Springfield Sweeps Budget Deficit Under the Rug

by: Jeff Smith

Wed Oct 15, 2008 at 09:45:26 AM CDT


Being on multiple legislative e-mail lists, I received alerts yesterday advising me that the enormous hole in the state budget had been patched, again, through the practice of "fund sweeps." This phrase, one of those like "credit default swaps" that makes ordinary taxpayers' eyes glaze over, means that money sitting in various "special funds," instead of being used for the purposes for which it was intended and collected, will instead be diverted into the General Funds pool. Think of it as if you'd set up a special savings account for your childrens' education, or had a cookie jar in the kitchen where you put pin money to save for an upcoming wedding, but instead, when things are tight, you dip into it to pay your electric bill.

Interestingly, not one of the e-mails I got detailed which funds were being raided. So I checked. The bill itself, which got completely amended about a dozen times, is online. As a public service I am listing the funds, the amounts diverted, and a link to the bill at the end of this post (below the fold).

The list is mind-boggling. First, the total: $224 million in raided funds. That's a lot of lettuce.

Second, the sources. Probably you had no idea that we had 300 different funds to plunder, with opaque monikers such as the "Auction Regulation Administration Fund" from which we're plucking half a million bucks, the "Professions Indirect Cost Fund" from which we're diverting $2 million, or the "Subtitle D Management Fund" that will involuntarily donate a quarter-million dollars to this year's spending. Probably you also have no idea what all those funds do. I wonder if our legislators do.
Jeff Smith :: Springfield Sweeps Budget Deficit Under the Rug
Some of the funds tapped have names suggesting that their mission might actually be important. We are going to sweep, this year, a combined $24.75 million from the Drycleaner Environmental Response Trust Fund, Energy Efficiency Trust Fund, Environmental Protection Permit and Inspection Fund, Fish and Wildlife Endowment Fund, Hazardous Waste Fund, Illinois Forestry Development Fund, Park and Conservation Fund, Renewable Energy Resources Trust Fund, Wildlife and Fish Fund, Illinois Clean Water Fund, Environmental Protection Trust Fund, and EPA Special State Projects Trust Fund. Sounds to me like $24 million intended to make our state greener is now going to green some other pockets.

Similarly, our representatives have decided that we don't need to spend $3 million, after all, on the Nuclear Safety Emergency Preparedness Fund. So which is it, folks:  were the dangers of Byron and Braidwood going Chernobyl on us overstated, in order to scare the Land of Lincoln into greater spending? Or are all Illinoisans being put at risk of glowing in the dark as a result of necessary, allocated monies going unspent?

Other fund names are intuitive but make one wonder. Who set up the Used Tire Management Fund, and why is it so flush that it can spare an extra million bucks this year? Does your company or nonprofit have an extra million lying around?  Who or what is the State Pheasant Fund and why do they have an extra $250,000? Or does this mean pheasants are going to have to cut corners and eat macaroni and cheese this winter like the rest of us?

Scan the list and you'll come up with your own questions. Are the missions of the Fish and Wildlife Endowment Fund so different from the Wildlife and Fish Fund that we need both? Does one even know the other exists? One thing is for sure:  when each and every one of these funds was established, politicians issued press releases and had public announcements, and probably received awards, for their valiant efforts in "fighting for" whatever societal good was supposed to be served by each of these funds. Probably they posed for grip-and-grins with Mothers Against Piles of Used Tires and received plaques from the Friends of the Pheasant, all duly printed in the local paper and constituent newsletters.

Another thing is for sure: the establishment of each and every of these funds results in computer fields having to be re-programmed, accounts having to be set up, personnel having to input, review, and output data, meetings being held, budgets being prepared, and reports being generated.  For all I know that's all that goes on, and no actual work related to the mission is ever accomplished -- not one used tire or pheasant saved. But it can't possibly be efficient.

