Budget trouble ahead for Illinois when federal aid runs dry, experts warn

[May 24, 2022] By Kevin Bessler | The Center Square

(The Center Square) – Illinois state government could run into budget trouble in a few years because they’ve been using a one-time surge of federal tax funds to pay recurring, longer-term expenses, a report says.

The Volcker Alliance, a nonprofit group that promotes responsible government spending, said Illinois is vulnerable for budget stresses when American Rescue Plan funds run out.

States need to be careful which projects they fund with the money to make sure that they don’t create long-term budget problems, said Beverly Bunch, a professor at the University of Illinois Springfield’s School of Public Management and Policy and author of the report.

“We are not saying what projects are more worthy than other projects,” Bunch said. “We are just saying from the fiscal sustainability point of view, you need to be transparent, say what projects are being funded, and if they are long-term projects, how are you going to continue it.”

The report said states need to be mindful of what happens after the federal funds go dry to avoid the types of budget headaches they experienced in the Great Recession.

Gov. J.B. Pritzker speaks at a news conference on Friday, Dec. 10, 2021.
Courtesy of Facebook

“To help narrow the gaps, states shed almost 150,000 jobs and took actions that included Illinois borrowing $7.2 billion to cover government worker pension contributions,” Bunch noted in the report.

Congress laid out specific ways that states could use ARPA money, and it required states to share their plans with the U.S. Treasury Department. But as Bill Glasgall, director of public finance at the Volcker Alliance notes, Illinois lawmakers have a reputation of not being transparent with state budgets.

“Illinois is very flush with funds now, but Illinois also has a long history of using one-time actions, budget gimmicks, budget maneuvers to balance the budget,” Glasgall said.

The report said California and Pennsylvania are the two other states that may see fiscal difficulties in the years ahead as federal aid runs dry.

Kevin Bessler reports on statewide issues in Illinois for the Center Square. He has over 30 years of experience in radio news reporting throughout the Midwest.