Doug Wilson

Illinois budget battle explained through ugly math of a dysfunctional state

Posted: Mar. 6, 2016 12:01 am
When spending bills were passed in the Illinois House last week, Rep. Randy Frese, R-Paloma, called them "empty promises."

The spending plan would have required the state to pay nearly $3.7 billion to higher education, student grants and human resources. Another bill would have paid for those expenditures by forgiving $454 million the state raided from special funds last year.

Yes, that's how the math was supposed to work -- spend $3.7 billion financed by forgiving a $454 million loan from the previous year.

Frese did some math of his own to demonstrate what the spending bills would mean for Illinois residents.

"I can't call up folks and tell them they each need to come up with $200 to cover this spending. For a family of four that's $800," Frese said.

"We've got that $7.2 billion in backlog debt, too. I think I figured up that would be $550 a person."

The budget crisis can be demonstrated pretty well by other numbers.

About $32 billion worth of spending is still taking place this year. State law requires part of those payments to proceed, court orders account for the rest. However, there are billions more in expenses that continue even though the state has no authority to release the money.

The Monetary Award Program grants that help low-income students afford college is one of those programs where the money is frozen.

State-supported universities and community colleges also are not getting operating funds.

Even without those expenditures, the state has that $7.2 billion backlog on bills to everyone from Medicaid providers to vendors who operate under contracts with the state.

How could the state be falling further behind on its finances if it's "saving" billions that it cannot pay?

Without a budget, the state's spending template operates under the assumptions of the last budget that was passed when the Illinois personal income tax rate was 5 percent, before it rolled back to 3.75 percent at the beginning of 2015. Lower income tax rates are bringing in billions less for state use.

Politicians who call this a financial crisis are not exaggerating.

Last week the Commission on Government Forecasting and Accountability said this in its Illinois Economic Forecast:

"Illinois' budget problems are its biggest headache ... Illinois has the lowest credit rating and worst-funded pension system among all 50 states and its unpaid bill backlog is mounting. The state's structural budget problems are so severe that it will likely take both spending restraint and revenue enhancements to overcome them."

Much of the COGFA report concerned business trends. Moody's Analytics and other COGFA officials noted that "Illinois' economy is the weakest in the underperforming Midwest." Another part of the report said: "Illinois has added fewer jobs than any neighboring state this year despite being the most populous in the region. Further setting the state apart from its neighbors, the mix of new jobs has been heavily tilted toward low-paying positions."

Back on July 1, when the state began a new fiscal year without a budget, the story line was overly simplified by the opposing forces.

Democrats said Republican Gov. Bruce Rauner was refusing to work on a spending plan because he wanted it tied to reforming the workers compensation program, halting the cost spiral of pensions and a half-dozen other things. Rauner said the Democrats were refusing to bargain on anything and were sending him an unbalanced budget that violated state law.

A few people believe that once the March 15 primary is past, there will be a new willingness to work together and pass a workable budget.

Others don't think anyone will give ground on this budget. Under that scenario, it's next year's budget that may get all the attention. If that happens, the ugly math is only going to get uglier.