06/19/2012 05:19 pm ET Updated Aug 19, 2012

Springfield Budget Recap -- The Poor Get Poorer

John Bouman, president, Sargent Shriver National Center on Poverty Law, contributed to this post.

The final budget voted by the Illinois General Assembly makes historically deep cuts to medical assistance and other programs that help and provide opportunity for the poor. These cuts could have been mitigated by an assortment of revenue ideas advanced by the Responsible Budget Coalition, among others, but those ideas were never seriously considered. As always, the decision to target programs for poor people was a question of priorities, not necessity.

The $1.6 billion in cuts to medical assistance included the elimination of programs, restrictions in eligibility, new co-payments and utilization limitations. Here are some of the more significant and potentially worrisome cuts:

Elimination of the Illinois Cares RX program, which made it possible for 180,000 poor elderly and disabled people to afford prescription medications. Advocates are asking Governor Quinn to amendatorily veto the budget bill to eliminate this cut or at least delay it until January to allow people to adjust and try to minimize the damage.
• Reduction in Family Care income eligibility from 185 percent to 133 percent of the federal poverty level, terminating medical assistance to 26,000 parents whose children receive medical assistance.
• Elimination of restorative dental, including fillings, crowns, and dentures. Only emergency dental -- teeth-pulling -- will be covered.
• Imposition of maximum allowable co-payments for prescription drugs and services received at health clinics.
• Hiring of private vendor to verify income and residency. Accuracy in eligibility determinations is a good thing, but the concern is that private vendors have a history of inaccurate, over-aggressive, profit-motivated caseload reduction.

To its credit, the General Assembly spared children from the medical assistance cuts entirely, including undocumented immigrant children who remain eligible for the AllKids program. The General Assembly also avoided even deeper cuts by raising $800 million in new revenues through an increase in the cigarette tax, an enhanced hospital assessment, and federal matching funds.
In addition to the cuts to medical assistance, many other programs that primarily serve poor people were hit hard. These included:

• The education budget was cut by $210 million, including a $160 million cut to General State Aid and a $25 million cut to the Early Childhood Block Grant that funds Illinois's Preschool for All pre-kindergarten program. Funding for Preschool for All has been cut by $80 million since FY 2009, eliminating services to 26,000 at-risk children.
• Child Care Assistance - program cut of $46 million, most of which will be realized by steep increases in parent copayments. In addition, the state will not adhere to the principle of parity whereby center rate increases have matched home increases negotiated by the Service Employees International Union, which represents home providers.
• Temporary Assistance for Needy Families (TANF) - the effective date for assistance was changed to 30 days after application rather than the date of application. This yields $10 million in savings by eliminating one month's payment to TANF applicants whose applications are approved. Thirty-thousand families per year will lose a month of benefits.
• The budget for the Department of Children and Family Services (DCFS), the state's child welfare agency responsible for abused and neglected children, was cut by $86 million. It is not yet clear how this will affect the services the agency provides.

Many of the "savings' generated by these cuts are illusory. Persons whose medical assistance is terminated will seek care in emergency rooms, at much greater cost to the state. Eliminating preventive services will result in much greater costs later from problems that could have been avoided. Every child denied Preschool for All will, later in life, cost the state an average of seven times more in special education, welfare, incarceration, and other costs than the cost of the investment in preschool education would have been. Those who supported the medical assistance and other cuts to poor people's programs claimed they were doing so in the name of not saddling future generations with unsustainable debt, but the fact is that their short-sighted and expedient decisions will impose far greater costs on future generations.

The Responsible Budget Coalition and others proposed revenue-raising measures that would have ameliorated the need for cuts. These ideas included:

• Closing five corporate tax loopholes ($700 million).
• Broadening the sales tax to include selected consumer services ($550 million).
• Reinstituting sweeps of surplus revenue from non-GRF funds ($300 million).
• Using excess revenue from the Road Fund for the Secretary of State and State Police ($250 million).

In addition to these immediate sources of additional revenue, the most important long-term revenue initiative is the Fair Tax Coalition's proposed constitutional amendment to eliminate the flat tax provision of the Illinois Constitution and permit a graduated income tax. Until this occurs, Illinois' revenue shortfalls will be chronic and increasingly severe.

This post was originally published on the Shriver Brief.