CHICAGO – Illinois’ current state budget represents a “lost opportunity” because legislators didn’t prepare for even more grim financial realities in the years ahead, such as ballooning pension payments and a sharp drop in income tax revenue, a nonpartisan watchdog group said Wednesday.
The Chicago-based Civic Federation’s analysis of the $35.4 billion budget that took effect July 1 also notes that while lawmakers used an unanticipated, one-time spike in tax receipts to pay down some overdue bills last year, the backlog is still projected to be about $5.8 billion at the end of the current fiscal year.
“This year was a lost opportunity as legislators failed to prepare for the extreme financial challenges everyone knows are on the immediate horizon,” said Laurence Msall, Civic Federation president.
Democrats, who control both chambers of the Illinois Legislature and the governor’s office, lauded the budget they passed in the final days of the spring session because it avoided cuts to education or human services for the first time in years. But Republicans criticized the plan because it increased spending at a time when they said Illinois should be cutting back.
The Civic Federation report notes the current budget may represent a “high-water mark” because the state could see a big drop in revenues come Jan. 1, 2015. That’s when a temporary income tax increase is slated to be rolled back, reducing Illinois’ annual revenue by an estimated $7 billion – about one quarter of the state’s general fund revenues this year.
Lawmakers also have yet to come up with a solution for the state’s nearly $100 billion pension crisis. The annual contribution to the fund, plus payments on past pension bonds, is about $7.65 billion this year. That number will increase in years to come if the Legislature doesn’t take action.
A bipartisan committee has been working on plan to address the pension mess, but has not yet proposed any legislation.