Courts call the shots for budget-less Illinois

Reuters News
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Posted: Sep 18, 2015 5:25 PM

By Karen Pierog

CHICAGO (Reuters) - Caught in a political stalemate that has forced it to operate for nearly three months without a budget, Illinois' spending decisions are increasingly being made by courts and at a rate that is further deepening the state’s fiscal woes.

The standoff between the Republican governor, a political newcomer, and the Democratic-controlled legislature is affecting everything from the ability of lottery winners to collect their cash to state workers' healthcare payments.

In the weeks since fiscal 2016 began on July 1, U.S. and state judges have ordered Illinois to pay its workers and adhere to federal consent decrees mandating certain healthcare and social service programs.

That has put $14 billion of state spending under judicial control, according to Illinois Budget Director Tim Nuding. It has also placed the state on a path to spend more than its estimated fiscal 2016 revenue of $32 billion. The courts have ordered spending at levels in place in fiscal 2015 when revenue totaled about $36.6 billion due mainly to higher income tax rates that expired on Jan. 1.

    "The courts in many ways are running our government because the legislature has failed to pass a balanced budget," Nuding told a state Senate hearing last week.

    Governor Bruce Rauner sent a memo to lawmakers on Thursday, warning that the longer it takes to resolve the budget impasse with Democrats, "the cuts we will have to make become deeper and what we ask of taxpayers will be steeper."

  Illinois and Pennsylvania are the only two states still fighting over a budget past their July 1 deadline, according to the National Conference of State Legislatures. Arturo Perez, an NCSL analyst, said the fact that neither state was able to put temporary spending measures in place has opened the door to court intervention.

RISK OF MORE JUDICIAL INTERVENTION

Lottery players in Illinois who have won prizes of $25,000 or more and who have not been paid since July 1 due to the lack of a budget filed a class action in federal court. The winners are seeking $288.4 million plus interest and a suspension of certain lottery ticket sales.

    Several labor unions including Illinois' biggest, the American Federation of State, County and Municipal Employees Council 31, this week asked a St. Clair County Court to force the state to fund healthcare coverage after it stopped paying claims, according to AFSCME spokesman Anders Lindall.

"There is a substantial possibility that state employees

will forego needed medical care, either because they will not be able to afford to pay for the care up front at the time of service, or because they fear that medical care providers will demand such payments up front," the unions' complaint states.

In a notice on Friday, Illinois said it will resume payments for its self-insured plans once a budget is approved.

    Group health insurance and public universities and colleges are two big-budget items that cannot be funded without an annual appropriations. Other big-ticket items, such as bond and pension payments, are being paid through continuing appropriations, which total about $8.9 billion, according to Nuding.

    The budget impasse is also preventing the state from making some payments to local governments. 

    Mark Kern, St. Clair County Board chairman, said Illinois is close to being $6 million in arrears on money earmarked for the county's 911 emergency communication system and probation department.

    "The taxpayers of St. Clair County can't afford to balance the state's budget on our backs," Kern said.

The county is preparing a lawsuit over money the state is collecting but not remitting for 911 service on county residents' cell phone bills, he added.

A multi-county  mass transit district in southern Illinois sued for the release of $3.8 million. In its lawsuit, the agency warned it will have to shut down in mid-October if no state money comes in.

(Editing by Matthew Lewis)