CHICAGO – Illinois Gov. Bruce Rauner moved quickly to sign legislation that frees up $3 billion of funds, allowing the state to distribute motor fuel taxes, gambling, and emergency phone service revenues owed to local governments and to pay out lottery jackpots.
The House, in a near-unanimous vote, passed the spending allocation in Senate Bill 2039 last week and the Senate concurred Monday in a unanimous vote. Rauner's signature soon followed. The funds have been tied up due to the more than five-month-old impasse over a fiscal 2016 budget.
"I have directed our staff to process payments for domestic violence shelters, local governments, 911 services and Lottery winners as soon we receive the necessary vouchers," Comptroller Leslie Geissler Munger said in a statement. "Domestic violence shelters have entered their sixth month without payments and are turning away women and children. Local governments also provide critical services to our families and communities."
Most of the payments can be made quickly as the bulk of the authorized costs come from non-general fund accounts that have the available cash. Only about $28 million of the $3 billion authorization requires general revenue fund dollars.
The state is running about $7 billion behind on payments and Munger has warned that the state is on course to end the year with an $8.5 billion backlog. The state continues to spend at fiscal 2015 levels on items under continuing appropriations or under court orders but is $4 billion to $5 billion short due to the partial expiration last January of the 2011 income tax hike.
The $3 billion spending package marked a rare agreement between Rauner and his fellow Republicans in the legislature with the General Assembly's Democratic majorities. Some said it didn't go far enough.
"Public universities and community colleges are struggling because they have not received state funding. Likewise, vital services are on hold for rape victims, the homeless, autistic children, at-risk youth, the poor and people in need of health care because of the impasse," said Sen. Daniel Biss, D-Evanston.
The package frees up $1 billion for lottery winners. About $583 million of motor fuel taxes will go to state and local governments and $45 million of video gaming proceeds will be distributed to local governments. About $31 million will go to state transportation officials to purchase road salt, $165 million for home heating bill assistance, and $77 million for 911 services.
Local governments have been straining to compensate for the overdue revenues. In October, Standard & Poor's dropped Chicago's $270 million of motor fuel-tax backed bonds six notches because the state's lack of a budget threw a monkey wrench into the flow of funds that backs the bonds. S&P downgraded the credit to BBB-plus from AA-plus. Chicago had said it would draw from funds on hand to cover debt service until an appropriation passed.
Rauner was initially opposed to the so-called "piecemeal" appropriation but the administration then negotiated on the revised package in order to provide essential public services needed for public safety.
Rauner and the General Assembly's four leaders are slated to meet Tuesday, a followup to their first joint meeting in months that was held last week. Rauner and his fellow Republicans want the General Assembly to approve worker's compensation and tort reforms, a property tax freeze that curtails some union contract rules and constitutional amendments on terms limits and redistricting as part of the budget process. Democrats are opposed to most of the proposals and say the budget should be tackled separately.
Moody's Investors Service dropped Illinois one notch to Baa1 from A3 on Oct. 22, primarily due to the five-month-old budget feud. Moody's assigns a negative outlook. Fitch Ratings also recently downgraded the state to the same level at BBB-plus, but assigns a stable outlook. Standard & Poor's has the rating at A-minus on creditwatch. Illinois is the lowest rated state.