 Illinois state government has left the people of the Prairie State quite the
stocking stuffer this holiday season: a nearly $11 billion bill backlog that is
expected to hit $14 billion by summer 2017. However, with money from a June
stopgap funding agreement set to run out by the new year, nonprofit service
providers and students receiving state grants may view it more as a lump of
coal.
Funding for service providers hasn’t been a priority for the General Assembly
for quite some time. Service providers wait, on average, nearly a year to be
paid. Illinois politicians have been delaying payment to service providers since
2002, valuing increases in government-worker salaries and pensions more than
compensating those who aid the most vulnerable Illinoisans. Spending on
state-employee pension benefits increased 586 percent from 2000 to 2015, yet
funding for human services only increased by10 percent during that time.
Funding for student grants and education has also been at the bottom of
Springfield’s priority list. K-12 education has seen a steady increase in
funding since 2006, rising at an annual average rate of 6.2 percent. However,
most of this is being swallowed up by ballooning pension costs, leaving funding
for classrooms and other educational operations virtually flat. At the higher
education level, over half of the state’s funding for state colleges and
universities is being spent on employee pension and retirement costs.
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 The state’s total pension debt has swelled to $130 billion, up 17
percent since 2015. If the debt is divided by household, it amounts
to $27,000 per family. Pension spending now accounts for 25 percent
of the state budget, consuming funds that could be spent in other
critical areas. Most other states do not have this problem. The
median rate for state pension spending nationwide is only 4.1
percent.
Illinois’ tax revenues have increased 70% more than inflation
over last 3 decades
A lack of revenue is not driving Illinois’ pension problem.
Tax revenues have consistently grown over the years. Since 1983,
Illinois’ tax revenues have grown 70 percent more than inflation
plus population. Illinois has collected $265 billion more over the
last 33 years than it would have if revenues had just been growing
at the rate of inflation. One of the key problems behind Illinois’
budget crisis and the bill backlog is the state’s out-of-control
spending on pensions.
Politicians will be tempted to address Illinois’ crises by
increasing revenue through more property or income tax hikes on
ordinary Illinoisans. But this will not fix the systemic fiscal
problems reflected in the bill backlog. Rather, the General Assembly
needs to tackle the bill backlog by passing a sustainable, balanced
budget and reforming the massive cost drivers that drain the
resources of Illinois taxpayers and divert funding from core
government services.
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