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 The Illinois General Assembly on May 24 approved Illinois’ 20th
consecutive unbalanced spending plan. Gov. J.B Pritzker is expected to sign the
legislation.
Lawmakers made no serious attempt to balance the budget, despite a
constitutional requirement to do so. The $42.8 billion in approved spending
exceeds available resources by nearly $6 billion.
Meanwhile, Illinoisans across the private sector are struggling
to responsibly manage their own finances amid economic fallout from COVID-19 and
related government shutdown orders. As of May 23, over 1.15 million residents
had filed for unemployment benefits. Many businesses remain shuttered, and those
that are operating under restrictions face drastically reduced income.
Five facts demonstrate why Illinois’ latest irresponsible spending plan is an
insult to taxpayers who are facing unprecedented challenges of their own,
largely due to government-ordered business shutdowns intended to fight COVID-19.
1. The plan failed to take all available steps to prevent an $1,800 raise for
lawmakers while private sector Illinoisans face record unemployment and lost
income
Amid record job losses and lost business income, lawmakers failed to take all
actions available to them to stop automatic salary increases that will increase
their pay by an estimated $1,800 per year.
Some Democratic lawmakers seem to be under the impression they did indeed
prevent the raises, according to social media posts. Because the actual text of
the budget legislation appropriates the same amount of money as the prior budget
year, and because $0 is appropriated for legislator cost of living adjustments,
or COLAs, some confusion is understandable.
Comptroller Susana Mendoza has likewise claimed she will not be issuing
additional money in lawmaker checks. However, the decision may not ultimately be
hers to make.
A law passed in 2014 made lawmaker pay a “continuing appropriation,” which means
the money has to be paid regardless of what is actually passed in the budget.
The act specifies that the money shall be paid even if “aggregate appropriations
made available are insufficient to meet the levels required” and “for any
reason.”
From fiscal year 2014 through 2019, lawmakers included specific language
prohibiting the COLA notwithstanding any other contrary law. That same language
was used to prohibit COLAs in several years before the 2014 law created the
continuing appropriation.
Even that language may be insufficient to prevent automatic lawmaker pay
increases. In 2019, two former Democratic state senators – Michael Noland and
James Clayborne – prevailed in a lawsuit seeking to recoup backpay for years in
which the COLA had been prohibited. Cook County Judge Franklin Valderrama ruled
the Illinois Constitution’s ban on changing a member’s salary “during the term
for which he has been elected” invalidated the attempts to stop the raises.
That case is still ongoing and no judge has yet ordered back pay to be issued.
Lawmakers could and should have included provisions similar to what they passed
from 2014 to 2019, to make a clear statement of legislative intent. Setting the
COLA to $0 could prove to be a weak and ineffective attempt because the
continuing appropriation specifically speaks to a situation in which not enough
money is authorized by the budget.
As things stand, lawmakers have left open the door to future lawsuits that would
force the comptroller to issue the higher pay. This could occur after the
current budget year when some current lawmakers retire and no longer have to
face reprisal from voters, as happened with Noland and Clayborne.
 To regain control and provide a fair outcome to struggling residents, lawmakers
will likely need to amend the law providing for a continuing appropriation and
adjust salaries before the next General Assembly officially begins in January
2021.
2. It spends $2.4 billion more than last year and $773 million more than
Pritzker proposed in February
Economic fallout from COVID-19 blew a large hole in expected revenue collections
for the coming fiscal year. In April, Pritzker’s own Office of Management and
Budget predicted revenues would drop by more than $4.6 billion for fiscal year
2021. A stress test conducted by Moody’s Analytics projected an even steeper
drop in total revenue of between $5.2 billion and $6.9 billion depending on the
severity of the economic contraction.
Despite these lower revenue expectations, Illinois will spend $2.4 billion or
nearly 6% more than last year’s $40.385 billion budget. Moreover, the enacted
fiscal year 2021 budget spends $773 million more than the $42.023 billion
Pritzker proposed prior to the pandemic in February.
Other states governed by both Democrats and Republicans are taking their duty to
balance their budgets much more seriously. For example:
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Michigan Gov. Gretchen Whitmer furloughed 31,000 state
employees
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California Gov. Gavin Newsom is pushing for a 10% cut to
worker salaries and education
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Pennsylvania Gov. Tom Wolf is laying off 9,000 state
employees who could not work remotely
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And Indiana Gov. Eric Holcomb directed state agencies to
cut spending by 15% each as the “first of what is likely to be a number of
steps we’ll take to rein in state spending.”
