TO:                 The Honorable Pat Quinn, Governor

                        The Honorable Jesse White, Secretary of State

                        The Honorable Dan Rutherford, State Treasurer

                        The Honorable Judy Baar Topinka, State Comptroller

                        Members of the General Assembly


FROM:           William G. Holland, Auditor General


RE:                 Report #1-14 Pursuant to the Taxpayer Accountability and Budget Stabilization Act (P.A. 96-1496)


DATE:           June 26, 2013



A.  Introduction


This report is made pursuant to the Taxpayer Accountability and Budget Stabilization Act (the “Act”) (P.A. 96-1496).  The Act increased the income tax rates imposed on individuals, trusts, estates, and corporations.  The Act also established State spending limitations for Fiscal Years 2012 through 2015, and provided for a reduction in tax rates should those limitations be exceeded.  Among its provisions, the Act requires the Auditor General to examine each Public Act authorizing State spending from State general funds and prepare a report indicating:


i.        The amount of State spending set forth in the applicable Public Act;

ii.      The total amount of State spending authorized by law for the applicable fiscal year as of the date of the report; and

iii.    Whether State spending exceeds the State spending limitation.


In the event that the Auditor General determines that State spending has exceeded the State spending limitation in any given fiscal year, the Act provides certain mechanisms and timeframes by which State spending may be reduced to a level that does not exceed the State spending limitation, including by passage of a bill or bills or designation of reserves.  Under these circumstances, the Auditor General is required to issue a

supplemental report summarizing the actions taken by the General Assembly and Governor, indicating whether the level of State spending has changed since the initial report, and indicating whether State spending still exceeds the State spending limitation.  If State spending still exceeds the State spending limitation, then the income tax rates will be reduced as provided by Section 201.5 of the Illinois Income Tax Act.


A complete text of the Taxpayer Accountability and Budget Stabilization Act is available on the Illinois General Assembly website at www.ilga.gov.



B.  Definitions


Under the Act, the State spending limitation applies to specific types of appropriations or transfers from the State’s general funds.  The Act provides the following definitions of terms pertinent to the reporting requirement (35 ILCS 5/201.5 (h)):


State spending” means:


i.        The total amount authorized for spending by appropriation or statutory transfer from the State general funds in the applicable fiscal year; and

ii.      Any amounts the Governor places in reserves that are subsequently released from reserves following authorization by a Public Act.


Appropriation” means authority to spend money from a State general fund for a specific amount, purpose, and time period, including any supplemental appropriation or continuing appropriation, but does not include reappropriations from a previous fiscal year.


Statutory Transfer” means authority to transfer funds from one State general fund to any other fund in the State treasury, but does not include transfers made from one State general fund to another State general fund.


State general funds” means the General Revenue Fund (Fund 0001), the Common School Fund (Fund 0412), the General Revenue Common School Special Account Fund (Fund 0005), the Education Assistance Fund (Fund 0007), and the Budget Stabilization Fund (Fund 0686).      



C.  Additional Provisions


Public Acts, Continuing Appropriations and Statutory Transfers


The definition of “appropriations” for purposes of the State Spending Limitation includes “continuing appropriations.”  Continuing appropriations are those expenditures that are authorized by law for one or more fiscal periods without the necessity of further legislative action.  Further, the definition of “state spending” includes “statutory transfers.”  Like continuing appropriations, statutory transfers can occur in one fiscal period based on authorization granted in prior fiscal periods.  Therefore, continuing appropriations and statutory transfers impacting the State spending limitation may occur in Fiscal Year 2014 based on laws passed in previous years, and in some instances, several years ago. 


Under the Secretary of State Act [15 ILCS 305/5 (9)], as amended by the Taxpayer Accountability and Budget Stabilization Act, the Secretary of State is required to notify the Auditor General of any new Public Act filed with that Office making an appropriation or a transfer of funds from the State treasury.  Additional spending may occur based on existing statutory authority, and would be documented at the time of authorization or transfer in forms C-45 (Chart of Accounts Maintenance and Inquiry) and C-55 (Fund Transfer Notification) on file with the State Comptroller's Office. 


The Auditor General’s Office will review new Public Acts as they are filed with our Office by the Secretary of State.  We will also review forms C-45 and C-55 provided by the State Comptroller’s Office.  The purpose of our reviews will be to identify all appropriations, supplemental appropriations, continuing appropriations and statutory transfers constituting “State spending” from “State general funds” (as those terms are defined in P.A. 96-1496).  We will issue a report or reports under the Taxpayer Accountability and Budget Stabilization Act showing authorizations for spending or actual spending and their impact on the State spending limitation.




Under the Act, any amount placed in reserves is not State spending and shall not be considered when calculating the total amount of State spending [35 ILCS 5/201.5 (d)].  Notice of the Governor’s designation of amounts to be set aside as reserves shall be given to the Auditor General, among other parties.  However, any Public Act authorizing the use of amounts placed in reserve by the Governor is considered State spending, unless such Public Act authorizes the use of amounts placed in reserves in response to a fiscal emergency. 


Fiscal Emergencies


Under the Act, State spending authorized by law to address a fiscal emergency declared by the Governor and concurred in by the State Comptroller and State Treasurer shall not be considered “State spending” for purposes of the State spending limitation [35 ILCS 5/201.5 (g)]. 



D.  State Spending Limitation


The State Spending Limitation for Fiscal Year 2014 is $38,305,000,000 [35 ILCS 5/201.5 (b)].


E.  Report Deadline


The Auditor General’s report is due no later than 30 days after receiving notification of a new Public Act from the Secretary of State or 60 days after the effective date of the Public Act, whichever is earlier.  As long as the deadline is met, the Auditor General may issue one report covering multiple Public Acts.

All reports are available on the Auditor General’s website at www.auditor.illinois.gov.  



F.  Log of State Spending Authorizations


Report #1: 

On June 7, 2013, pursuant to 15 ILCS 305/5 (9), the Auditor General’s Office received the following Public Act from the Secretary of State: 



The complete text of all Public Acts and statutory citations is available on the General Assembly's website at www.ilga.gov.



G.  State Spending Analysis


As of this report:


•     Cumulative State Spending for Fiscal Year 2014 is $7,396,391,220.00; and

•     The balance of the Fiscal Year 2014 State Spending cap remaining is $30,908,608,780.00.


H.  Conclusion


It is our conclusion that the amount of State spending authorized to date for Fiscal Year 2014 does not exceed the State spending limitation.  This report does not constitute a post audit or examination as that term is defined in generally accepted government auditing standards. 




William G. Holland, Auditor General


Date: June 26, 2013





Exhibit 1















Does it
Impact the FY14 Cap?




Cumulative State Spending To Date


Balance of  State
Spending Cap Remaining