Published: June 29, 2009 04:46 pm      

Fiscal year deadline looms; does Illinois shut down?

By JOHN O’CONNOR

AP Political Writer

SPRINGFIELD — The state’s budget year ends Tuesday, and lawmakers are nowhere near a deal on a spending plan with Gov. Pat Quinn. Does that mean someone shuts off the lights of state government at midnight Tuesday?

In a word, no.

Construction crews likely will work on state highways even if Illinois lacks a budget on July 1. You’ll be able to get a fishing permit or renew your driver’s license. Public schools will continue planning for the fall semester.

But if the stalemate continues far into July, state employees’ pay runs dry. That’s when services could be interrupted across the state.

“You stop issuing paychecks, you have people not showing up to work, services not being provided — just think about transportation, secretary of state, human services — the consequences of that are going to be unthinkable,” said Sen. John Sullivan, D-Rushville.

With the state wallowing in red ink, Quinn, a Democrat, wants to raise the income tax rate to pay for government services. But he couldn’t get agreement from the Democratic-controlled Legislature, which instead passed a budget that would require drastic cuts in human service programs.

Budget talks have dragged on for weeks since then, with no real progress. Now legislators must decide whether to send Quinn a budget that slashes services, pass a temporary budget so talks can continue or simply let the new fiscal year begin without any spending plan in place.

“Stay tuned,” Quinn spokesman Bob Reed said Monday, adding that the governor “remains optimistic” that a new spending plan will be approved in time.

Even without a budget in place, government would continue to function normally, for a while.

It could still pay bills for expenses incurred under the previous budget.

Big projects such as road work will likely continue because they are typically tied to multiyear contracts. Building goes on with the understanding that payment will follow eventually, although contractors technically would be taking some risk.

Public schools aren’t immediately in jeopardy because they don’t receive any state aid payments in July. Agencies can still purchase commodities — gas for state police squad cars, for instance — because they buy on credit.

And welfare checks to low-income families continue uninterrupted thanks to a 1993 court ruling that Temporary Assistance to Needy Families and Medicaid cannot be halted because they are paid in part with federal funds.

The date to watch is July 15, the first pay day in the new budget year, according to state Comptroller Dan Hynes’ office.

Those getting paid that day are staff members working for constitutional officers, such as the governor, treasurer and attorney general, and payroll information has to be sent to the comptroller by July 9, although there’s a little leeway on that deadline, Hynes spokeswoman Carol Knowles said.

Pay deadlines for other groups of employees follow on subsequent days.

“When July 1 comes, if there isn’t a budget, you can pretty much go until mid-month until things start to be a problem,” Knowles said.

And it would be a problem. In 2007, then-Gov. Rod Blagojevich and lawmakers agreed to a one-month budget for July, but it expired without action in August. Blagojevich told Hynes to write paychecks anyway, but Hynes maintained that he needed an authorized budget to do so.

The American Federation of State, County and Municipal Employees sued Hynes, and a Christian County judge brokered a deal that allowed state employees to be paid in August, but ruled that in the future, the comptroller may not cut paychecks unless he had a budget or a court order in hand.

“It is wearying,” AFSCME spokesman Anders Lindall said of the annual budget wrangling. “People are sick of the games, sick of the posturing, tired of the excuses and have every reason to be sick of the uncertainty.”

State employees aren’t the only ones on edge. Sen. Emil Jones III, a Chicago Democrat, said he had heard of private social-service agencies that rely on state funds already turning away new clients.

Those agencies will continue getting paid for at least a few weeks because they are submitting receipts for services through June, for which there’s still money. But to get paid for work in July, they have to have new contracts with the state, which requires a budget.

The anxious moments ramp up pressure on legislators to adopt an income tax increase, said Jones, who voted for the Senate plan to hike the individual income tax rate from 3 percent to 5 percent — and from 4.8 percent to 7.2 percent for corporations — that failed in the House.

Jones said he’s received a lot of calls and letters from constituents in the past few weeks, so those who have resisted a tax increase must be getting even more.

“I’m quite sure the ones that didn’t vote on it are reconsidering their votes,” Jones said.