Pain to be Felt in Governor's Budget Proposal

Gov. Bruce Rauner's administration has been tight-lipped about its first budget proposal, as it grapples with a potential $6 billion hole for next year. But, sources familiar with the plan say the pain will be spread far and wide, with $1.5 billion in cuts expected in the state's Medicaid program, and $387 million to higher education, a 31 percent reduction.

The governor is also expected to slash funding for mass transit, including $112 million in cuts to the RTA, and cut by as much as half the money that the state gives to municipal governments through the Local Government Distributive Fund. Chicago alone gets $250 million per year from the state, and a proportionate cut to its funding would blow a sizable hole in the city's budget.

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The proposal is also expected to include savings in payments to worker pension systems by moving all current employees to a "Tier 2" system for work going forward. That means they would keep the pension benefits they have accrued to this point, but receive lower pensions based on earnings from this point on. Rauner is expected to propose a $300 million increase in K-12 education spending.

Some lawmakers on both sides of the aisle have expressed frustration at the lack of transparency in the budgeting process, with the governor choosing not to brief rank-and-file members before he gives his budget address Wednesday.

The Rauner administration did brief legislative leaders Tuesday afternoon at the state capitol in a short meeting, with House Speaker Michael Madigan emerging saying that the budget contained some "tough medicine." But he reiterated his call for a budget to include increased revenue along with cuts.

Gov. Rauner has proposed broadening the state sales tax to cover more services as a way to generate more revenue, but could look to lower the overall rate. He has also called for a freeze on local property taxes and has hinted that the state income tax, which rolled back to 3.75 percent from 5 percent on Jan. 1, 2015, stay where it's at, with some lawmakers on the left calling for the rate to be restored to 5 percent.

Today, the Center for Budget and Tax Accountability released a report saying that the tax rollback has benefited the wealthiest taxpayers more than lower and middle class taxpayers. 

"The vast majority of this tax relief is missing the very people who would spend it and create a stimulus," said the Center's Ralph Martire, who was joined by State Sen. Heather Steans (D-Chicago).

The governor's budget will face an uphill battle with Democratic super majorities in the House and Senate who will have to approve it. Also at stake is an expected $2 billion hole in the current fiscal year's budget, in which the governor has called for a freeze on non-essential spending, as well as unprecedented authority to move around money from certain items to plug gaps in others, and authority to sweep other special funds the state controls.

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