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Illinois to see drop in federal aid

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SPRINGFIELD — Still dealing with the fallout created by years of budgets when spending outpaced revenue, Illinois now faces uncertainty about a major revenue source — the federal government.

By Andrew Thomason

SPRINGFIELD — Still dealing with the fallout created by years of budgets when spending outpaced revenue, Illinois now faces uncertainty about a major revenue source — the federal government.

The federal Congressional Joint Select Committee on Deficit Reduction, commonly referred to as the supercommittee, failed to reach an agreement last month on how to slice up to $1.5 trillion in spending from the national budget over the next decade. Without this agreement, automatic cuts of $1.2 trillion will be triggered.

"For states, the name of the game is uncertainty," said Jeff Hurley, a policy analyst for the National Conference of State Legislatures, a bipartisan organization that provides research and technical assistance to all of the states' Legislatures.

Illinois received $23 billion in federal aid in fiscal 2010, according to the latest figures from the U.S. Census Bureau. That translates into a little more than $1,800 per capita in Illinois, which is slightly less than the national average of about $2,000 per capita.

State-federal programs as a whole would see a reduction of 8.8 percent in fiscal 2013 under the current scenario, Hurley said.

The most costly and widely used federal programs, like Medicaid and Social Security,are exempt from any automatic cuts, leaving programs such as education, homeless assistance, food shelters, home weatherization and substance abuse, on the cutting board.

"These areas are going to get hit that much harder due to the exemptions," Hurley said.

Another program eligible for cuts from Congress is Head Start, which gives education, health and nutritional assistance to pre-kindergarten students from low-income families. The various Head Start organizations in Illinois received $402 million in federal aid to serve 42,000 participants in fiscal 2010.

Project Now is a community action agency that serves Rock Island, Henry and Mercer counties. It has a budget of about $15 million in federal funding and administers weatherizing and homeless services along with a Head Start program that serves 360 children annually.

"There's not a lot of wiggle room with most of these programs as far as cuts you can endure," Maureen Hart, executive director of Project Now, said.

Hart said that if the federal funding is cut, the number of children served would be reduced.

"You've got to have the people to provide the service; that's your main cost. So when you're dealing with significant cuts and you don't have the staffing to carry out the program, it results in fewer people being served," she said.

There's very little Illinois' state government can do in regards to the cuts. Only $15 billion of the $23 billion in federal aid the state received in fiscal 2010 went through the General Assembly. Congress earmarked the overwhelming majority of that $15 billion for specific programs like Medicaid.

"We don't have a lot of leverage or latitude of how we move things around. They have to be spent in a way the federal government has said," state Rep. David Harris, R-Arlington Heights, said.

The remaining $10 billion in federal aid was distributed through grants to local governments or organizations like Project Now.

Harris, who helps prepare state budgets for the Illinois House Republicans, said with the state facing an increased pension system payment of $1 billion next year and swelling health-care costs, those facing cuts shouldn't look Illinois to make up the difference in any reduction to federal spending.

"There's going to be such pressures on (the budget) this coming year that we're not going to have any excess. If the feds cut, I don't see us having any excess to make up any reductions," Harris said.

The federal cuts don't start until 2013, six months after the state's next budget has been enacted.

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