Analysis predicts $7.8 billion deficit for Illinois despite budget deal

[July 15, 2016]  By Dave McKinney

CHICAGO (Reuters) - Illinois’ newly passed stopgap budget for the first half of the fiscal 2017 budget year means expenses will outstrip revenues by a record-setting $7.8 billion, a legislative analysis showed on Thursday.

The report by the bipartisan Commission on Government Forecasting and Accountability came as Illinois Comptroller Leslie Munger warned that the state could face a $10 billion backlog of unpaid bills by December, with average payment delays growing from the current two months to at least six months by year’s end.

“If we look at the numbers we are facing, the realities continue to be sobering,” Munger, a Republican, told reporters.

The analysis underscored how the six-month budget, approved by the Democratic-led legislature and enacted by Republican Governor Bruce Rauner in late June, was hardly a fiscal panacea despite being the first breakthrough in a yearlong budget stalemate.

The legislative panel estimated total state spending for the 2017 fiscal year that began on July 1 at $39.5 billion, compared with expected revenues of $31.8 billion. The spending total includes nearly $3 billion for public employee healthcare, higher education and other state programs not covered by the budget that will fund state government through December.

The resulting $7.8 billion deficit is “proof that the recently passed unbalanced stopgap measure is making our insolvent state's fiscal problems much worse,” said state Representative David McSweeney, a Republican representing part of Chicago’s northwestern suburbs who requested the commission study.

“The General Assembly should do its job and go back into session to immediately adopt a balanced budget without a tax increase,” he said.

Munger said she expected no disruption in state bond payments but cautioned she may have to skip a monthly state pension payment as she did late last year before making up for the shortfall in April. State law dictates $6.9 billion in payments to Illinois’ five pension systems by next June.

“I may need to do that again if we get into an extremely low cash period in the fall,” she said.

Dan Long, executive director of the legislative budget-forecasting panel, said if the deficit projection holds, it would eclipse Illinois' previous record deficit of $6.09 billion in fiscal 2010 before passage of a temporary state income tax increase.

(Reporting by Dave McKinney; Editing by Jonathan Oatis)

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