Cap spending now: Illinois taxpayers need a responsible budget this year

Cap spending now: Illinois taxpayers need a responsible budget this year

Lawmakers should voluntarily adopt a spending cap to give taxpayers the certainty they deserve.

Illinois taxpayers desperately need a full-year, balanced budget with no new taxes. While the history of election-year budgets shows that lawmakers prefer to kick the can on tough choices, half measures and phony budgets will only make matters worse.

Lawmakers should end the bickering about a revenue estimate for next year’s budget and instead adopt a “magic number” based on the formula outlined in a proposed constitutional amendment that caps state spending growth to what taxpayers can afford – the growth in the state’s economy. The magic number this year? $36.9 billion.

Voluntarily adopting this spending cap would help remedy the state’s “crisis-like” budget environment, stem chronic overspending and eventually ease the crushing tax burden imposed on residents.

Near-junk credit rating

Illinois already has the worst credit rating of any state in the nation, with credit ratings agencies assigning much of the blame to Illinois’ “persistent crisis-like budget environment.” Moody’s Investors Service gives Illinois a negative outlook on its credit, meaning more troubling financial decisions from elected officials could cause the state’s bond rating to drop even further – into junk status. Ultimately, a bad credit rating means higher borrowing costs and therefore higher future taxes on the residents of the state.


Illinoisans already know that higher spending today means higher taxes tomorrow. From 2005 to 2015, state spending per capita grew 25 percent faster than residents’ per capita personal income. A 2011 tax hike took $31 billion out of taxpayer’s pockets and cost the state’s economy $55.8 billion over five years. The state’s two-year budget impasse was only ended by a record-setting $5 billion permanent income tax hike, which failed to close the deficit.


Tax hikes have never fixed the problems in Illinois and never will fix the problems in Illinois. According to WalletHub, Illinois already has one of the highest taxpayer burdens in the nation when combining state and local taxes. A 2016 survey from the Paul Simon Public Policy Institute found that nearly half of Illinois residents polled wanted to leave the state, and taxes were the No. 1 reason. If these tax increases served their supposed purpose, Illinois should be financially stable.

Busted budgets

Illinois’ budget has not been balanced since 2001, and a series of accounting gimmicks hide the true size of the state’s deficits. As of May 4, 2018, the comptroller reports that Illinois owes $6.5 billion in overdue bills and has just $98,500 set aside in a rainy day fund. That means the state is completely unprepared for emergencies and recessions. High debt and no savings is a recipe for financial disaster.

Why Illinois needs a spending cap

For all these reasons, Illinois desperately needs a spending cap that ties lawmakers’ ability to spend money to taxpayers’ ability to pay the bill. Rather than arguing over unreliable revenue estimates, a spending cap would give lawmakers a “magic number” to plan around.

The current budget discussion encourages questions such as “How much money do we have?” or “How much more can we take from taxpayers?” But a spending cap forces lawmakers to frame budget negotiations properly: “How do we prioritize our spending while living within our means?”

A spending cap is a commonsense solution that is currently receiving bipartisan support in the General Assembly. Proposed amendments would cap annual increases in general funds spending to the 10-year average growth rate in per capita GDP.

Unfortunately, because the Illinois House of Representatives is taking a week off, the constitutional amendment cannot pass this session. Even if it had, the amendment would need to go to a voter referendum before it could be enacted. That means the cap cannot apply this year.

However, lawmakers can still choose to voluntarily do the right thing by planning their budget as if spending increases were tied to economic growth.

For the most recent 10-year period, Illinois’ economy grew at an average rate of 2.4 percent each year. The fiscal year 2018 budget called for $36.054 billion in spending, according to the Commission on Government Forecasting and Accountability, or COGFA. Applying a 2.4 percent growth rate means the fiscal year 2019 budget would be able to increase by $865 million, for roughly $36.9 billion in total spending next year.

Republican leaders in the House and the Senate are pushing for the adoption of a revenue estimate of $37.672 billion, derived from COGFA projections. If lawmakers adopted a spending cap for this year’s budget, that would mean revenue is expected to be roughly $753 million above the spending limit. That extra money could be used to pay down the backlog of bills, shore up the rainy-day fund, or provide tax relief.

Illinois has been a national laughing stock on budget and tax issues for too long. A spending cap amendment would give taxpayers, and ratings agencies, much-needed stability. Lawmakers do not need to wait for the constitution to change. They can and should adopt a spending cap now.

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