August 12, 2009
More details are finally available on the FY2010 operating budget, and it would be difficult to describe it as balanced—even on paper.
Depending on how you look at it, there is technically either a $157 million deficit or an $872 million surplus in the budget approved by the General Assembly and signed by Governor Pat Quinn on July 15, 2009. However, those numbers don’t take into account the $3.5 billion that the State plans to borrow to make its required pension payments. Nor do they reflect the bills expected to be left unpaid at the end of FY2010, an amount estimated at $3.9 billion.
The total appropriated operating budget of about $54 billion is composed of $26.1 billion in General Funds and $28 billion in funds from federal and other state sources. General Funds, the State’s operating checkbook, represent the funds over which state officials exert most control. The budget surplus or deficit is calculated by subtracting General Funds appropriated by the legislature (and certain other required expenditures) from General Funds revenues.
As shown in the table below, the Governor’s Office of Management and Budget estimates total General Funds revenues at $29.3 billion, including $19.6 billion in state source revenues such as income and sales taxes and $7.1 billion in federal source revenues. These numbers are within the range of estimates released in June by the legislature’s Commission on Government Forecasting and Accountability.
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The General Assembly appropriated $26.1 billion in General Funds, of which $500 million is estimated to remain unspent. In addition, total spending includes certain required transfers out to other funds or to local governments totaling $2.8 billion. That spending would amount to $28.4 billion, or $872 million below the $29.3 billion revenue estimate above. However, the State also has to pay off about $1 billion in short-term debt issued in May 2009. If that amount is included in total spending, the $872 million surplus becomes a $157 million deficit.
As noted above, however, these calculations don’t include the $3.5 billion in pension borrowing or the approximately $3.9 billion in bills estimated to remain unpaid at the end of FY2010. The Illinois Constitution requires the General Assembly to balance the budget by appropriating amounts that don’t exceed funds estimated to be available during the year, but the Constitution doesn’t rule out borrowing or not paying bills to make revenues match expenditures.
Moreover, Governor Quinn has said that the $26.1 billion in General Funds appropriated by state lawmakers is $1.4 billion below the level at which state government is actually operating. The Governor plans to push for an income tax increase in the fall to make up this shortfall. His initial budget proposed in March included an income tax increase that would have brought in more than $3 billion, but that plan was rejected by the General Assembly. Published reports suggest that lawmakers might have more of an appetite for a tax increase after they find out whether they will face stiff opposition in the February 2010 primary election. The deadline for filing nominating papers for that election is November 2.