Ask yourself: would your life be easier or more complicated if instead of one checking account you had one for your electric bill, another for your gas bill, three related to your car, seven different accounts for various subcategories for groceries, one for your dry-cleaning and another for your spouse's, and a hundred others for various expenses you may or may not incur in the coming year? Would you have more or less time in the day?

The list is so bizarre, and the inefficiency so obvious and overwhelming, that if it wasn't real, I'd swear someone made it up as satire. But no, this isn't The Onion, it's Springfield in action. Pronounced "inaction." These sweeps have been an annual rite since at least 2003 and are now generally accepted practice in our capitol. This year's sweep means that we'll have diverted, in six fiscal years, over a billion dollars total. And I'll bet you've never heard your representative utter a peep against it. It's just business as usual -- with our money. Just part of the reason why I've often said, only half in jest, that service in our state legislature ought to be disqualification for any other post, because too many bad habits are learned.

Whether the funds are unnecessary and overfunded in the first place, or are necessary but being annually hamstrung by fiscal irresponsibility, is hard for the average citizen to figure out. Do we even have a deficit, or are we better-funded than we thought? Apparently neither the governor (who hasn't signed the final authorization) nor the comptroller are even sure the funds have the surpluses designated. If they don't know, how can we? And it looks like it's set up that way. Among the many other things we need in government are some representatives willing to put an end to this annual shell game.

You can find more on how these funds work (or don't work) on p. 25 of the useful report, Citizens Guide to the Illinois State Budget and Tax System, from those budget watchdogs at The Center for Tax and Budget Accountability, who label this an "unsound fiscal practice." A copy of the final version of the "fund sweep" legislation is available online here. And the full list of the swept funds, with amounts, hereby follows for your edification and enjoyment. Ignore the first numbers on the left, those are just page numbers from the printed bill.

