Budget ‘Grim,’ But University Working on 2.5% Raises for All Staff in FY12

The red line shows what Illinois’ budget shortfall would have been in billions of dollars without the recent State tax increase. The blue line projects what the shortfall still will likely be even with the tax increase. 

(Graph courtesy IGPA.) 

UNIVERSITY OF Illinois Institute of Government and Public Affairs (http://igpa.uillinois.edu/) Professor David Merriman on Jan. 27 presented to the University Senate (http://www.uic.edu/depts/senate/) an analysis of the impact of the recent income and corporate tax increases in Illinois on the State budget (click here).

IN ESSENCE, Merriman told the Senate that the tax increase helps, but is not enough. At best, the State will continue to have a recurring annual deficit of between $5 billion and $10 billion unless further actions to increase revenue and decrease spending are enacted.

MERRIMAN SAID that “Illinois’ pension underfunding is the worst in the nation.”

WHILE THE tax increase will help, there are new hits every budget year. Merriman said, for example, that the State’s Fiscal Year 2011 budget relied on some one-time proceeds, like a $1.25 billion tobacco settlement, that will not be available again. “In FY 12 the State will spend $5 billion more than it has, plus will carry over $7 billion in unpaid bills from the previous year,” Merriman noted. “And even Democrats are saying no more tax hikes, so don’t expect that to happen.”

FOR HIGHER education institutions, while the backlog of unpaid bills could be “reduced,” Merriman said, Fiscal Year 2012 budget prospects “remain grim.” He noted that even when the recession is over, people will be using State services more because their personal reserves are depleted, and that these services will have to be paid for.

INTERIM PROVOST Jerry Bauman spoke next, and noted, “The State owes us $406 million. An even with the tax increase, there still is a $6 billion deficit in the State.”

HOWEVER, BAUMAN did offer some good news, saying “President Michael Hogan is determined to get raises for staff, faculty, and administration,” and noted that raises of  2.5% is the target the University is shooting for.

“BUT THERE is no new money coming from the State so we’ll have to reallocate, meaning to cut someplace else. The president will work with the UIC community to plan cuts rather than just cut across the board,” Bauman said.

HE ALSO noted that the University is planning no furlough days.