November 29, 2016; Chicago
Throughout the 2016 fiscal year, Illinois government leaders failed to pass a state budget. Without a budget, many nonprofits did not receive any state funding even though they had valid contracts and performed the promised services. One day before the 2017 fiscal year began, state leaders passed a six-month stopgap budget to fund services for the first half of 2017. That budget will end on December 31, 2016.
Last week, the legislative session ended without state leaders passing a budget, leaving many Illinois nonprofit leaders holding their breath on their organizations’ ability to provide essential services after January 1st.
Over the last eighteen months, the Nonprofit Quarterly wrote extensively on the state of Illinois’s lack of a budget and its devastating effects on some nonprofits. During this time, nonprofits providing programs mandated by the state constitution were paid but those providing non-mandated services were not. These nonprofits had valid contracts with the state to provide these essential services, and most struggled to provide the services as required under the contract.
The governor, Bruce Rauner, and his staff promised to pay the providers after the impasse was resolved. But once the stopgap budget passed, the governor used a clause in the contract to limit reimbursements. Additionally, since the state did not have the revenue to make the payments, the disbursements were further delayed. Nonprofit leaders, including Diane Rauner, the governor’s wife, who leads a large Illinois nonprofit organization, sued the state. They lost in county court and the suit is now on appeal.
The failure of the state to pay for “nonessential” services caused great hardship for citizens throughout the state. For example, college students did not receive their MAP grants, K-8 schools did not receive educational funding, and people scheduled to leave prison were forced to stay locked up because halfway houses could not pay the staff that would support their reentry. At the same time, 62 percent of Illinois residents reported the budget impasse did not affect them.
In These Times and Kartemquin Films are creating an eight-part documentary, Stranded by the State, on the effects of the 2016 budget impasse on residents and the nonprofit institutions that serve them.
In These Times is a Chicago-based independent nonprofit magazine dedicated to advancing democracy and economic justice. The first program was released two weeks ago, highlighting the effects on Illinois’s higher education system and the tens of thousands of students served.
The limited late payments and decreased tax revenue continue to devastate an already damaged safety net and the State as a whole. As of November 16th, Illinois owed $10.6 billion in outstanding bills and possess a deficit of over $5 billion. Last month, North Side Housing and Support Services announced it would close a 72-bed shelter on the North Side of Chicago by the end of the year.
Currently, state leaders are meeting behind closed doors to try and reach agreement. Although Democrats lost a small number of state house representatives and senate leaders, they continue to hold majorities in both legislative houses. The Republican Governor continues to demand nonbudgetary items, including term limits on legislative leaders, before he will agree to a budget; Democrats in the legislature refuse to discuss these items. The Democrats won the State Comptroller’s office during the November election, but it is unclear if and how this will affect the impasse.
To create a balanced budget and begin to pay down the debt without instituting major long-term budget cuts, the state needs about $7 billion dollars in additional revenue annually. In the meantime, nonprofit leaders must recover from the presidential election and advocate for a solution before they and the residents they serve are stuck in another devastating situation.—Gayle Nelson
Original cite: https://nonprofitquarterly.org/2016/12/05/18-months-budget-impasse-illinois-stresses-nonprofits-devastates-lives/