FUND NAME AND NUMBER                                  AMOUNT
8          Alternate Fuels Fund (0422)........................2,000,000
9          Alternative Compliance Market Account Fund (0738)....200,000
10          Appraisal Administration Fund (0386).................250,000
11          Asbestos Abatement Fund (0224).....................2,000,000
12          Assisted Living and Shared
13           Housing Regulatory Fund (0702)......................100,000
14          Whistleblower Reward and Protection Fund (0600)....8,250,000
15          Auction Recovery Fund (0643).........................200,000
16          Auction Regulation Administration Fund (0641)........500,000
17          Audit Expense Fund (0342)..........................3,250,000
18          Build Illinois Capital Revolving Loan Fund (0973)..2,000,000
19          Capital Development Board Revolving Fund (0215)......250,000
20          Care Provider Fund for Persons
21            with a Developmental Disability Fund (0344)......1,000,000
22          Child Labor and Day and Temporary
23            Labor Services Enforcement Fund (0357).............500,000
24          Child Support Administrative Fund (0757)...........1,000,000
25          Community Water Supply Laboratory Fund (0288)........200,000
26          Conservation 2000 Fund (0608)......................3,000,000
1          Corporate Franchise Tax Refund Fund (0380)...........200,000
2          Death Certificate Surcharge Fund (0635)..............500,000
3          Department of Corrections Reimbursement
4            and Education Fund (0523)........................1,500,000
5          Dram Shop Fund (0821)................................500,000
6          Drivers Education Fund (0031)......................1,000,000
7          Drug Rebate Fund (0728)............................3,000,000
8          Drycleaner Environmental Response Trust Fund (0548).2,000,000
9          Energy Efficiency Trust Fund (0571)................1,000,000
10          Environmental Protection Permit and
11            Inspection Fund (0944)...........................1,500,000
12          Fair and Exposition Fund (0245)......................500,000
13          Federal Asset Forfeiture Fund (0520).................500,000
14          Feed Control Fund (0369).............................250,000
15          Fertilizer Control Fund (0290).......................250,000
16          Financial Institution Fund (0021)..................2,000,000
17          Fish and Wildlife Endowment Fund (0260)..............500,000
18          Food and Drug Safety Fund (0014).....................250,000
19          Fund for Illinois' Future Fund (0611).............10,000,000
20          General Professions Dedicated Fund (0022)..........5,000,000
21          Group Workers' Compensation Pool
22            Insolvency Fund (0739).............................250,000
23          Hazardous Waste Fund (0828)........................1,000,000
24          Health and Human Services Medicaid Trust Fund (0365).5,000,000
25          Health Facility Plan Review Fund (0524)..............500,000
26          Health Insurance Reserve Fund (0907)...............5,000,000
1          Home Inspector Administration Fund (0746)............500,000
2          Horse Racing Fund (0632).............................250,000
3          Illinois Affordable Housing Trust Fund (0286)......2,000,000
4          Illinois Charity Bureau Fund (0549)..................200,000
5          Illinois Clean Water Fund (0731)...................5,000,000
6          Illinois Community College Board Contracts
7            and Grants Fund (0339).............................250,000
8          Illinois Forestry Development Fund (0905)............500,000
9          Illinois Habitat Fund (0391).......................1,000,000
10          Illinois Health Facilities Planning Fund (0238)....1,000,000
11          Illinois Historic Sites Fund (0538)..................250,000
12          Illinois State Dental Disciplinary Fund (0823).....1,000,000
13          Illinois State Medical Disciplinary Fund (0093)....5,000,000
14          Illinois State Pharmacy Disciplinary Fund (0057).....250,000
15          Illinois State Podiatric Disciplinary Fund (0954)....200,000
16          Illinois Tax Increment Fund (0281)...................250,000
17          Innovations in Long-term Care Quality
18            Demonstration Grants Fund (0371).................1,000,000
19          Insurance Financial Regulation Fund (0997).........5,000,000
20          Insurance Producer Administration Fund (0922)......3,000,000
21          International Tourism Fund (0621)..................5,000,000
22          Large Business Attraction Fund (0975)................500,000
23          Law Enforcement Camera Grant Fund (0356).............800,000
24          Lead Poisoning, Screening, Prevention,
25            and Abatement Fund (0360)..........................250,000
26          Local Tourism Fund (0969)..........................5,000,000
1          Long Term Care Monitor/Receiver Fund (0285)........1,000,000
2          Low-Level Radioactive Waste Facility
3            Development and Operation Fund (0942)..............250,000
4          Medicaid Buy-In Program Revolving Fund (0740)........500,000
5          Medical Special Purpose Trust Fund (0808)............500,000
6          Mental Health Fund (0050)..........................5,000,000
7          Metabolic Screening and Treatment Fund (0920)........500,000
8          Nuclear Safety Emergency Preparedness Fund (0796)..3,000,000
9          Nursing Dedicated and Professional Fund (0258).....2,000,000
10          Off-Highway Vehicle Trails Fund (0574)...............250,000
11          Optometric Licensing and Disciplinary
12            Board Fund (0259)..................................200,000
13          Park and Conservation Fund (0962)..................2,000,000
14          Pesticide Control Fund (0576)........................500,000
15          Pet Population Control Fund (0764)...................250,000
16          Plumbing Licensure and Program Fund (0372)...........750,000
17          Presidential Library and Museum Operating Fund (0776).500,000
