Illinois’ budget: Where does all the money go?

Even with record revenues, Illinois is suffering

Contrary to what some groups would have you believe, Illinois had record levels of revenue in 2012:

The Wall Street Journal reported that “revenue from income taxes in Illinois was up almost 40% last year. That’s because state legislators approved a massive tax hike in 2011 to ease Illinois’ budget woes.”

Between 1994 and 2012, revenue from personal and corporate income taxes alone increased by 104 percent after adjusting for inflation. Even before the Great Recession and the subsequent record tax hike, Illinois’ income tax revenue had grown by 46 percent since 1994 after adjusting for inflation.

So where did all that money go? 

Illinois’ total spending (the technical term for this is “Total Appropriated Funds Expenditures”) totaled $67.9 billion in 2012, according to data from the Illinois comptroller. This includes all monies received from state and federal sources. The state has direct control over some of these funds, while others are earmarked for specific purposes by state or federal laws.

In fiscal year 2012, the lion’s share of the total appropriated funds was spent on health care and social services (36.7 percent), and education (22.2 percent). Other spending drivers included general government (14.2 percent) and transportation (8.3 percent). Embedded in these spending numbers are Illinois’ fiscal year 2012 pension contributions and pension obligation bonds totaling nearly $7 billion.

Here is a breakdown of some of the biggest spenders:

• The agency that spent the most from the appropriated funds budget was the Department of Healthcare and Family Services with expenditures of $17 billion.

• Spending by the Department of Human Services was $5.3 billion. Of this total, $4.1 billion was spent for various grant programs.

• The agency that spent the second-largest amount was the State Board of Education with $8.8 billion; $4.4 billion was for payments to local school districts.

• Expenditures by higher education agencies were $3.6 billion; $985 million of the total was by the State Universities Retirement System.

• Expenditures by the Department of Revenue totaled $6.3 billion. Included in this total:

• $2.2 billion for refunds
• $1.2 billion for payments to local governments from the Local Government Distributive Fund
• $1.3 billion from the Personal Property Tax Replacement Fund

• Spending by the Department of Transportation was $5.6 billion; $2.8 billion of this total was for highway construction.

• The state treasurer spent $4.9 billion, nearly all of which went to debt service.

• Other agencies that had spending in excess of $1 billion include:

• State Employees Retirement System: $2.6 billion
• Teachers’ Retirement System: $2.5 billion
• Department of Corrections: $1.3 billion
• Department of Children and Family Services: $1.2 billion
• Department of Commerce and Economic Opportunity: $1 billion
• Department of Central Management Services: $1 billion

• The larger increases in spending from the previous year were:

• $2.2 billion by the Teachers’ Retirement System
• $918 million by the Universities Retirement System
• $663 million by the Department of State Lottery
• $592 million by the state treasurer.

Even with record revenues, Illinois is suffering – the state has a massive backlog of unpaid bills, the worst-funded pension system in the nation, the second-highest unemployment rate and the nation’s worst credit rating. These problems will take structural reforms, not more revenue.

The Illinois Policy Institute has laid out a plan to reform and modernize the way the state of Illinois budgets and spends taxpayer resources. These changes will certainly be difficult, but Illinois is worth fighting for.