Locals predict crisis under proposed state cuts
By DENNIS GRUBAUGH
If “turnaround” equates to heads spinning, Gov. Bruce Rauner’s proposed budget fixes are hitting the mark.
– SIUE officials say cuts to higher education proposed for next fiscal year would cost the campus 250 jobs.
– Belleville’s mayor says a 50 percent reduction in the local government fund would cost his city $2.2 million, the equivalent of closing a firehouse or laying off police officers.
– The president of the Illinois Association of Area Agencies on Aging says the budget for senior services will be held to current levels but doesn’t factor in the growing senior population, which is being affected by the totality of the proposed cuts.
And so it has gone on for weeks, local officials reacting to the likely impact that Rauner’s $32 billion budget would have on Southwestern Illinois. With key votes anticipated in the General Assembly in the weeks ahead, community leaders have spoken out, at Southern Illinois Senate budget committee hearings, at chamber of commerce gatherings, at council meetings and business luncheons. No one is sure exactly what will happen, but everyone fears the prospects.
“This is serious business. The budget which is being proposed has been described as unconscionable. It may be numbers to the governor, but to us it’s real people. These are necessary services; they are not waste and fraud,” state Sen. William Haine, D-Alton, said at joint hearing of the State Senate’s two appropriations committees, held at Southern Illinois University Edwardsville. He’s made similar comments in multiple recent appearances.
According to an Associated Press report, lawmakers in late April began working in earnest on the governor’s “Turnaround Agenda,’’ which is a set of pro-business priorities Rauner wants the Legislature to approve in exchange for consenting to new revenue to save programs dear to Democrats. The governor’s proposed spending plan would balance the budget mainly by slashing spending for things like Medicaid, human services programs and state employees’ group health care. The plan also includes a roughly $300 million increase to K-12 education, which the governor has identified as a top priority.
Rauner, during a recent media stop in O’Fallon and in answer to a question from the Illinois Business Journal, said he was willing to discuss new taxes.
“I’m open to discussing anything, and I have said I’m open to tax reform,” the governor said. “However, we’ve got to have structural reform prior to that, as part of that. For politicians, it’s scary to do structural reform but that’s what we have to do. Balancing a budget is not hard if you’re sincere, and I am. We will always have a balanced budget in our administration. What’s hard is to change the structure that causes your budgets to constantly go out of balance.”
All of the uncertainties have many leaders ready to pull their hair. Local cities, which work on an earlier fiscal year calendar than does the state, had their budgets largely figured out before the impact of the potential cuts became known. They’ve been scrambling to make revisions ever since.
The governor has proposed cutting by half the amount of funding that goes to cities through the Local Government Distributive Fund. Most observers think a compromise cut will eventually be reached, but Rauner said everyone must share in the sacrifice.
“It’s true that mayors and county chairmen did not create our financial problems,” he said. “However, we as a state share more income with local governments than most states do. And the reality is we’re all going to have to have discipline together. And our reforms will allow local governments to need less income tax share because they can get control of their burden of taxes.”
Haine said the governor himself had suggested less Draconian budget measures to fix Illinois, while he was campaigning last fall. Rauner beat incumbent Pat Quinn in the November election. Quinn had supported keeping in place a temporary Illinois income tax increase authorized in 2011 by the Legislature. That tax expired at the end of 2014.
Rauner at one point had said it might be prudent to keep at least part of that increase in place for the fiscal year before lowering it incrementally, thereby keeping some revenue in place while Illinois pares expenses. Since his election, though, he has shown little support for that idea.
Haine, in general, likes the incremental approach.
Here is a capsule look at the potential effects in Southwestern Illinois:
Southern Illinois University Edwardsville
Next year, SIU predicts it would see a 31.5 percent cut, amounting to $63.6 million for the combined Edwardsville and Carbondale campuses, and $20 million in Edwardsville alone.
It would mean a total loss of the appropriation for the School of Pharmacy, SIUE Chancellor Julie Furst-Bowe said at the Senate budget hearing.
“This would take us back to funding levels last seen in 1986,” she testified. “We’ve been looking at options, but we don’t have many. We would have to increase tuition by 112 percent. We don’t think the students and parents would be wild about that idea.”
SIUE officials fear that “headlines” are already driving potential students from state universities in Illinois.
