Fact check: Pritzker claims fiscal responsibility but report shows ‘fiscal cliff’
A new report shows Illinois is likely to face financial challenges when the federal stimulus money propping up its current budget runs out. That reality is very different than the Pritzker campaign claims about fiscal responsibility.
Gov. J.B. Pritzker is touting Illinois’ fiscal progress as he runs for reelection and claiming his accomplishments have “pulled the rug out from the naysayers and pessimists who have built a career on badmouthing our state.”
But there’s a difference between pessimism and acknowledging the state’s severe fiscal problems. Experts are again warning Illinois is facing big trouble.
The Volcker Alliance, a non-partisan government watchdog, has issued a new report showing Illinois is at risk of facing a “fiscal cliff” once one-time federal relief funds dry up. That means the state will have to either cut programs or raise revenues to maintain spending that has been enabled by the federal funds, once those funds run out. The report shows Illinois has allocated nearly 60% of its $8.1 billion in State and Local Fiscal Recovery Funds. Only California and Pennsylvania have allocated more of their recovery funds.
The report mentions those states are also at risk of facing a fiscal cliff once the money runs out because of how they are potentially using the money. The report notes responsible use of the funds would go to one-time expenses such as water, sewer and broadband infrastructure or repaying federal loans for unemployment trust funds. The report states California, Pennsylvania and Illinois are at risk for spending at least some of the funds on programs that may become recurring costs and burdens on future budgets.
Illinois appears likely to spend at least some of the funds on programs that will continue to be needed after the federal funds run out and potentially strain future budgets, the report states. That Illinois spending includes:
- $50 million for trauma, mental health and behavioral health
- $147.3 million for community support organizations, including $87 million for centers that assist immigrants and refugees
- $55.8 million for Criminal Justice Information Authority violence prevention and interruption programs
- An unspecified amount to the Illinois State Board of Education for enrichment activities and parent mentoring.
Under Pritzker, no attempts have been made to address the structural problems the state has in its budget, forecasting or pension crisis. The only thing keeping the state’s finances afloat is the temporary lifeline of federal relief, set to run out in the coming years. When that ends, Illinois will sink back into the fiscal abyss it had been trapped in because of decades of inaction by leaders in Springfield.
The single biggest drag on the state’s financial health is pension costs. Under Pritzker, the state spent $4.7 billion more on pension contributions than it was projected to spend, continuing a trend that started long before he took office. While it would be fiscally responsible to push for reforms to such a system, Pritzker instead ignores solutions such as a constitutional amendment to address pensions and claims there is “no silver bullet” to fix the system.
Under Pritzker’s fiscal stewardship, even good news comes with a catch. Improvements to the state’s credit rating have largely been the result of that one-time federal COVID-19 relief money, not any actions taken by Pritzker’s administration. Illinois still has the worst rating of any state. Without doing anything to address poor budgeting and spending habits, it is unlikely the state’s credit climb will continue.
Then there is the state’s rainy-day fund. While state leaders are celebrating the record funding level for the emergency fund, the reality is much less exciting. Since having only enough funds to run the state for less than a minute in 2016, the nearly $750 million in the budget stabilization fund now is enough to run the state for just six days. While that represents an improvement, most states’ rainy-day funds and total reserves have been in far better condition. In fiscal year 2020, 48 states had total reserve funds, which included year-end balances along with rainy-day funds, that could allow them to operate for seven days or more, with Illinois and Pennsylvania being the only two that could not.
Under Pritzker, Illinoisans have seen taxes increase on the average family by $2,165, even after accounting for the $556 from his temporary “tax relief” reelection gimmick. Worse, neighboring states have used better-than-expected revenues and the one-time federal aid to strengthen the competitiveness of their tax codes and set themselves up for future economic prosperity. Pritzker has opted for temporary relief that will end after Election Day, then hit taxpayers with increases.
Pritzker is trying to claim victory over the state’s financial problems simply for being less bad than before. But when most of the improvement has come from one-time federal funding and virtually none from structural changes or reforms, it is simply a campaign claim without merit.