August 5, 2010

by Kristina Rasmussen

Illinois’s budget is required to be balanced by constitutional mandate, right? Then why has the budget been balanced only 15 of the 41 years between 1970 and 2010? The last time Illinois had a balanced budget was in 2001. We certainly didn’t have one this year.

Charles Wheeler has a great article in the July/August 2010 publication of Illinois Issues, in which he summarizes how lawmakers skirt truly balancing the state budget:

…Consider the language of Article VIII, Finance, section (b): “The General Assembly by law shall make appropriations for all expenditures of public funds by the State. Appropriations for a fiscal year shall not exceed funds estimated by the General Assembly to be available during that year.”

The language clearly says that lawmakers can’t authorize spending more money in a budget year than they expect the state will have available to cover that spending during that year. Strange as it may seem, the out-of-whack plan lawmakers sent to Quinn in May passes. At $26.3 billion, the general funds appropriations fall short of the $26.7 billion expected to be available in FY 2011. In addition, lawmakers approved a trio of one-time ploys — offering amnesty to delinquent taxpayers, selling long-term rights to the tobacco settlement proceeds and raiding other treasury accounts — to boost the bottom line by $2.5 billion, according to the center.

So, one could argue, the plan meets the narrow constitutional test: General funds appropriations do not exceed the funds estimated to be available this budget year.

Then what’s the catch? The legislature simply ignored certain inescapable expenses, appropriating no money, for example, to cover some $6 billion in unpaid bills from FY 2010, which ended June 30, or to make a required pension payment of almost $4 billion.

While the FY 2011 budget may be perhaps the most egregious example of how lawmakers can circumvent the supposed constitutional requirement for a balanced budget, it’s far from unique.

Apparently, this problem was foreseen during debate over the 1970 Constitution by one delegate Louis Bottino, who asked if the provision could be skirted by not appropriating funds for commitments like the pension contribution. Replied presenter Dawn Clark Netsch:

“You are right that there is no way to enforce a standard of absolute intellectual integrity on all of the people who are involved in the state financial management if they choose not to respond that way…”

“We have freely admitted among ourselves that you can balance a budget by simply raising your estimates of what the various taxes will bring in…I am not sure the Constitution can really deal with that. In fact, I am sure it cannot really deal with that kind of problem.”

The current balanced budget provision clearly isn’t working (indeed, its flaws were admitted up front). We should proceed to enacting a constitutional spending limit, like the version outlined in our Pension Funding & Fairness Act, to get a better handle on liabilities.