State budgets – Dan Vock

Category: State budgets

Illinois faces daunting fiscal challenge

May 19, 2011 / Dan / 0 Comments

Stateline did a five-part series on the financial outlook for some of the biggest states in the Union. I took on Illinois and, not surprisingly, the picture is bleak.

SPRINGFIELD, Illinois — The Illinois General Assembly has given itself five years to fix the state’s dismal fiscal situation. It will be a painful five years.

The countdown is timed to new personal and corporate income taxes approved by lawmakers this January. Most of them will expire in January 2016. Before the extra revenue sources go away, the state somehow needs to get itself back on a permanently stable financial footing. The 2011 tax increases won’t do that by themselves.

In fact, they won’t come close. Even though they bring in more money than the entire state budget of Iowa, legislative forecasters say the only way the tax hikes would lift Illinois out of the fiscal hole it has spent years digging for itself would be if lawmakers kept spending flat through 2014. That’s unlikely, given growing bills for pensions and health care. And right now, at least, it is hard to imagine any more tax increases during the five-year period. So massive program cuts are certain to come, on top of cuts that already have been made.

Unpaid state bills shift burden to local governments

October 21, 2010 / Dan / 0 Comments

The third installment of my three-part Stateline series “Behind on Bills” looks at the fall-out when Illinois and New York state ran late in reimbursing counties and other local governments.

Anthony Picente decided he’d had enough. The state of New York had fallen $34 million behind on payments to Oneida County, the Upstate county around Utica where Picente is the top elected official. Picente was counting on the money to reimburse the county for services it provides that are in high demand these days: job training, food stamps and other key pieces of the social safety net.

By July, Picente hadn’t seen a check from Albany in months. He was still waiting for reimbursements for money the county spent in December. So Picente decided to fight back. Counties in New York State are expected to make their own weekly payments back to the state, in order to help pay for the state’s Medicaid program. Picente sent a letter to Governor David Paterson with a simple message: We won’t pay Albany until Albany pays us.

Ultimately, the state had the better hand in the stand-off, and it eventually paid back the county. But the late payments still took their toll.

“Part of the issue is the state, through all its budget talks, has been talking about shutting down state government,” Picente told Stateline this summer. “In essence, what they’ve done is slowly shut down county government.”

Of course, Illinois localities also suffered. Take Hardin County, in deep southern Illinois.

Money became so tight this May that the county commission laid off all seven county employees at the courthouse who weren’t elected officials. In fact, the elected officials thought they would have to go without pay, too, until the state sent some of the money that it owed. But the county still is in crisis mode. The county was able to re-hire a janitor and some office staff on a part-time basis only because David Robinson, one of the county commissioners, gave up his salary for three months. For the upcoming election, part-time staffers are coming in on their days off to make sure the paperwork is done in time. There is no money set aside to pay election judges to monitor polling stations.

Nearly all county services are getting shortchanged, but some of the most striking examples deal with cops and courts. Criminal defendants have requested jury trials in routine cases, rather than bench trials, because they know the county can’t afford to spend a few thousand dollars to pay jurors. In one case, the county prosecutor had to ask to delay the trial from May until November, when the county hopes it will have more money on hand to pay jurors. In order to keep cases from stacking up too much, the recently-retired wife of State’s Attorney Roger Ralph has come into the office to help her husband file charges. Staffing at the sheriff’s office, Ralph says, has been reduced to the point that the county is “barely able to say there’s an officer on duty at all times.”

What’s more, Hardin County is delinquent in paying its own bills, piling on to the problems other units of local government are having getting their own payments from Springfield. In her office, Mary Ellen Denton, Hardin County’s elected clerk and recorder, has a stack of unpaid bills totaling $25,000. Almost all of the payments are owed to other government entities: More than $10,000 for the regional superintendent of schools, about $5,000 for a planning commission that handles local economic development and another $5,000 to a nearby county for housing prisoners.

On campus, a long wait for state checks

The second installment of my three-part Stateline series “Behind on Bills” addresses how students and universities coped with lengthy waits for state money in Illinois and California.

Lately, the biggest obstacle before La Madrid’s education has been the budget standoff in Sacramento. For 100 days this summer and fall, California operated without a budget. The political stalemate over how to close a massive deficit prevented the state from paying $8.3 billion in bills — a backlog that included La Madrid’s state financial aid check. The state’s community colleges estimate that 41,000 students, or 60 percent of Cal Grant recipients at community colleges, have been left hanging in the same situation this fall.

Without a Cal Grant, La Madrid has been stressing about money as much as his studies. He’s been borrowing groceries from his roommate and has contemplated taking a second job. He has several friends facing similar hardships. “We rely on the state for the grants,” La Madrid says. “I just cross my fingers and hope it comes soon. It’s pretty much my life.”

…

The delays were not the result of a policy choice to cut back on financial aid or to minimize the role of community colleges. Indeed, Governor Arnold Schwarzenegger, who attended Santa Monica City College in the 1960s, told a national group of community college administrators last year that the schools are “institutions of hope” and could lead the country out of the recession. But dysfunctional politics around California’s budget are making it difficult for the colleges to fulfill that promise.

Of course, Illinois also put colleges in a tough spot.

Cash flow is so crimped that as of the end of September, the state of Illinois owed its community colleges and universities close to $600 million. That’s more than one-third of the state’s entire budget for higher ed.