By contrast, Pritzker told reporters on April 23 that he is not
even discussing canceling $261 million in automatic raises he agreed to grant
state workers in 2019. Additionally, Pritzker did not push for 6.5% cuts in
agency budgets despite having asked agencies to come up with plans for those
reductions last year.
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3. It authorizes $5 billion in debt to be repaid with a federal
bailout that doesn’t exist
To partially fill the deficit in the enacted
budget, lawmakers passed Senate Bill 2009 on a party line vote. The
bill grants Pritzker authority to borrow $5 billion from the Federal
Reserve’s new state and local lending program. The Fed’s program is
designed to provide a “liquidity backstop” for government borrowing
amid concerns that the private market for state and local debt would
face interruptions resulting from COVID-19 fallout.
Pritzker and many Democratic lawmakers have
publicly stated they hope to be able to repay the borrowing with a
bailout from the federal government, which Congress has not passed.
Pritzker has repeatedly called for potential federal aid to be
“unencumbered,” meaning he wants a blank-check bailout with no
strings attached.
The Illinois Policy Institute has proposed a plan under which any
financial assistance provided to state governments by Congress would
be made contingent on certain taxpayer protections. Those conditions
would ensure federal aid supports essential government services
rather than being squandered through waste and mismanagement. States
would have to demonstrate they have sound pensions, truly balanced
budgets and sufficient rules for emergency savings or else enact
significant reforms to meet those conditions.
Illinois’ latest irresponsible budget clearly demonstrates why
Congress should reject blank-check bailouts and refuse to provide
any financial assistance until Springfield politicians get serious
about correcting their decades of mismanagement.
4. More than 30% of Illinoisans’ tax dollars will prop up the
state’s bloated pension system
Illinois’ broken pension system will consume nearly $9.7 billion, or
about 31% of tax dollars state residents send to Springfield this
year. When federal sources are included, such as Medicaid
reimbursements, pensions will consume 26.5% of all general fund
revenues. Springfield’s inaction to reform the unsustainable
pensions system has seen pensions consume an ever-larger share of
the budget, crowding out services that provide value to state
residents. From 1990 through 1997, pension contributions accounted
for less than 4% of Illinois’ general funds budget.
For the past 20 years, Springfield’s overspending has primarily gone
to pay for pension benefits and state worker health insurance, while
inflation-adjusted spending on a range of core government services
has actually been reduced in real terms by nearly one-third. Yet
despite the 501% increase in pension spending since fiscal year
2000, the five state pension systems have at least $138.6 billion in
pension debt according to the state’s own estimates.
Illinois pension systems as they exist today are fundamentally
unsustainable because benefits have been set at levels taxpayers
cannot afford, and employee contributions set by state law are
insufficient to cover a substantial enough portion of these
benefits.
Career workers in the five state retirement systems, those with at
least 30 years of service credit, contribute around 5% of what they
receive in lifetime benefits on average. Among individuals relying
solely on public pensions for retirement, total lifetime payouts
range from an average as high as $3.6 million for career judges to
$2.3 million for career teachers and education administrators.
Career state workers receive lower lifetime benefits, a still
generous $1.7 million on average, because more than 96% of them also
qualify for Social Security.
As long as Springfield continues to prop up this unsustainable
system, taxpayers will continue to face tax increases and cuts to
services that benefit residents. Amid a global pandemic straining
governments’ ability to pay for programs related to public health
and safety, these excessive benefits are completely unjustifiable.
Pritzker has refused to support an amendment to the state
constitution that would allow for modest reforms to make pensions
affordable and sustainable, such as replacing guaranteed 3%
compounding annual benefit increases with a true cost of living
adjustment tied to inflation.
5. The only significant spending lawmakers cut was for K-12 and
higher education
Despite increasing overall spending by $2.4 billion compared to
fiscal year 2020, the budget essentially keeps education funding
flat for both K-12 schools and state universities. After accounting
for inflation, this equates to an education cut in real terms.
An analysis from Republican state senate staff obtained by the
Illinois Policy Institute explains that the budget provides “the
bare minimum” of $7.2 billion under the state’s funding formula,
through which money is provided to local schools. All school
districts will receive the same amount from the state as last year.
Total state K-12 spending, including grants outside of the funding
formula and the budget for the Illinois State Board of Education,
will increase by just $12.79 million or 0.14%.
Similarly, total general revenue funding for state universities will
be held constant with the prior budget at $1.16 billion.
Government budgets reveal the priorities of elected officials. By
cutting education while increasing their own pay and preserving
unaffordable pension benefits, Springfield is sending a clear and
disturbing signal to taxpayers about what they value most.
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