY 05 Estimated

72 Revenues State Sources$18,529 Corporate Tax Amnesty($100) Adjustment to Cigarette Tax($50) Federal Sources$4,688 Extra Federal Match($25) Subtotal Revenues$23,042 Transfers Transfers In$2,385 Fund Transfers($260) Administrative Chargeback Change($50) Sale of Assets($25) Transfer Holiday($10) Subtotal Transfers$2,040 Short Term Borrowing$0 Total Cash Receipts$25,082 Appropriations$23,685 Medicaid$1,000 Pension Contributions$486 Annualize Nursing Home Rate$30 AFSCME Contract$28 (Less Permanent Lapse)($681) Plus Transfers Out$2,598 Plus Rainy Day Transfer$50 Plus Accounts Payable from Previous Year$593 (Less Accounts Payable at End of Current Year)($593) Total Expenditures$27,196 Increase (Decrease) in End-of-Year Balance($2,114) Walk-up: FY 2006 Budget Hole ExpendituresCash Receipts FY 06 Adjusted

73 Questions?


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