Despite Deficit State Spending Still Growing

January 26, 2010

The Civic Federation’s Institute for Illinois’ Fiscal Sustainability recently released its examination of the State of Illinois’ enacted FY2010 budget. The analysis shows that the State already faces a two-year budget deficit going into FY2011 totaling at least $12.8 billion but it also revealed that the Governor plans to spend an addition $885 million before the fiscal year ends on June 30. If other revenues are not identified, or cuts made in other areas, this additional spending could increase the existing deficit.

After signing off on the budget enacted by the General Assembly for FY2010, the Governor stated that several vital programs remained underfunded. Originally, the Governor estimated that funding shortfalls totaled $1.4 billion after tapping $180.0 million from the contingency reserve funds. The estimated combined shortfall for Medicaid and state employee and retiree group insurance totaled $600.0 million, and the funding approved for elementary and secondary education fell short by $145.0 million.

Since these needs were identified, the Governor signed legislation amending the spending bill to provide an additional $205.0 million for need-based college scholarships, which covered the majority of his original estimate of the college scholarship shortfall. Since new revenues were not identified to pay for this spending approval, it increased the FY2010 General Funds Deficit by the same amount. Additionally, $300.0 million in Medicaid appropriations were shifted from General Funds to Federal Funds mid-year, freeing up money that the Governor intends to use for group insurance. After adjusting for mid-year appropriations changes, the unmet needs now stand at $885 million. The following chart shows programs for which the Governor is expected to seek additional spending authority from the General Assembly before the end of the fiscal year.

To view the full IIFS report on the State of Illinois Enacted FY2010 Budget click here.