October 28, 2010
An issue in this year’s election campaign for Illinois Governor has concerned the State’s budgetary trends since FY2009. Different conclusions can be reached depending on which numbers are included in the analysis. Counting pension contributions, debt service and legislatively required transfers yields different results.
In the table below, the top line shows enacted General Funds appropriations. General Funds support the regular operating and administrative expenses of most state agencies and are the funds over which the State has the most control. Enacted General Funds appropriations declined by $2.0 billion, or 7.1%, from $27.8 billion in FY2009 to $25.8 billion in the enacted FY2011 budget.
Unspent appropriations are subtracted from this amount to show net appropriations before pension contributions. Net appropriations before pension contributions declined by $2.3 billion, or 8.6%, from $27.3 billion in FY2009 to $24.9 billion in FY2011.
In FY2011, unspent appropriations reflect the $891 million in reserves imposed by the Governor under the Emergency Budget Act of FY2011. The Emergency Budget Act (Public Act 96-958) authorized the Governor to require reserves that cannot be spent unless released by the Governor or upon passage of new revenue sources. The Act authorized reserves of up to one-third of outstanding bills as of June 30, 2010, or roughly $1.6 billion.
The State has typically used General Funds to make pension contributions required under the funding schedule in Illinois’ 1995 pension reform law. State pension contributions increased by $1.7 billion, or 67.2%, from $2.5 billion in FY2009 to $4.2 billion in FY2011. No pension contributions are shown in FY2010, when the State issued $3.5 billion in Pension Obligation Bonds to make the required payments.
The pension reform law (Public Act 96-889) enacted in April 2010 reduces benefits for new employees. The Governor’s Office has estimated that the new law could lower required contributions in FY2011 by roughly $400 million. However, the table above does not include any such reductions because the retirement systems have as yet not officially amended their necessary funding requirements based on the new law.
General Funds are also used to make other payments required by statute, including tax distributions to local governments and debt-service payments. These transfers out of General Funds increased by $1.2 billion, or 38.3%, from $3.2 billion in FY2009 to $4.4 billion in FY2011.
The last line in the table shows the trend in total spending and transfers out. Total spending and transfers out increased by $543 million, or 1.6%, from $33.0 billion in FY2009 to $33.5 billion in FY2011.
Illinois voters will elect a Governor on November 2, 2010. The numbers above suggest the difficulties involved in evaluating competing assertions about budgetary trends.