December 02, 2009
For anyone who missed a last ride on the tilt-a-whirl when Kiddieland closed last month, a quick review of our state’s fiscal situation can provide a similar type of stomach-churning, gravity-defying—though rather less pleasurable—experience.
As Illinoisans endure the second year of a historic recession, Illinois government has no budget, no plan, a half-year’s worth of unpaid bills and sky-high piles of pension debt. Budget negotiations in Springfield this year set new lows for fiscal responsibility in a state ranked by the Pew Center on the States as one of the ten most financially troubled in the nation. The General Assembly simply passed lump sum appropriations unrelated to projected revenue and left it up to Governor Quinn to decide where to cut. To avoid making difficult choices, lawmakers also added new pension borrowing to the tune of $3.5 billion and pushed roughly $4 billion in bills to next year.
The Governor signed the “spending plan,” but has yet to make substantial cuts, so state agencies are continuing to spend in the apparent hope of some future tax increase or bailout. The bond rating houses cried “foul” at these shenanigans and downgraded the state’s bond rating, thereby increasing the cost of current and future borrowing, just as Illinois appears poised to borrow even more.
For many years, our Springfield leaders have been unable to match the state’s spending with available revenue, preferring to skip pension contributions and force Medicaid providers and social service agencies to wait longer for payment. Some state vendors are waiting six months or even up to a year for payment. The service providers that now face bankruptcy and the local governments that are forced to cut services to make up for late state funding are direct consequences of years of inaction by the General Assembly and various Governors.
All the choices our state leaders now face are grim. Illinois’ tax receipts are continuing to drop. According to the Civic Federation’s latest calculations, Illinois’ current budget deficit is $4.8 billion. If nothing changes, we foresee that number more than doubling for a two-year deficit entering FY2011 of $12.6 billion.
Unless the Governor and General Assembly act now to stop Illinois’ fiscal thrill ride, the budget imbalance will only get larger and more difficult and painful to fix. Next year’s state budget roller coaster may mean huge spending cuts AND enormous tax increases AND massive layoffs—just in time for an election year. The Civic Federation wouldn’t care to bet on what is likely to happen when the General Assembly reconvenes next year, but you can be sure it’s going to be a bumpy ride.
Note: This op-ed by Civic Federation President Laurence Msall was featured in the November 30, 2009 issue of Crain's Chicago Business (registration required).