Illinois governor warns of funding shortfall

Reuters News
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Posted: Sep 06, 2011 4:44 PM
Illinois governor warns of funding shortfall

By Karen Pierog

CHICAGO (Reuters) - Illinois Governor Pat Quinn's administration warned on Tuesday that some state agencies will run out of money in late April because appropriations will fall short.

"The General Assembly sent the governor an incomplete budget that does not contain the funds needed to continue operations at their current level," said Kelly Kraft, a Quinn spokeswoman.

"Budgeting is a daily process where we continually review the funds available and make the needed adjustments for implementation," she added.

The Democrat-controlled Legislature is scheduled to return to an abbreviated fall session in October, but leaders of the two chambers appeared to be at odds on appropriating more money for the budget.

"The Senate president has warned for months that there are shortcomings in the current budget that will need to be addressed either during the fall session or early next year," said Rikeesha Phelon, spokeswoman for Senate President John Cullerton.

But revisiting the budget appears unlikely in the House.

"Every dollar we were aware of was spent or earmarked for paying old bills," said Steve Brown, spokesman for House Speaker Michael Madigan. "It's really up to the agencies to use the funds that were approved."

Illinois will need to tap the fiscal 2012 budget to pay $5.1 billion in bills and expenses incurred in fiscal 2011, which ended June 30, according to a report from State Comptroller Judy Baar Topinka.

Fear that the funding shortfall may lead to state facility closures and lay-offs, American Federation of State, County and Municipal Employees Council 31 Executive Director Henry Bayer issued a statement on Tuesday warning such actions would "plunge state government into crisis" and be in "direct violation" of negotiated union agreements.

The union, which represents state workers, is already fighting the elimination of 2 percent raises from the budget by Quinn. As fiscal 2012 began on July 1, Quinn said the $32.98 billion general funds budget did not appropriate money for the raises.

Revenue collections, meanwhile, are higher, boosted mainly by legislative action in January hiking income tax rates. General fund revenue was up $409 million or 10 percent in the first two months of fiscal 2012 over the same period in fiscal 2011, according to a legislative commission report.

The state's widening structural deficit, huge unfunded pension liability, inability to pay its bills on time and propensity to borrow its way out of financial problems have made Illinois a major worry in the U.S. municipal bond market.

(Reporting by Karen Pierog; Editing by Dan Grebler)