On the campus of the University of Illinois at Chicago, it’s easy to see the effects. The university’s flagship building, 28-story University Hall, is literally falling apart. The concrete skin of the building is flaking off, exposing the rusted steel of rebar beneath. Canopies surround the building to keep pieces of falling concrete from hitting students and staffers on their way in. University Hall is one of three buildings on campus surrounded by protective platforms.

UIC officials aren’t planning on fixing up the buildings anytime soon. Checks from Springfield trickle in as many as six months late — the pattern is too unreliable for doing long-term planning. So administrators are trying to keep cash on hand to simply make payroll and keep the university functioning. Other universities have struggled even to do that. This spring, Southern Illinois University, then owed $140 million by the state, started planning for the possibility of shutting down its four campuses in the middle of the school year.

Illinois lawmakers had no money to alleviate the problem, so they gave colleges the authority to borrow on their own to ease the pressure.

In Illinois, late payments fray the safety net

October 19, 2010 / Dan / 0 Comments

The first installment of my three-part Stateline series “Behind on Bills” focuses on how after-school programs, domestic violence shelters and other social service providers are coping with Illinois’ inability to pay its bills on time. In some cases, they must wait half a year or more to get paid for work they have already done.

Service providers, vendors, universities and others who do business with the state are struggling to stay open, let alone plan for the future, in an environment where they never know when their next check will arrive from Springfield. Many have resorted to layoffs or letting their own bills go unpaid, trickling the economic impact down to businesses that have no direct connection to the state.

During the recession and its aftermath, of course, almost every state has had to make deep budget cuts, and those cuts have taken a toll on services. What Illinois is experiencing is different. The turmoil at the Youth Service Project is not a result of policy choices made by political leaders to cut back on youth violence prevention. Rather, it’s a result of choices they haven’t made. By failing to balance revenues with expenditures, lawmakers have turned their budget problem into a cash-flow problem, pushing decisions of how to spread the state’s fiscal pain to the governor’s budget office, which prioritizes payments, and to state Comptroller Dan Hynes, who writes the checks.

The state’s huge pile of unpaid bills doesn’t show up as borrowing on its balance sheet, but that’s essentially what it is. Illinois pays only minimal interest for late payments, and that money comes well after it cuts checks to its vendors, service providers, universities and school districts. So the state is essentially taking out low-interest loans from groups like the Youth Service Project. Martin-Ocasio says the arrangement with the state basically makes contractors “involuntary lenders.”

This goes far beyond an accounting problem. It means cuts in services to Illinoisans who rely on them.

In the suburb of Elgin, the Community Crisis Center reduced its staff from 72 people to 62. The group relies on volunteer work from former staffers to help victims of domestic violence and sexual assault, along with homeless people. Stress is high for the remaining staff, because of lengthy furloughs and increased workloads, says executive director Gretchen Vapnar. “Some of my staff are making $26,000 a year, and they have to give up a month of salary,” she says.

Long delays in state payments create a snowball effect that makes the job of Family Rescue, the Community Crisis Center and other related organizations even harder. The nature of the safety net is that many programs are tied together and only work if all the pieces are in place. When Family Rescue (which runs a domestic violence shelter) tries to move a woman and her children out of a shelter to a more stable setting, the agency relies on other nonprofits to provide medical services or job training to help the family along. But the other agencies are strapped for cash too, laying off staff and reducing services while they wait for their own payments from Springfield to come through.

Lawmakers passed a major tax increase in early 2011, but that money hardly put a dent in the stack of unpaid bills, because it was needed elsewhere. The Associated Press and other news organizations ran a series called “Deadbeat Illinois” in the fall of 2011 confirming that many of the same problems Stateline documented a year earlier remain very real.

Beyond California: States in Fiscal Peril

December 11, 2009 / Dan / Comments Off

I was the project leader for the Pew Center on the States’ November report “Beyond California: States in Fiscal Peril.” That meant I helped conceive, edit, coordinate and publicize the report. Of course, I also did quite a bit of reporting and writing. My biggest contributions on that end were the Arizona and Illinois profiles and the executive summary.

California’s problems are in a league of their own. But the same pressures that drove it toward fiscal disaster are wreaking havoc in a number of states, with potentially damaging consequences for the entire country.

This examination by the Pew Center on the States looks closely at nine states, in addition to California, that are particularly affected. All of California’s neighbors—Arizona, Nevada and Oregon—and fellow Sun Belt member Florida were severely hit by the bursting of the housing bubble and landed on Pew’s top 10 list of recession-stricken states facing a similar set of fiscal difficulties. A Midwestern cluster comprising Illinois, Michigan and Wisconsin emerged, too, as did the Northeastern states of New Jersey and Rhode Island.

These states’ budget troubles can have dramatic consequences for their residents: higher taxes, layoffs or furloughs of state workers, longer waits for public services, more crowded classrooms, higher college tuition and less support for the poor or unemployed. But they also pose challenges for the country as a whole. The 10 states account for more than a third of America’s population and economic output. And actions taken by state governments to balance their budgets—such as tax increases and drastic
spending cuts—can slow down the nation’s economic recovery.

The entire report (PDF) is 65 pages long, but the Arizona and Illinois pieces provide a good sample of my contributions.

The report generated significant media coverage. Among the outlets that covered the report were PBS’ NewsHour (vide0), ABC News (story), Fox Business (video), the Financial Times, Christian Science Monitor (story) and dozens of state and local outlets. Illinois Gov. Pat Quinn (D) even called in to talk with my director on C-SPAN’s Washington Journal.

Dan Vock

Smart reporting. Great writing.