SPRINGFIELD -- Governor George H. Ryan submitted $502 million in cuts to lawmakers to bring into balance the Fiscal Year 2003 budget passed last week, citing the worst revenue picture in nearly fifty years, the continued national trend of reduced tax revenue to state governments and lawmakers’ over reliance on borrowing to balance the budget.
“I understand that many of these spending cuts are difficult for some members of the General Assembly to accept. They are not easy for anyone, and I did not make these decisions lightly,” Gov. Ryan said. “I would caution you, however, against overriding these painful actions. I will not balance this budget by borrowing from future revenues. Period.”
In his veto message to legislators, Gov. Ryan said he made the cuts because “despite our collective best efforts,” the General Assembly last week passed a budget that did not balance base spending with revenues as required by the state constitution.
Governor Ryan also vetoed House Bill 3714 that would have prohibited the Department of Corrections from contracting with private vendors for food or commissary services. Privatization of those services could save the state more than $25 million.
The Governor called the legislature into session on Memorial Day to introduce his second budget to solve a legislative impasse on how to balance the budget in the wake of dramatically reduced revenues since the terrorist attacks of September 11th. The budget provides important funding for educating our children, provides critical healthcare services to the poor and expands pharmaceutical assistance for senior citizens in the next fiscal year.
In the budget passed in the June 2 overtime session, lawmakers rejected $220 million in tax and revenue proposals included in the Governor’s May 27th budget and increased base spending by $277.5 million. As a result, the budget was out of balance by $497.5 million.
Gov. Ryan said “well-meaning legislators from both parties” looked to revenue from financing bonds backed by settlement money from litigation against tobacco companies—known as tobacco securitization—to balance the budget “without voting for increased taxes.” However, the Governor noted he, Republican Senate President James “Pate” Philip and Democrat House Speaker Michael Madigan all agreed borrowing against future revenues is not sound fiscal policy. While not appropriate to use the one-time revenues to fund operations, the Governor said the tobacco-borrowing plan could be used to maintain a healthy Rainy Day Fund and an end-of-year balance.
The cuts are necessary because individual income tax collections nationally dropped by 14 percent from the same period last year. Illinois income tax collections were down more than 8 percent from a year ago and 13 percent for the month of April.
With the $500 million cut through the Governor’s line item and reduction veto powers, the $685 million cut in the original February 20th budget plan and the $260 million cut in the May 27 proposal, Gov. Ryan said the state budget will have been cut by more than $1.4 billion from the current fiscal year.
The General Assembly may override the vetoes—line item vetoes require a vote of three-fifths of the members while reduction vetoes require a simple majority. However, the Governor warned that if his vetoes are not sustained, legislators may once again be called back to Springfield.
“If you choose to override these actions, and if our revenues continue to decline, I will have no choice but to recall you for another Special Session later this summer to consider revenue increases,” Gov. Ryan said.