As with any first-rounder after their second season, if the option was declined the player becomes an unrestricted free agent the following summer. In Butler's case, since he was such a low pick his 3rd year salary will only be $1,112,880, which even for the tax-conscious Bulls is not significantly over the minimum to think twice about it. Plus he may be pretty good.
The Bulls will have a similar choice next summer when his raise will put him over $2m. These used to be similarly perfunctory, but by the season it seems like more and more of these options are not picked up.