Bill would curb Illinois state budget gimmicks allowing deficits since 2001

Bill would curb Illinois state budget gimmicks allowing deficits since 2001

Illinois has not truly balanced its budget since 2001 despite a constitutional requirement to do so. A new bill would help change that.

It’s pretty simple: You shouldn’t spend more than you have. But Illinois has done so in each fiscal year since 2001.

State Rep. Jaime M. Andrade Jr., D-Chicago, is trying to stop that with House Bill 4039, which bolsters the requirement that Illinois balance its budget.

The proposal specifically focuses on what lawmakers can count as revenue when creating the budget. It defines revenue sources as “taxes, fees, and federal transfers” and would prohibit debt and additional funds already in state government from being counted. Additionally, it reaffirms that expenditures cannot exceed revenue and that appropriated funds must be used in the fiscal year for which they were set aside.

The Illinois Constitution already requires a balanced budget, but the requirement is toothless. The constitution reads: “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 word “estimated” is the problem. It applies to budget planning, and the money lawmakers “estimate” at the beginning of the year that they will receive and spend can be way off by the end of the year – as the past 18 years of budget deficits shows. The process allows for budget gimmicks, including overestimating revenue, underestimating expenditures, counting debt and considering funds moved from other sources within state government as revenue.

The resulting financial sleight of hand allows politicians to claim the budget is balanced nearly every year when it truth it hasn’t been since 2001.

Branches of state government agreeing on a revenue estimate is an important best practice in budget making, but the state has not done so since at least 2014. Ideally, estimates from the legislative branch and executive branch should be averaged to minimize potential biases and therefore increase accuracy. Expert research has consistently found evidence of motivated math in government revenue projections. Even non-political staff often feel pressured to make numbers match the political objectives of their elected bosses

By better defining what counts as revenue, lawmakers can more easily create a budget that is truly balanced. This is beneficial to taxpayers because they will be less likely to be asked to pay more to make up for poor estimations.

Illinois has struggled to balance the budget during the past two decades. Deficits have continuously piled higher, too.

Most recently, state lawmakers gave their bipartisan blessing to Gov. J.B. Pritzker’s 1,581-page fiscal year 2020 budget just 12 hours after it was introduced. It is as much as $1.3 billion out of balance, which will give Illinois a 19th consecutive year of deficits. It relied on more taxes and fees as well as revenue from the legalization of recreational marijuana, but did little to cut spending to make it line up with revenue projections.

Illinois is one of just 11 states that allow a deficit to be carried from one year to the next, according to the National Association of State Budget Officers. HB 4039 would end that in Illinois.

The state can balance its budget now, but lawmakers must be willing to do so. Illinois Policy Institute research has found the state can balance the budget and cut taxes in the next five years if the right steps are taken. First, lawmakers can amend the state constitution so the growth in future, not-yet-earned pension benefits can be reduced to a level that is sustainable and affordable. Second, they can align responsibility for paying new pension benefits with accountability for negotiating compensation for school and university employees. Third, they can reduce school district administration costs that direct money out of the classroom and away from students. In total, these three reforms can save the state $21.21 billion over five years.

Taxpayers deserve action. The current path is unsustainable. It is not good enough to boast a hypothetically balanced budget at the beginning of the year and leave taxpayers to clean up the mess at the end of the year. Lawmakers must work to properly balance the budget and be realistic about the state’s revenue expectations.

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