Fiscal Year 2012 Budget Proposal Overview

In a brief speech before a joint session of the General Assembly, on Feb. 16, 2011, Governor Quinn outlined in only the broadest terms his proposed budget for Fiscal Year 2012, which actually begins on July 1, 2011.

Despite telling lawmakers in his speech that "I have reduced our spending every year," the Governor in his third budget, like the previous two, would spend more than the state will take in and which will actually set a new spending record for the state's general funds.

Governor Quinn asked to increase state spending by $1.7 billion, or 5% over the previous year.

The Governor's budget would require $35.4 billion in state general funds, but only $33.9 billion in revenues are expected to be available, leaving a deficit of about $1.5 billion.

To fill that deficit, the Governor's proposal would take borrowed funds and use those funds to offset the shortfall in revenues. Not surprisingly, Senate Republicans, who were already opposed to added borrowing, rejected the idea.

Revenues & Spending:

Quinn claims cuts of over $1 billion in this budget plan.  While this move is admirable, the fact is that overall State spending is increasing by at least $1.7 billion.  The total General Funds spending contained in this proposal is $35.382 billion, while General Funds revenues are expected to be $33.932 billion. Quinn has submitted another budget proposal that is out of balance.  Spending in this plan exceeds anticipated revenues by $1.45 billion.

To help eliminate this FY12 operating deficit, Quinn is relying on $1.45 billion from the proposed $8.75 billion in debt restructuring bonds.

Deficit Borrowing:

The Governor’s budget is built on the very shaky assumption that the General Assembly will approve his legislation allowing him to sell $8.75 billion in “restructuring” or deficit bonds.  His plan requires a "backloaded" bond payment plan, with bonds repaid over 15 years, at an interest cost of about $4 billion. This proposal was already rejected by the House in the lame-duck January session, falling three votes short of the necessary 71 votes on an amendment to SB336 (Haine-Mautino). (State debt requires 3/5ths approval in each chamber.)

The latest incarnation of this plan is SB3 (Cullerton).

The Democrats’ much-touted “budgeting for results” legislation, HB 5424, which the Governor signed shortly after delivering his budget message, expressly prohibits the Governor from including revenues in his budget that are not yet enacted – such as any of these $8.75 billion bond funds.                               

If borrowing legislation were approved, Governor would sell $5.75 billion in bonds in 2011 and the remaining $3 billion in 2012, with projected bond payments. But, he would push off the bulk of the repayments until after his term of office expires.

More information on:

Bonding Proposal
Illinois’ Rising Debt
New Hiring
Borrowing to Spend