The state's spending plan for the year starting July 1 (13 days prior to its approval by the legislature) contains something for everyone, but more significant are changes approved for the revenue plan. For the record, the fiscal year 1994 budget stands at $30 billion, with the general revenue funds portion approved for $14.3 billion. That $14.3 billion represents the state spending — and its revenue — for basic day-to-day operations.

On the revenue side, the income tax is now permanently raised to rates of 3 percent for individuals and 4.8 percent for corporations. Taxpayers will pay the same rate as before, when the basic rate plus a temporary surcharge added up to the 3 percent for individuals and 4.8 percent for corporations. But local governments wind up with a greater share of income tax revenue.

Few observers doubted the temporary income tax surcharge rates would be allowed to expire June 30. But many were surprised that cities and counties won a permanent and bigger share of income taxes.

For this budget year, the revenue that could be figured as part of the "old" surcharge was divvied up so the state got some and so did local governments. But in fiscal 1995, cities and counties will get 11 percent of state income taxes with their percentage to go up to a final 10 percent starting in fiscal 1996. The state will wind up with only 90 percent of income tax revenue by fiscal 1996. Before any surcharge or temporary rates had been added to the state income tax, cities and counties got 12 percent of the revenue. Distribution to cities and counties is still based on population.

Also on the revenue side is a higher tax on cigarettes — up 14 cents — and a new tax on other tobacco products, both enacted in order to dump the so-called "granny tax" that levied $6.30 per day per bed on nursing homes. Suburban Republicans especially wanted to kill off the granny tax, but a revenue replacement was necessary in order not to jeopardize the state-federal method of financing Medicaid. Unchanged is the basic state assessment on hospitals, nursing homes and other facilities to allow the state the greatest federal reimbursement possible to finance Medicaid. Still, to help the state pay Medicaid providers, the state is using $300 million of $900 million in borrowed short-term money. The other $600 million was to be used to pay other bills and allow the advanced payment of September state aid to school districts.

Left unresolved — and undebated in the spring session — was any restructuring of the balance between state aid and local property taxes for financing public schools

Other pieces of the budget deals:
• To help keep some state-owned enterprises operating, the Department of Historic Preservation will begin experimenting with admission charges for some of its sites, and the Department of Conservation may increase some fees for using state parks. The object: raise new revenue.
• To help business, specifically manufacturers, tax credits were worked out that in the short-term are expected to cost the state treasury about $75 million, but in the long run are hoped to enhance employment in the state.

As Gov. Jim Edgar and the legislative leaders with a special team of "budgeteers" worked to hammer out the final deals in the final days of the legislative session, they dealt with the budget as an omnibus bill since almost all spending was tied up in one House-and-Senate conference

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committee. Once all the side deals were done, the appropriations sailed through the legislature's roll calls and none was vetoed by the governor. Those side deals assured that each political entity got something. Examples include the OK on home-rule tax powers for the city of Chicago and some upfront money for its schools; authorization for toll road extensions in the suburban counties around Chicago; and the new 10 percent of state income tax for local governments.

In the end, the spending plan is very similar to the budget proposed in March by the governor. Among the priorities he got is greater spending for two beleaguered agencies: the departments of Children and Family Services and Mental Health and Developmentally Disabled. Edgar also wound up agreeing to a new $60 million super-maximum security prison. Compromise also came on a $10 monthly increase in welfare grants to families of two or three, beginning in April. Education gained some, but only incremental increases — $142 million for elementary and secondary education and $52 million for higher education. (See table at right for spending details.)

Two signs that the new budget may be an improvement in attempting to "balance" its revenue and spending are the plans to spend less of fiscal 1994's first three months of revenue for expenses from fiscal 1993 (the so-called lapse-period spending) and to pay off a significant portion of unpaid bills owed vendors.

Left unresolved — and undebated in the spring session — was any restructuring of the balance between state aid and local property taxes for financing public schools. Although the budget was passed late, it was passed without any crisis: no late paychecks, no shutdown of government, no big surge in spending.

Watch now as debate heats up on a heavy realignment of finances between state and locals since suburban Republican, Senate President James "Pate" Philip, in mid-August tossed onto the table the concept of switching school funding from the local property tax to a new and higher state income tax. *

General funds spending authority (appropriations) (dollars in thousands) The total spending in the fiscal 1994 budget is $30 billion, split almost in half between the state's main operating funds called GRF (general revenue funds) at $14 billion and all other funds totaling $16 billion. Here is a breakdown for GRF spending authorized for the fiscal 1994 year. Note that some agencies rely also -- and some entirely like the Department of Lottery -- on funds other than the GRF. The governor signed all appropriations as enacted by the General Assembly for the fiscal 1994 year, which started July 1, 1994.
	FY 1993 (estimated final spending)	FY 1994 proposed by governor	FY 1994 final (all signed)
LEGISLATURE	$46,503	$55,745	$48,923
JUDICIAL agencies	185,686	191,560	196,648
EXECUTIVE officers
Governor	7,501	7,496	7,496
Lieutenant Governor	2,466	2,526	2,526
Attorney General	27,812	27,867	27,867
Secretary of State	87,416	87,401	89,644
Comptroller	40,970	42,191	43,363
Treasurer	14,648	12,512	12,512
CODE agencies
Aging	108,793	119,729	115,059
Agriculture	27,751	29,356	29,414
Alcohol & Substance Abuse	95,458	104,729	94,299
Central Management Services	419,328	520,637	482,142
Children and Family Services	573,441	691,012	679,388
Commerce & Community Affairs	27,613	30,108	29,680
Conservation	34,126	35,126	35,275
Corrections	609,855	675,252	688,834
Employment Security	11,000	11,000	11,526
Energy & Natural Resources	16,352	16,352	17,234
Financial Institutions	1,616	0	0
Human Rights	3,774	4,547	4347
Insurance	536	536	525
Labor	4,481	4,411	4,411
Lottery	0	0	0
Mental Health & Developmental
Disabilities	872,024	934,218	936,750
Military Affairs	7,508	7,452	7,378
Mines and Minerals	3,180	3,148	3,116
Nuclear Safety	550	554	543
Professional Regulation	3,680	3,617	3,386
Public Aid	4,548,872	4,690,100	4,773,792
Public Health	87,776	93,751	101,530
Rehabilitation Services	117,200	135,968	131,968
Revenue	207,868	210,928	210,348
State Police	123,464	126,094	134,222
Transportation	57,023	55,224	58,556
Veterans' Affairs	20,014	21,733'	21,357
OTHER agencies*
Arts Council	6,668	6,668	6,657
Capital Development Board	32,800	24,982	25,147
Comprehensive Health Insurance	17,379	17,324	17,324
Environmental Protection	15,928	15,479	16,428
Historic Preservation	8,938	9,361	9,326
Health Care Cost Containment	828	809	959
EDUCATION
Elementary & Secondary	3,326,338	3,437,038	3,471,864
Higher Education	1,593,224	1,630,224	1,645,621
TOTAL*	$13,458,441 $	14,144,963	$14,270,965
* Only some "other agencies" listed individually, but appropriations for all other boards, commissions and agencies, etc., included in total. Source: Bureau of the Budget.

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