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 Gov. J.B. Pritzker is touting Illinois’ fiscal
progress as he runs for reelection and claiming his accomplishments have “pulled
the rug out from the naysayers and pessimists who have built a career on
badmouthing our state.”
But there’s a difference between pessimism and acknowledging the state’s severe
fiscal problems. Experts are again warning Illinois is facing big trouble.
The Volcker Alliance, a non-partisan government watchdog, has issued a new
report showing Illinois is at risk of facing a “fiscal cliff” once one-time
federal relief funds dry up. That means the state will have to either cut
programs or raise revenues to maintain spending that has been enabled by the
federal funds, once those funds run out. The report shows Illinois has allocated
nearly 60% of its $8.1 billion in State and Local Fiscal Recovery Funds. Only
California and Pennsylvania have allocated more of their recovery funds.
The report mentions those states are also at risk of facing a fiscal cliff once
the money runs out because of how they are potentially using the money. The
report notes responsible use of the funds would go to one-time expenses such as
water, sewer and broadband infrastructure or repaying federal loans for
unemployment trust funds. The report states California, Pennsylvania and
Illinois are at risk for spending at least some of the funds on programs that
may become recurring costs and burdens on future budgets.
Illinois appears likely to spend at least some of the funds on programs that
will continue to be needed after the federal funds run out and potentially
strain future budgets, the report states. That Illinois spending includes:
$50 million for trauma, mental health and behavioral health
$147.3 million for community support organizations, including $87 million for
centers that assist immigrants and refugees
$55.8 million for Criminal Justice Information Authority violence prevention and
interruption programs
An unspecified amount to the Illinois State Board of Education for enrichment
activities and parent mentoring.
Under Pritzker, no attempts have been made to address the structural problems
the state has in its budget, forecasting or pension crisis. The only thing
keeping the state’s finances afloat is the temporary lifeline of federal relief,
set to run out in the coming years. When that ends, Illinois will sink back into
the fiscal abyss it had been trapped in because of decades of inaction by
leaders in Springfield.
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The single biggest drag on the state’s financial health is pension costs. Under
Pritzker, the state spent $4.7 billion more on pension contributions than it was
projected to spend, continuing a trend that started long before he took office.
While it would be fiscally responsible to push for reforms to such a system,
Pritzker instead ignores solutions such as a constitutional amendment to address
pensions and claims there is “no silver bullet” to fix the system.
Under Pritzker’s fiscal stewardship, even good news comes with a catch.
Improvements to the state’s credit rating have largely been the result of that
one-time federal COVID-19 relief money, not any actions taken by Pritzker’s
administration. Illinois still has the worst rating of any state. Without doing
anything to address poor budgeting and spending habits, it is unlikely the
state’s credit climb will continue.
Then there is the state’s rainy-day fund. While state leaders are celebrating
the record funding level for the emergency fund, the reality is much less
exciting. Since having only enough funds to run the state for less than a minute
in 2016, the nearly $750 million in the budget stabilization fund now is enough
to run the state for just six days. While that represents an improvement, most
states’ rainy-day funds and total reserves have been in far better condition. In
fiscal year 2020, 48 states had total reserve funds, which included year-end
balances along with rainy-day funds, that could allow them to operate for seven
days or more, with Illinois and Pennsylvania being the only two that could not.
Under Pritzker, Illinoisans have seen taxes increase on the average family by
$2,165, even after accounting for the $556 from his temporary “tax relief”
reelection gimmick. Worse, neighboring states have used better-than-expected
revenues and the one-time federal aid to strengthen the competitiveness of their
tax codes and set themselves up for future economic prosperity. Pritzker has
opted for temporary relief that will end after Election Day, then hit taxpayers
with increases.
Pritzker is trying to claim victory over the state’s financial problems simply
for being less bad than before. But when most of the improvement has come from
one-time federal funding and virtually none from structural changes or reforms,
it is simply a campaign claim without merit.
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