Center for Tax and Budget
Accountability
J
June
4
4, 2013
FY13 Budget Experience
• The FY13 budget reduced appropriations
for General State Aid
Aid, early childhood
childhood, and
other education priorities
• Incorporated changes to the Medicaid
program pursuant to the SMART Act
• At the outset of the fiscal year,
underfunded liability in certain human
services programs
FY13 Budget Experience
• Pension pressures continued to crowd out
other areas of state spending
• Changes were needed to contain the
rising cost of state employee group health
insurance benefits
• We started the year with a modest
revenue projection, not anticipating the
“April surprise”
FY13 Budget Experience:
Cl i O
Closing
Out the
h Fi
Fiscall Y
Year
• The “April
April surprise”
surprise – using the revenue to
pay old bills
• We will end FY13 having passed over $1
$1.2
2
billion in GRF supplemental appropriations
• GOMB estimates
ti t th
thatt we will
ill end
d FY13
with over $2.3 billion less bills on hand
FY14 Budget: Pressures and Goals
• Rising pension costs pressure other areas
of the budget
– The GRF payment to the 5 pension systems
comprises 17% of the GRF budget
– When combined with debt service on bonds
issued to make our pension payments in
2003, 2010 and 2011, the state’s contribution
is 22% of the overall budget
FY14 Budget: Pressures and Goals
• Governor’s introduced budget cut General
State Aid by $150
$150.4
4 million from FY13
FY13,
which would have created a much deeper
proration to the Foundation Level
p
• The state’s subsidy for school
p
was also cut,, byy $146
$
transportation
million from FY13
• Higher
g
education saw reductions ranging
g g
from 4% to 5% across lines
FY14 Budget: Pressures and Goals
• FY14 budget goals included:
– Maintaining the 89% proration on GSA
– Holding the line on the school transportation
funding level
– Holding the line on early childhood funding
– Fully fund social service programs at their
estimated liability
FY14 General Revenue Funds by Source
$35.446 Billion
Federal Receipts
11%
Personal Income
45%
Other Sources
15%
Personal Income - $16.0B
Sales
S
21%
Corporate Income - $2.9B
Sales - $7.4B
Corporate Income
8%
Other Sources - $5.1B
Federal Receipts
p - $4.0B
Personal Income Tax Rates of Midwestern States
10.00%
9.00%
8.00%
7.00%
Tax R
Rate
6.00%
Iowa
Wisconsin
5.00%
00%
Missouri
Kentucky
4.00%
Illinois
Indiana
3 00%
3.00%
Illinois ‐ 2015
2.00%
1.00%
0.00%
$0
$50,000
$100,000
$150,000
$200,000
Income (Married Filing Jointly)
*Indiana's tax rate includes an average county tax rate of 1.28%
$250,000
$300,000
Top Corporate Income Tax Rates of Midwestern
States
14.00%
12.00%
Inco
ome Tax Rate
R
12 00%
12.00%
10.00%
8.00%
8 00%
8.00%
7 90%
7.90%
7.00%
6.00%
6.00%
6.25%
4.00%
2 00%
2.00%
0.00%
Illinois
Kentucky Missouri
Indiana Wisconsin
Iowa
FY14: All Funds Budget
$71 Billion
$35.4 Billion
50%
$8.0 Billion
11%
$27.8
$27
8 Billi
Billion
39.0%
Federal Funds
Other State Funds
General Revenue Funds
FY14 General Revenue Fund Budget:
$35.446 Billion
Discretionary
Spending:
$16.7 Billion
Non-Discretionary
Spending:
$18.7 Billion
Pensions total 22%
FY 2014 Proposed GRF
Discretionary
y and Non-Discretionary
y Appropriations
pp p
$35.446 Billion
Debt Service on
Government Services Public Safety
Capital Bonds
3%
1%
Statutory
and Regulation
Transfers Out¹
5%
D bt S
Debt
Service
i on
7%
Pension Bonds
5%
Pensions
17%
Operation of State Government =$4 billion (11%).
Human Services
15%
Government Services - $1,178
Public Safety and Regulation - $1,692
Human Services - $5,202
P- 12
19%
Medicaid/Healthcare
23%
P- 12 - $6,687
Higher Ed - $1,991
Medicaid/Healthcare - $8,311
Higher Ed
5%
Pensions - $5,988
Debt Service on Pension Bonds - $1,655
Debt Service on Capital Bonds - $527
Statutory Transfers Out - $2,172
FY14 Budget Accomplishments
• Balanced
• Relies on eliminating liabilities in FY13
thanks to revenue surprise
• Places an emphasis on funding K-12 and
human services:
– Increases K-12
K 12 spending by $136 million over
FY13
– Funds human service providers at a level that
gives them some predictability, and helps
them plan