Pritzker claims $1.7B surplus while his budget shows $1.5B deficit
Despite claims during Gov. J.B. Pritzker’s speech, his budget documents show a flood of federal COVID-19 aid temporarily shrank Illinois’ deficit but failed to balance its budget. His next budget will not end well.
Gov. J.B. Pritzker claimed his budget proposal would achieve an unprecedented $1.7 billion surplus this year. Documents released by his budget office show Illinois would end the year with a $1.5 billion deficit.
Illinois has not had a truly balanced budget since fiscal year 2001. While federal aid helped Pritzker shrink the deficit, his budget proposal from Feb. 2 does not achieve balance according to projections from his own staffers.
The $1.53 billion deficit projected at the end of fiscal year 2023 represents the balance of general funds accounts, including carried deficits. A budget can only be truly balanced if it ends the year in the black. On a single year cash basis, Pritzker’s budget office projects a $279 million surplus. The $1.7 billion claim is not supported by the budget documentation.
Pritzker also touted an improvement in the state’s credit rating and a temporary reduction in the bill backlog as accomplishments of his administration. Pritzker said these improvements resulted from budget decisions during the past several years.
However, improvements in the state’s credit rating and balance of unpaid bills are the direct result of the flood of federal aid. The state has yet to make any of the significant financial reforms needed to eliminate the structural deficit and reduce Illinois’ economically burdensome taxes.
Spending in the state budget actually has increased – significantly – under Pritzker relative to baseline expectations in the state budget. If lawmakers accept Pritzker’s proposal, then total spending during Pritzker’s first term will be up nearly $8.5 billion, or 5% higher than the growth expected when he took office.
Without major reforms, the state’s bill backlog and tax burdens will begin to grow again when federal aid runs out.
The Illinois Policy Institute’s five-year fiscal plan – Illinois Forward 2023 – offers a path to balancing the budget in the long run with no further tax hikes. It would eliminate the structural deficit and backlog of unpaid bills for good. The plan relies on common-sense pension reform, diverting wasteful administrative spending to classrooms and rightsizing taxpayer costs for state worker health insurance. Together these reforms can reduce taxpayer costs in the state budget by nearly $3.6 billion the first year.
After eliminating the remaining bill backlog in fiscal year 2023 – the budget year starting July 1, 2022 – the Illinois Forward plan results in surpluses ranging from nearly $2.5 billion to more than $3 billion. Under the status quo, the bill backlog will rise back to $6.5 billion within five years, roughly where it hovered before federal aid enabled the state to pay it down.
Illinois faces a decision. It can choose structural financial reform that will limit taxpayers’ burdens as much as possible and spur economic growth, or it can choose to continue decades of fiscal irresponsibility that left it on the brink of collapse when COVID-19 hit.