18          Professions Indirect Cost Fund (0218)..............2,000,000
19          Provider Inquiry Trust Fund (0341)...................250,000
20          Public Health Laboratory Services
21            Revolving Fund (0340)..............................500,000
22          Public Infrastructure Construction
23            Loan Revolving Fund (0993).......................1,000,000
24          Public Pension Regulation Fund (0546)................250,000
25          Public Utility Fund (0059).........................5,000,000
26          Rail Freight Loan Repayment Fund (0936)............1,000,000
1          Real Estate License Administration Fund (0850).....5,000,000
2          Registered Certified Public Accountants'
3            Administration and Disciplinary Fund (0151)........500,000
4          Renewable Energy Resources Trust Fund (0564).......5,000,000
5          School Technology Revolving Loan Fund (0569).........500,000
6          Solid Waste Management Fund (0078).................2,000,000
7          State Asset Forfeiture Fund (0514).................1,000,000
8          State Boating Act Fund (0039)........................500,000
9          State Migratory Waterfowl Stamp Fund (0953)..........500,000
10          State Offender DNA Identification System Fund (0537).250,000
11          State Parks Fund (0040)..............................250,000
12          State Pensions Fund (0054).........................5,000,000
13          State Pheasant Fund (0353)...........................250,000
14          State Police DUI Fund (0222).........................250,000
15          State Police Services Fund (0906)..................6,000,000
16          State Police Whistleblower Reward
17            and Protection Fund (0705).......................2,000,000
18          State Police Wireless Service Emergency Fund (0637).1,000,000
19          State Rail Freight Loan Repayment Fund (0265)......2,000,000
20          Subtitle D Management Fund (0089)....................250,000
21          Tax Compliance and Administration Fund (0384)........250,000
22          Tax Recovery Fund (0310).............................250,000
23          Teacher Certificate Fee Revolving Fund (0016)........250,000
24          Tobacco Settlement Recovery Fund (0733)............3,000,000
25          Tourism Promotion Fund (0763)......................5,000,000
26          Traffic and Criminal Conviction
1            Surcharge Fund (0879)............................1,000,000
2          Transportation Regulatory Fund (0018)................500,000
3          Trauma Center Fund (0397)..........................2,000,000
4          Underground Resources Conservation
5            Enforcement Trust Fund (0261)......................200,000
6          Used Tire Management Fund (0294)...................1,000,000
7          Weights and Measures Fund (0163)...................1,000,000
8          Wildlife and Fish Fund (0041)......................5,000,000
9          Wireless Carrier Reimbursement Fund (0613).........5,000,000
10          Petroleum Violation Fund (0900)....................1,000,000
11          Communications Revolving Fund (0312)...............1,000,000
12          Facilities Management Revolving Fund (0314)........1,000,000
13          Professional Services Fund (0317)..................2,000,000
14          State Garage Revolving Fund (0303).................1,000,000
15          Statistical Services Revolving Fund (0304).........2,000,000
16          Workers' Compensation Revolving Fund (0332)........1,000,000
17          Working Capital Revolving Fund (0301)................500,000
18          Abandoned Mined Lands Reclamation
19            Set Aside Fund (0257)............................5,000,000
20          DHS Private Resources Fund (0690)....................500,000
21          DHS Recoveries Trust Fund (0921)...................1,000,000
22          DNR Special Projects Fund (0884).....................500,000
23          Early Intervention Services Revolving Fund (0502)..1,000,000
24          EPA Special State Projects Trust Fund (0074).......1,000,000
25          Environmental Protection Trust Fund (0845)...........250,000
26          Land Reclamation Fund (0858).........................250,000
1          Local Government Health Insurance
2            Reserve Fund (0193)..............................1,000,000
3          Narcotics Profit Forfeiture Fund (0951)..............250,000
4          Public Aid Recoveries Trust Fund (0421)............3,000,000
5          Public Health Special State Projects Fund (0896)...3,000,000
6          CDB Contributory Trust Fund (0617).................2,000,000
7          Department of Labor Special State Trust Fund (0251)..250,000
8          IPTIP Administrative Trust Fund (0195)...............250,000
9          Illinois Agricultural Loan Guarantee Fund (0994)...2,000,000
10          Illinois Farmer and Agri-Business
11            Loan Guarantee Fund (0205).......................1,000,000
12          Illinois Habitat Endowment Trust Fund (0390).......2,000,000
13          Illinois Tourism Tax Fund (0452).....................250,000
14          Injured Workers' Benefit Fund (0179).................500,000
15          Natural Heritage Endowment Trust Fund (0069).........250,000
16          Pollution Control Board State Trust Fund (0207)......250,000
17          Real Estate Recovery Fund (0629).....................250,000
18          TOTAL                                            224,250,000
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Springfield Sweeps Budget Deficit Under the Rug | 5 comments
The IL legislature could use some of that money from the Mental Health Fund... (0.00 / 0)
Jeff is spot-on in calling this a shell game; the amount of [annual! traditional!] swapping that's going on here is incredibly confusing and, yes, very inefficient. Whether this ritualized "sweeping" (and the number of unheard-of Funds) is purposeful misdirection of constituents or merely more of the Same Old Same Old, exposing and explaining it is a very important action in the face of governmental inaction.

