Illinois Public Media News
Just weeks after signing a major tax increase into law, Gov. Pat Quinn gets the privilege of telling Illinois lawmakers and taxpayers that the state's budget is still a mess.
Even with higher income taxes, Illinois won't have enough money to pay all its expenses for the coming year, let alone cover the billions in old bills that have been allowed to pile up.
When Quinn delivers his budget proposal Wednesday, he's likely to call for significant spending cuts in some areas. He will undoubtedly renew his call for borrowing $8.7 billion to pay old bills. And a document from his budget office indicates he wants to take another try at raising cigarette taxes.
Quinn has largely stayed out of sight in the run-up to his budget address, but in an appearance Friday the Chicago Democrat talked about the importance of money for education, health care and public safety. At the same time, he warned Illinois must be "very, very frugal."
State budget director David Vaught said Quinn will make it clear that raising taxes by two-thirds did not solve Illinois' budget problems.
"The General Assembly and the public will see the spending pressures," Vaught said in an interview with The Associated Press last week. "They'll see where we plan to spend and where we don't. We'll make clear not just that we're saying no but why we're saying no."
The Quinn administration has been studying possible cuts to human services - cuts that advocates for the poor describe as draconian.
"We're terrified," said Maria Whelan, president of Illinois Action for Children. "Our hope is the pain will be shared and the most vulnerable people in our state do not bear the brunt."
State employees and retirees may also be targeted, if not by Quinn then by the Legislature.
House Speaker Michael Madigan, D-Chicago, recently warned lawmakers of tough decisions that lie ahead and even suggested cutting pension benefits for current state employees, a move generally considered unconstitutional.
"If you come here and you don't want to cast a difficult vote, well, you ought to go back home and give the job to somebody else," Madigan said.
It's not clear just how big a deficit Illinois faces in the budget year that starts July 1. The Quinn administration has avoided direct answers to that question.
A three-year budget outline from Quinn's office shows he's counting on some revenue measures that haven't been approved yet, notably a $330 million increase in cigarette taxes.
A review of the document suggests a gap of more than $3 billion between income and expenses in the coming year. On top of that, the state owes about $8.7 billion to groups that provide services on government's behalf, to corporations waiting for tax refunds and to the program that provides medical care for government employees.
So the total deficit could top $12 billion. That's one-third of state government's total spending from general funds.
Quinn and Democratic legislative leaders want to borrow money to pay the overdue bills quickly. They argue it's more responsible for government to take on the debt directly rather than borrowing it unofficially by simply not paying what it owes.
Republicans generally oppose the idea, but Quinn has been trying to build public support. He has set up a website promoting the plan - which he calls debt restructuring instead of borrowing - and is urging vendors to demand their money.
The budget outline also counts on federal aid remaining steady even though the economic stimulus program that has propped up state budgets is ending. It's not clear how Quinn expects to avoid a drop-off that would further add to the deficit.
Vaught made the task of balancing the budget sound like playing a Whac-a-Mole game. Officials reduce employee costs but pension expenses jump. They cut drug-addiction treatment yet medical costs keep climbing.
"If you push it down over here, it pops up over there," Vaught said.
An Illinois lawmaker is pushing to raise the state's minimum wage to more than $10 an hour -- higher than anywhere else in the United States.
The Chicago Sun-Times reports that Democratic Sen. Kimberly Lightford of Maywood has introduced legislation to raise the minimum wage by 50 cents plus the rate of inflation every year until it reaches the point where it's equivalent to what $1.60 an hour was in 1968. Today, that would mean an hourly wage of $10.03.
Lightford said she wants to make sure the working poor aren't ignored or forgotten.
But opponents say the proposal could cause businesses to move to other states -- especially if it comes after a recent corporate income tax increase.
The U.S. Department of Agriculture is reporting that reserves of corn have hit their lowest level in over 15 years.
The high demand for corn could put upward pressure on food prices in 2011.
Demand for corn in the ethanol industry is up 50 million bushels after record-high production in December and January, according to the USDA.