John Navin, the interim dean of the SIUE School of Business, has done the last three economic impact statements showing the affect of SIUE’s budget on the area economy.
SIUE is the second-largest employer in Southwestern Illinois, behind Scott Air Force Base. The predicted losses would be around $19.6 million or around a $168.6 million reduction in the surrounding economy.
Navin estimates that loss would mean 250 positions at the campus and up to 120 more jobs in the community. He said all of the projections assume there’s no change in enrollment.
Cities and villages
Mark Eckert, the mayor of Belleville for the last 10 years and the current president of the Southwestern Illinois Council of Mayors, said the cuts would be devastating.
He said the state has forced many mandates onto communities without giving them the means to pay for them. He used sewer fixes as an example, while testifying at the Senate hearing.
“We know they’re needed, but we’ve been doing it at the expenses of our taxpayers. We’ve had to raise tap-ons, we’ve had to raise sewer rates.”
Some 60 percent of Belleville’s $28 million budget is police and fire expense. The city has a paid fire department of 63 firefighters and 85 sworn police officers, and around 400 employees all total, full- and part-time.
“People do not want to hear talk of cuts but if we get the governor’s proposal of cutting the LGTF by 50 percent, the city of Belleville would lose $2.2 million. We lost a little over $700,000 when the state adjusted the income tax back in 2009-2010 and we struggled greatly to tighten our belt. We laid people off, we did not fill jobs through attrition. We have 20-something less jobs that we had prior to the 2008 recession,” Eckert said.
“We believe this cut will simply force us to cut services or raise our taxes — which no one wants to do,” he said.
He noted that most municipalities have budget years that began May 1, two months before the start of the state’s fiscal year, leaving little flexibility on planning amid the state’s debate.
“We’ve got to strike a balance,” Eckert said. “The state of Illinois did not get into this mess overnight. We can’t crawl out of it overnight.”
Edwardsville Mayor Hal Patton agrees that the cuts are threats to jobs. His city stands to lose $1.2 million, which represents half his police force or his entire street department.
“Or we can pick and choose,” he said.
Patton, a Republican, said he agrees with the principles of austerity, but thinks the process should be slowed down.
“The wrong cuts will greatly impact your revenue. The best way is to grow your way out of this financial hole. We do need reform and change, but do so carefully,” he said.
Patton said he favors cutting back on units of government that do not provide the level of services that cities do.
Pension reform also is needed, he said.
The area’s hospitals
CEO Ed Cunningham, the head of Gateway Regional Medical Center in Granite City, said health care is suffering a double whammy on funding at multiple levels.
“Not only the cuts proposed by the state but what the federal government is proposing to do to us also, the cuts never seems to end,” he said. In the last five years, some $1.9 billion has been cut from hospitals by way of Medicare and other services.
One of the biggest concerns in Illinois is the potential for doing away with safety net hospitals — those designed to handle indigent care.
“We are a safety net hospital. Forty-nine percent of our patients are Medicaid. And another 31 percent are Medicare. Fifteen percent are commercial and 5 percent are charity care. We do almost 24 million dollars in charity care a year. That is tremendous when you look at our payer mix and what we deal with.”
There are three safety net hospitals in Southwestern Illinois, the others being Touchette Regional in Centreville and St. Mary’s in Centralia.
All three offer psychiatric services where state funding and reimbursements have been so severely reduced that many patients from as far away as Chicago are finding their way to Granite City for treatment.
He said the hospital has been considering opening an additional 25 beds, which would have brought in another 40 or 50 employees.
“I can’t (now). If we’re going to lose our safety net designation — as well as the cuts — we’re going to see a 30 to 35 percent cut minimum. Almost $7.8 million of our budget, which means all the things we’re doing to keep people out of the hospital and make it better will probably stop,” Cunningham said. “Our speculation, not knowing how this is going to work out, we’ll probably lay off up to 200 employees. We’ll have to cut our services associated with that, such as home health and hospice. We’ll probably have to gut our psychiatric care.”
Cunningham, who testified before the Senate committee, said the hospital has 950 employees (600 full-time equivalents) and a $59 million payroll that helps generate another estimated 742 jobs in the community.
The hospital has made $6.2 million in capital improvements since it purchased the former St. Elizabeth’s Hospital 10 years ago.