Also, the Illinois Tourism Tax Fund? Separate from the Tourism Promotion Fund? Separate from the Local Tourism Fund? For that kind of money (and money spent on staffing for these Funds), I want to see some aliens wearing Hawaiian shirts and cameras around their necks, pronto.

Bravo, Jeff, for posting this. When newspapers and our own politicians won't keep us informed, it's a good thing we have fellow citizens who will.

;-))))) (0.00 / 0)
I'm thinking maybe the Audit Expense Fund should go to Jeff.
Source of Funds' Funds? (0.00 / 0)
Even though this is supposed to be a day of relaxation after we finally got the grant turned in, I don't really have time to follow up on the answer to my question. And the Citizens Guide doesn't in fact say word one about how the funds work. It only lists the amounts of the "fund sweeps" over the years. Which means it's not the funds themselves that are being described as an "unsound fiscal practice."

I ask because to my mind it makes perfect sense to have separate funds fof money from revenue streams that by law much be set aside for specific purposes. For example, I notice an "Off-Highway Vehicle Trails Fund." It's my guess that fund gets a certain proportion of the off-highway vehicle license fee, in the same way that a certain proportion of the gasoline tax is set aside to pay for highway maintenance and construction. Is this a fiscally unsound practice, as you claim? I'm not convinced.

To follow up your home-grwon analogy, until I turned 70-1/2 I had two separate retirement funds: one a 403(b) representing combined employer and employee contributions from when I worked for non-profit educational institutions in the 1970s, and an IRA that represented my personal contributions. These two separate accounts were required becauase the different sources of funds were accompanied by different legal requirements about how the money could be spent. These state funds look much the same way to me.

Of course, this has little to do with fund sweeps. If the funds actually have a meaningful surplus -- and it's whacky that the Comptroller can't tell us whether they do -- then either the fees need to be cut or more money needs to be spent on the purpose for which it was collected. Diverting the money to other purposes is indeed fiscally irresponsible. But that doesn't seem to be your main point.

Bill Thomasson

Permission to reprint explicitly granted

following the money (0.00 / 0)
The law governing these funds and transfers between funds, including a history of previous transfers, can be found online.

Some state agencies maintain that at least some of these funds transfers are illegal.

The Comptroller's office has an index on its website, with dropdown menus, of these funds. Some descriptions are helpful, others are vague. But they do include the authorizing statues.

For instance, the description of the Drycleaner Environmental Response Trust Fund I referred to in my initial post is as follows:

TO RECEIVE AND RECORD MONIES OBTAINED FROM LICENSE FEES, INTEREST AND INVESTMENT INCOME AND DRYCLEANING SOLVENT TAXES. MONIES IN THE FUND ARE TO BE USED SOLELY FOR THE PURPOSES OF THE DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND COUNCIL, THE RETENTION OF A FIRM OF CERTIFIED PUBLIC ACCOUNTANTS TO ANNUALLY AUDIT THE COUNCIL'S ACTIVITIES AND FOR OTHER PURPOSES IN ACCORDANCE WITH THE DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND ACT.

Note that the purpose, by law, is limited.

The Comptroller includes a list stating that funds from this funds may be spent by the following state agencies: the Drycleaner Council; the Illinois EPA;  Dept. of Revenue;  SAMS Administrative Agency; Statutory Transfers; and the Treasurer.