That has left the United States with the lowest surplus of corn since 1996.
Scott Gerlt, a crop analyst with the University of Missouri, said high corn prices could increase the cost on everything from ethanol to food and feed.
"The corn market is definitely a changing market," Gerlt said. "With ethanol policy we have a lot more demand and so we are going to have a lot more pressure on prices. Because even though we have a lot of supply there's just so much demand a lot of that supply is getting used up and we're just not left with much at the end of the day."
Corn prices have already doubled in the last six months, rising from $3.50 a bushel to more than $7 a bushel.
(Photo courtesy of Artotem/Flickr)
Mattoon, Ill. is getting a boost from the United States Department of Agriculture.
Ag Secretary Tom Vilsack said his department is giving the Coles-Moultrie Electric Cooperative in Mattoon a $740,000 loan and a $100,000 grant to provide financing that will be used to renovate and modernize the Sarah Bush Lincoln Health Center.
"Strengthening the hospital will make it easier for economic development officials in Illinois to be able to attract business and industry to that area because they know that workers who may get injured or family members who need hospital care will be able to get hospital care," Vilsack said.
Vilsack said it is important to prevent residents from having to travel long distances to get the care they need. He added that the Mattoon project will create 17 new jobs and retain more than 1,600 by preventing hospital closure.
Vilsack said a nationwide package supporting sixteen rural development projects in ten states will leverage 15 private dollars for every public dollar spent.
Employers posted fewer job openings in December, the second straight month of declines. That's a sign hiring is still weak even as the economy is gaining strength.
The Labor Department said Tuesday that employers advertised nearly 3.1 million jobs that month, a drop of almost 140,000 from November. That's the lowest total since September.
Openings have risen by more than 700,000 since they bottomed out in July 2009, one month after the recession ended. That's an increase of 31 percent.
But they are still far below the 4.4 million available jobs that were advertised in December 2007, when the recession began.
The figures follow a mixed jobs report released last week, which showed the unemployment rate fell sharply to 9 percent in January from 9.4 percent the previous month. But it also found that employers added a net total of only 36,000 jobs, far below what's needed to consistently reduce unemployment.
There are far more unemployed people than there are job openings. Nearly 14.5 million people were out of work in December. As a result, on average there were 4.7 people competing for each available job. That's below the ratio of 6.3, reached in November 2009, the highest since the department began tracking job openings in 2000.
But in a healthy economy, the ratio would fall to roughly 2, economists say.
The department's report, known as the Job Openings and Labor Turnover survey, or JOLTS, counts number of jobs advertised on the last business day of the month. The figures are for December, but economists say the report provides an indication of future hiring patterns because it can take several months to fill many jobs.
Job openings dropped sharply in professional and business services, a category that includes temporary help agencies. They also fell in construction, manufacturing, and in education and health services.
Job openings rose in trade, transportation and utilities, and in retail.
A bill meant to get more tax revenue from online retailers is on Governor Pat Quinn's desk. As Illinois Public Media's Jim Meadows reports, it's a measure the governor probably would not be considering if people paid more attention to paying the state use tax.
(Photo courtesy of Maximum PC)
Mitsubishi Motors North America said Friday that it will begin production of a new SUV crossover at its plant in Normal, Illinois next year, promising to keep the facility open less than a month after its 1,100 union employees agreed to wage concessions.
The state of Illinois said it will give the company $29 million in tax incentives as it begins production of the new Outlander Sport.
The new vehicles, which Mitsubishi started making late last year, will replace four existing models now made at the Normal plant that will be phased out, Mitsubishi Motors North America President Shinichi Kurihara said Friday at the plant.
"Mitsubishi Motors remains fully committed to producing vehicles in Normal," he said. "We will build vehicles here not just for the United States, but for many nations around the world."
Mitsubishi has said the new model is part of its worldwide efforts to rejuvenate sales. It plans to produce the vehicle for North America as well as emerging markets such as Brazil and India.
