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 Illinois has the worst fiscal health in the nation, according
to a new study from the Mercatus Center at George Mason University. The report
is another mark against the Prairie State, which consistently ranks among the
worst in the nation on a range of indicators by numerous research organizations.
The study ranks states across five measures of fiscal solvency. Illinois ranked
50th overall and performed poorly across the board:
On the ability to cover short-term bills with money on hand, Illinois ranked
49th
On the ability to cover annual expenses with annual revenues, Illinois ranked
46th
On the ability to cover future commitments and weather fiscal shocks, Illinois
ranked 49th
 On the major long-term liabilities of pensions and government worker health
insurance, Illinois ranked 46th
On governments’ ability to raise taxes without harming the economy, Illinois
ranked 14th The fifth measure is out of date, because it used fiscal year 2016 – before
state lawmakers passed the 2017 state income tax hike. Illinois’ ranking today
would likely be much lower.
Mercatus reports Illinois consistently performs poorly because of ongoing
structural deficits, a growing reliance on debt to fund spending, and massive
debts for government worker health insurance and pensions – among other
problems. The report also highlights Illinois’ worst-in-the-nation pension
crisis, noting that unfunded pension liabilities have grown to 67 percent of
state personal income in fiscal year 2016, up from 22 percent in fiscal year
2006.
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Illinois’ last-in-the-nation fiscal solvency
ranking comes shortly after the state set a record for its
pension-debt-to-state-revenue ratio, at 601 percent, according to
Moody’s Investors Service. Illinois was also found to be one of the
least prepared states for the next recession by both S&P Global
Ratings and Moody’s Analytics.
Unfortunately, bad budget news is nothing new for the state.
Illinois has not had a truly balanced budget since at least 2001.
The state’s nearly two decades of unbalanced budgets stem from a bad
budgeting process and overpromised pension benefits that are growing
far faster than taxpayers’ ability to pay for them.
Fixing Illinois’ fiscal mess will require deep structural reforms to
tackle the cost drivers of the state’s overspending, including
meaningful pension reform to future unearned benefits and a spending
cap that ties lawmakers’ ability to spend to taxpayers’ ability to
pay.
The Mercatus report should spur Illinois to action: With some
economists predicting a recession could be on the horizon, Illinois
must start righting its fiscal ship to better weather the next
storm.
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