Governor's budget passes, solves worst fiscal crisis in Illinois history without sales or income tax increases or gambling expansion; provides nearly $1 billion in new funding for education, health care and public safety

Legislature approves 99% of Blagojevich's budget proposal

Budget cuts more than $1.3 billion in waste and inefficiency, creates rainy day fund

SPRINGFIELD, ILL. - Gov. Rod R. Blagojevich today announced that his first budget solves the worst fiscal crisis in Illinois history without raising the sales or income tax or expanding gambling, while at the same time investing nearly $1 billion in new funding for education, health care and public safety, and creating a rainy day fund.

Speaking at grade schools in Chicago, Decatur and Rockford, Blagojevich said legislators embraced his fiscal plans to raise $3.7 billion in revenue, trimming more than $1.43 billion in waste and inefficiency from state government and starting the state on the road toward fiscal reform.

"When I ran for governor, it was clear that the people of Illinois had lost confidence in their state government after years of corruption, cynicism and waste," Blagojevich said.  "This budget crisis gave us a chance to prove to the people that we could be responsible not just with their hard earned money, but with their trust.

"Despite a historic $5 billion deficit and numerous spending pressures, we have passed a budget that does not ask taxpayers to bail out the state for its past misdeeds.  We have changed business as usual in Springfield.  We have stopped years of mismanagement and unchecked spending that had left the Illinois with the worst financial condition of all 50 states."

The $52 billion spending and revenue plan approved by the legislature Saturday, gave Blagojevich what he proposed for the fiscal year 2004 budget on April 9 - nearly $400 million more in education spending, including a $250 per student increase, $30 million more for early childhood education and almost $100 million for school programs mandated by state law, such as special education and student transportation; creation of a $50 million rainy day fund to protect the state in the event of a economic downturn; $24 million to reopen Sheridan Correctional Center as a national model to deter drug crime; $23 million to expand FamilyCare eligibility to 65,000 working parents; $4 million to expand KidCare eligibility to 20,000 more children; 6,000 fewer state employees than the current fiscal year; and streamlined government by merging state agencies like the Illinois Racing Board, the Illinois Liquor Control Commission and the Department of the Lottery into the Department of Revenue.

"By being disciplined doing things differently, and making the tough choices, we have found a way - to not only balance this budget - but to invest our money where it matters - in education, in healthcare and in public safety," the governor said.  "At a time when states like New York and California are each proposing cuts to their education budgets by over $1 billion, we are investing millions more in new state money into our schools." 

The $250 per student increase in general state aid is larger than the previous three years combined and the highest since 1999.  It boosts payments for each student to $4,810 and Blagojevich has pledged to keep increasing funding until it reaches $5,665, the level recommended by the Education Funding Advisory Board.  Spending for school construction was funded at $500 million, the same amount as the current fiscal year.

The budget also begins to make structural reforms like paying overdue bills, using honest, realistic revenue projections, instituting quarterly budgeting for state agencies and providing a complete accounting of Medicaid spending.

"The state has taken a major step toward real reform and fiscal responsibility," the governor said.  "Spending was kept in check, a rainy day fund was created and, for the first time in more than 20 years, the state will spend less than the year before.  This is the kind of reform I promised on the day I was sworn in as governor and it's a principle that will continue to guide me in the future." 

While many viewed the massive budget deficit that Blagojevich inherited upon taking office in January as an insurmountable obstacle, the governor viewed it as an opportunity to force a change on a system desperately in need of a change.

Rather than ask taxpayers to bail out the system by paying more in sales and income taxes or take the easy way out by embracing the numerous proposals to expand gambling, Blagojevich opted to balance the budget through a mix of budget cuts; an innovative pension financing plan to save $1.9 billion; $1.3 billion in new, recurring revenue and $800 million in one-time revenue sources.

"I refused to let the promise of expanded gambling allow us to escape the hard choices our system so desperately needs," the governor said.  "We took this fiscal crisis and used it to turn this state around."

The plan included higher casino taxes on the most profitable boats; higher riverboat admissions; the decoupling of the Estate Tax; 5 percent to 7.5 percent service fees on special interest funds; the sale and leaseback of state assets, including the James R. Thompson Center in Chicago; a sales tax on natural gas bought out of state; taxing interstate trucking; closing corporate tax loopholes; non-consumer fees for state regulatory services and licenses; and a tax amnesty program.