Gov. Pat Quinn's budget planners are counting on Illinois' economy
to grow about 3 percent next year, generating roughly $1 billion in
new tax revenues. Illinois' operating budget, which was $33.2
billion this year, is expected to be just slightly more than $34
billion next year.
But the state's pension costs alone are expected to grow by $1
billion. A report released last week from the state's retirement
systems said Illinois' pension payment will jump from $4.9 billion
in the current budget to $5.9 billion for fiscal 2013.
Illinois' Medicaid costs also are expected to grow next year.
Lawmakers earmarked nearly $7 billion for Medicaid in the 2012 state
budget. Legislators will be asked for $490 million more in 2013.
Quinn's budget director, David Vaught, said in May that $1 billion
in overall growth is "not outlandish." Vaught said that $1 billion
in growth could either come from growing the state's economy or just
growing the tax base.
Vaught added in May that as long as Illinois' unemployment rate
continued to decline, the state could grow the economy and pay its
"This is why jobs are so important," Vaught said at the time.
But unemployment skyrocketed after May. The most recent unemployment
report, for October, shows the jobless rate at 10 percent in
Illinois. The national rate is 9 percent.
Greg Rivara, spokesman for the Department of Employment Security,
said that while the unemployment rate did tick up, Illinois has
added thousands of jobs during 2011.
"Illinois has added 64,800 jobs so far this year and 108,100 jobs
since January 2010, when job growth returned to Illinois after 23
consecutive months of declines," Rivara said Monday.
But the benefit of those new jobs is not yet being seen. The October
report from the Illinois Department of Revenue shows tax growth for
the state is still tied to January's income tax increase. In other
words, the state is collecting more taxes, but only because the tax
rate went up.
The October report also shows that state revenues are slightly
behind expectations at this point.
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Kelly Kraft, Gov. Quinn's budget spokeswoman, said the
administration will sit down for a status check next month.
"The governor's Council of Economic Advisors will be meeting in
December to assess whether FY12 revenue projections continue to stay
on target," Kraft said. "We will also asses the economic outlook for
Kraft is quick to say that FY13 revenues will be used to pay the $1
billion in increased pension contributions.
But Collin Hitt, a senior policy adviser with the Illinois Policy
Institute, said Kraft and Quinn’s budget team need to find a lot
more than just $1 billion before next June. The policy institute is
a nonprofit free market think tank.
"Lawmakers are going to have to add $4 billion to the 2013 budget
that was not included in the current spending plan," Hitt said.
He is quick to point to the $1 billion in added pension costs and
the $490 million for Medicaid programs. But he also points out the
backlog of unpaid Medicaid bills.
"Illinois is going to need $3 billion next year to keep the backlog
of unpaid bills from growing," said Hitt.
Illinois Comptroller Judy Baar Topinka's office reports a current
backlog of $3.5 billion. The Civic Foundation, a Chicago-based
nonpartisan policy watchdog organization, said that backlog will
grow to an $8 billion deficit by the end of the current budget in
Statehouse News; By BENJAMIN YOUNT]