Truly balanced budgets have proved elusive in Illinois (WITH VIDEO)
Gov. J.B. Pritzker speaks during a news conference Jan. 23 in Springfield. Pritzker will deliver his first budget address to the General Assembly on Wednesday. (Capitol News Illinois photo by Jerry Nowicki)
By PETER HANCOCK
Capitol News Illinois
SPRINGFIELD – Gov. J.B. Pritzker will deliver his first budget address Wednesday, laying out his spending plan for the upcoming fiscal year, in a highly-anticipated speech before a joint session of the General Assembly.
Pritzker campaigned in 2018 on a promise to balance the state’s budget while at the same time increasing funding for education, addressing the state’s underfunded pension systems, paying down the state’s $8 billion backlog of unpaid bills and making new investments in the state’s roads, bridges and other public infrastructure.
But what, exactly, constitutes a “balanced” budget can be open to interpretation.
The Illinois Constitution requires that, “Proposed expenditures shall not exceed funds estimated to be available for the fiscal year as shown in the budget.”
In reality, though, the state’s budget has been anything but balanced for the past several years, as the backlog of unpaid bills demonstrates.
Ralph Martire, executive director of the nonpartisan Center for Tax and Budget Accountability, said that has happened, in part, because prior administrations have used unrealistic expectations of incoming revenue.
“There are a number of budgetary maneuvers available to the public sector that, as long as they’re rational, can make you appear in balance, even if you’re not,” Martire said.
Among those maneuvers that have been used in the past, he said, are counting as “revenues” borrowed money that is used to pay ongoing expenses, or building in unrealistic expectations of revenues such as the proposed sale of the state-owned James R. Thompson Center in Chicago, which former Republican Gov. Bruce Rauner built into a number of budget proposals, even though the building has never been sold.
Martire also said that a balanced budget does not necessarily mean paying off all of the state’s unpaid bills from prior years. Nor does it necessarily mean the state won’t leave some bills unpaid in the upcoming budget year.
“If you’re taking an honest, comprehensive look, you would want to include the unpaid bills because that’s a revenue demand,” he said.
But if the state were actually to do that, he said, it would lead to unacceptable consequences – either a massive tax increase, massive cuts in spending, or some combination of both.
“What you need to do is to look at the drivers of the structural imbalance and resolve that over a period of years,” he said. “One year would be bad public policy.”
Adam Schuster, director of budget and tax research for the conservative-leaning Illinois Policy Institute, said he believes in the same definition of a balanced budget – one in which projected spending does not exceed projected revenue – but he said he hopes Pritzker will avoid tactics that have been used in the past, such as sweeping unspent money into the state general fund from other state funds, or using short-term borrowing to pay ongoing operating expenses.
“What I would hope to hear from the governor is some real structural reforms,” Schuster said.
Among those, he said, would be redesigning the state pension system to reduce future costs, as well as reducing the cost of state employee salaries and health insurance.
So far, Pritzker has released few details about his plan, other than his plan for paying down the state’s unfunded pension liabilities, which calls for selling off state assets, issuing bonds and stretching out the period for paying down the liabilities by an additional seven years.
Over the long term, Pritzker has said, he wants to boost state revenues by pushing for a constitutional amendment that would allow the state to adopt a graduated, or “progressive” income tax system in which wealthier people would pay higher tax rates on income earned above certain thresholds.
Speaking Tuesday during a news conference as he was signing a bill raising the state’s minimum wage, Pritzker said he would deliver a budget plan that fulfills his campaign pledges, although he offered few additional details.
“Tomorrow (Wednesday) I will deliver a budget that begins to stabilize our state finances while starting to rebuild our human services, our universities and P-12 education, and our public safety, along with the funding needed to make this minimum wage a reality,” Pritzker said.
His speech to the General Assembly is scheduled for noon Wednesday.