Illi­nois’ bud­get dis­as­ter as im­passe hits 3rd year

Kuwait Times - - BUSINESS -

Illi­nois started its third straight fis­cal year with­out a state bud­get yes­ter­day, ter­ri­tory that could mean some uni­ver­si­ties won’t be able to of­fer fed­eral fi­nan­cial aid, road con­struc­tion and Powerball ticket sales will halt, and the state’s credit rat­ing will be down­graded to “junk.” While a spend­ing plan got early ap­proval in the House on Fri­day, the cham­ber later ad­journed for the day, with House Speaker Michael Madi­gan say­ing they would re­turn Satur­day - the first day of the new fis­cal year.

Law­mak­ers are try­ing to end an im­passe be­tween Repub­li­can Gov. Bruce Rauner and Democrats who con­trol the Leg­is­la­ture that started when the first-term gov­er­nor took of­fice in 2015 promis­ing change. Rauner has said he’ll keep leg­is­la­tors at work in Spring­field un­til they can reach an agree­ment, con­tin­u­ing a spe­cial ses­sion that is cost­ing tax­pay­ers up to $48,000 per day. Comp­trol­ler Su­sana Men­doza, who con­trols the state’s check­book, warned that with­out a bud­get: “De­rail­ment is im­mi­nent.”

How bad is it?

No other state has come close to the mess that Illi­nois is in. Some states have gone months with­out a bud­get - Penn­syl­va­nia had a nine-month im­passe that ended last year. But Illi­nois’ stale­mate has been un­prece­dented since it reached a full year. Illi­nois al­ready has the low­est credit rat­ing of any U.S. state, and it owes more than $15 bil­lion in late pay­ments to ven­dors - in­clud­ing doc­tors who pro­vide health care to state em­ploy­ees and so­cial ser­vice agen­cies that care for dis­abled peo­ple. Some home­less and do­mes­tic vi­o­lence shel­ters have been forced to close or re­duce ser­vices, and some med­i­cal of­fices are no longer see­ing pa­tients on state in­sur­ance un­less they pay cash up front. Uni­ver­si­ties have laid off thou­sands of em­ploy­ees. Illi­nois also owes school dis­tricts mil­lions of dol­lars for trans­porta­tion, spe­cial ed­u­ca­tion and other ex­penses.

What are the con­se­quences?

S&P Global Rat­ings said ear­lier this month it would likely down­grade Illi­nois’ credit rat­ing to be­low in­vest­ment grade if law­mak­ers didn’t ap­prove a bud­get by Satur­day. The agency didn’t say when it would act, other than that it would be “around” July 1. A down­grade would make Illi­nois the first US state to be as­signed “junk” sta­tus, and in­crease the cost to tax­pay­ers when the state bor­rows money.

The Illi­nois Depart­ment of Trans­porta­tion has said nearly 700 road­work projects would stop, putting an es­ti­mated 25,000 peo­ple out of work, be­cause the state can’t spend money col­lected through the gas tax with­out the Leg­is­la­ture ap­prov­ing an ap­pro­pri­a­tion. The Higher Learn­ing Com­mis­sion, which ac­cred­its schools in the Mid­west, has warned the on­go­ing lack of fund­ing could cause some uni­ver­si­ties to lose their ac­cred­i­ta­tion. South­ern Illi­nois Univer­sity Pres­i­dent Randy Dunn said that would mean the col­leges wouldn’t be able to of­fer fed­eral loans and grants to stu­dents, caus­ing more to choose col­leges in other states. “We’re go­ing into very dan­ger­ous ter­ri­tory,” Dunn said. —AP

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