To see more detail you have to go elsewhere to look at the enabling statute, 415 ILCS 135/, the Drycleaner Environmental Response Trust Fund Act.

If you bore through the 9,000 words of that law, you can see that the Fund is funded by (a) annual licensing fees collected from dry cleaners, which vary by amount of gallons of solvent used annually, (b) a tax on dry cleaning solvents, and insurance premiums. The funds are supposed to be used for environmental remediation and claims by those affected (dry cleaners historically have left behind, when they move, all manner of toxic substances).

The Comptroller's site also says that the Daily Balance in the drycleaner fund is $4,418,846.36, but notes that

Specific transfers in and transfers out and their effect on the cash balances may have not been recorded by the State Treasurer.

Dan Hynes seems to be saying that, um, Alexi is not providing the info they need.

The Fund itself maintains its own fairly well-put-together website (not referenced by Hynes's office, but which I managed to find), which says that the fund balance as of Aug. 2008 was $5,761,195.23. This fund seems to pay a consulting firm about $800,000 a year, along with considerable legal fees.

I imagine the situation is much the same for most of these funds (which, according to one article, may number more than 600 total, not just the 300 from which sweeps are being made this time around).

Now, back to your comments.

Professionally, I too have to maintain some separate funds, and have looked at plenty of balance sheets with similar categorizations, and personally I've maintained separate accounts or funds for special purposes. I of course understand and agree that separate funds for special purposes can make sense.

Playing devil's advocate, I could also argue that the sweeps this year are less than 1% of the total budget, and that it is fairer for the users of dry cleaners to pay for dry-cleaning solvent environmental remediation than for that cost to be borne by the general public.

However, if surpluses are being generated, than in fact some specific users are being overtaxed, whether they are tire purchasers or pheasant hunters. In this case, it was reported in 2004 that the Drycleaner Fund was underfunded, and that the hikes in fees and licenses were going to be a burden on small dry cleaning businesses. So why is there now such a surplus? Meanwhile, the money spent on consultants has increased by over 50%, from a little over $500,000 in FY2000 to $800,000 in FY2008.

What I do know is this:  Fund transfers make it harder for anyone, especially an average citizen, to figure out what our state is doing with our money. Having separate funds makes more work. Some of the funds have been criticized as little more than slush funds.

Do the consultants have 20 FTEs devoted to the Drycleaning Council's mission, or 4 pulling down a fat $200K each? Does it make more sense to outsource this work rather than have it done by state employees? I haven't yet found a detailed budget for the drycleaning response fund (who I'm not picking on, I just picked that one as the first in my list of environment-related funds).

My larger points were (a) efficiency and (b) transparency. A third point would be the "hidden tax" aspect of these funds, since the costs, ultimately, of the monies collected get passed along to business and individual taxpayers. I.e., one effect of all these funds is that taxpayers get nickel-and-dimed from 300 different directions, while our elected officials maintain the illusion of no increase in the income tax.

[ Parent ]
Yes (0.00 / 0)
It appears that we are now mostly in agreement, except at the fringes.

1. The funds basically make sense. You're maybe a bit more inclined to argue that having so many creates unnecessary administrative costs.

2. We need to keep an eye on them. I'm not convinced that $800,000 in consultants' fees would be easier to monitor if it were part of the general state budget rather than of a specialized funds budget.

3. The sweeps are a bad idea from several perspectives. I couldn't locate in that huge bill the section that presumably authorizes the sweeps, so I can't tell whether they're actually legal under state law. The article in the Journal-Register, on a quick glance, seems to be saying not that the sweeps are illegal under federal law but that they will cost the state federal matching funds. Which is clearly an undesirable result.

Bill Thomasson

Permission to reprint explicitly granted

[ Parent ]
Springfield Sweeps Budget Deficit Under the Rug | 5 comments
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