Gov. Pat Quinn, who was with Kurihara at a news conference, said the state agreed to the incentives to help keep the plant - one of the largest employers in the Bloomington-Normal area - open.
"Mitsubishi's decision to produce a new generation of automobile here in Illinois is a strong testament to the strength of our work force and the state's appealing business climate," Quinn said.
The facility's union workers recently agreed to cut their pay by $1.67 an hour, a concession Mitsubishi said it needed to keep the plant open. In all the plant employs 1,300 people, about half of whom commute from surrounding communities and as far away as Peoria and Champaign, the company has said.
The plant now makes the Galant, Eclipse and Spyder and the Endeavor sport utility vehicle. All four will be phased out over the next few years.
The parent organization of Provena hospitals in Urbana and Danville is exploring a merger with another Catholic hospital system.
In a joint release, Mokena-based Provena Health and Chicago-based Resurrection Health Care say they have signed a non-binding Letter of Intent to look into combing their organizations.
In the release, Provena Health President and CEO Guy Wiebking said that a merger would "leverage the benefits" of their health care services under the federal health care reform law. Resurrection President and CEO Sandra Bruce said their common heritage as Catholic healthcare organizations could be a foundation for improved care in the communities they serve.
Provena Health and Resurrection Health Care operate six hospitals each, and dozens of other facilities, including clinics, nursing homes and home health agencies. Most are in Illinois. Their joint release states that combined, the two organizations would have a medical staff of nearly 5-thousand physicians and over 22,000 other employees.
Post offices across the country are facing cuts to make up for an $8.5 billion loss in revenue, and Champaign is no exception.
The U.S. Postal Service has experienced a 20 percent decline in mail volume since 2007, which it attributes to an uptick in e-mails and online payments. It plans to start a three-month review, known as an Area Mail Processing (AMP) study, looking at operations at the Champaign Processing and Distribution Facility on North Mattis Avenue. Postal Service spokesman José Aguilar said a decision will be made in a few months on whether to move the facility's stamp cancellation services to Springfield and Bloomington.
"Right now we're looking at every operation we can to save on fuel, save on work hours, set ourselves up, so that the machinery is running at its optimal capacity," Aguilar said.
The post office employs 205 people, and Aguilar said there is a possibility that a portion of those employees could be re-located or lose their jobs. However, he noted that there are several vacant positions at the Champaign facility, and he said there could be opportunities for displaced workers to fill those jobs. After the review is complete, the U.S. Postal Service will gather input from employees and customers before making a decision.
A union representing 800 University of Illinois service employees voted with overwhelming support Thursday to give its members the right to walk off the job.
Contract negotiations between the Service Employees International Union Local 73 and the U of I have gone on for six months. The union is asking for new contracts that include better pay and employee benefits for campus building and food service workers.
Union organizer Ricky Baldwin said the U of I has proposed salary cuts and pay freezes for the workers, which the union has rejected. The university is currently waiting on more than $400 million in state payments. Baldwin said he understand that the U of I is going through some tough economic challenges, but he said union workers are still entitled to better pay and employee benefits.
"We understand that the economy is not good, the budget is not good, but we also know the university has a lot of money," Baldwin said.
Baldwin cites a 37.5 percent salary increase for U of I President Michael Hogan over what former university President B. Joseph White was earning. He also points to the university paying outside consultants $1.7 million to train administrators to 'Plan to Plan', and Board of Trustees giving the green light to raising the U of I's overall operating budget by 3.9 percent.
"They're giving top administrators raises," Baldwin said. "They can afford to give us 30-to-40 cents an hour. It won't break the bank."
Baldwin said workers could walk off the job within a few months if a deal is not reached.
Meanwhile, U of I spokeswoman Robin Kaler said any discussion of a strike is premature and counterproductive.
"The University remains confident that the parties will be able to reach an agreement through good faith negotiations," Kaler said.
The two sides will return to the bargaining table Friday at 9 a.m. at the Florida Avenue Residence Halls. An hour before the meeting, union workers will be picketing.
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