Experts: Illinois taxpayers carrying 3rd-highest debt burden in nation
Truth in Accounting experts contested Gov. J.B. Pritzker’s claims Illinois is on the best fiscal footing in years, citing chronic underfunding of the state’s nation-leading pension debt. The watchdogs ranked Illinois’ finances third worst among U.S. states.
Watchdog accountants are challenging Gov. J.B. Pritzker’s claims Illinois is on its best fiscal footing in years, arguing his five-year economic outlook report severely underrepresents the state’s looming long-term financial liabilities.
Experts with Truth in Accounting examined state financial reports for fiscal year 2021 to determine Illinois failed to pay $210.5 billion worth of its bills, leaving each taxpayer responsible for $49,500 in debt. Illinois ranked third-worst in the nation, rating an “F” for fiscal management.
The accountants found Illinois has underfunded government workers' retirements each year by roughly $4 billion, driving up annual interest on the state’s $130 billion in pension debt, which Moody's Investors Service estimated at $313 billion using more real-world assumptions.
While Pritzker touted his office’s economic and fiscal policy report as evidence lawmakers were “honoring our commitments to long-term financial liabilities” and “contributing extra to Illinois' pension systems,” the watchdog accountants said that’s misleading.
The group likened Pritzker’s bragging to “a person touting they are not going to spend more money than they take in, but they are only going to pay $1,100 a month to their credit card companies, while the minimum payments are $1,500."
Pritzker’s economic report also projects pension contributions during the next five years for three of the five state systems will consume only about 21% of the annual budget, which is significantly less than in recent years. Funding all five systems ate 27 cents of every dollar spent by the state in 2022.
Illinois pensions can be fixed, but not by feel-good distortions of the economic realities. Reforms are needed that are only possible by changing the Illinois Constitution.
The “hold harmless” pension reform developed by the Illinois Policy Institute would tie all pension cost-of-living adjustments to inflation rather than a fixed rate of annual growth, saving $50 billion by 2045. It would also increase required government contributions to fully fund retirees’ promised pensions rather than the current target of 90% by 2045.
Constitutional pension reform would promise to slow the future growth of Illinois’ nation-leading debt and put more money back in the pockets of taxpayers today.