Rauner signs spending plan into law
While it’s the closest the state has come to passing a balanced budget in years, Illinois’ new spending plan leaves a lot to be desired for taxpayers.
Gov. Bruce Rauner signed House Bill 109 on June 4, a fiscal year 2019 spending bill that passed through the General Assembly with large bipartisan majorities.
Illinois Policy Institute analysis shows that the plan spends between $635 million and $1.5 billion more than realistic revenue estimates. The budget relies on a number of common but deceptive budget gimmicks to make it appear balanced on paper.
After the General Assembly passed the spending plan, Rauner did not say it was truly balanced or solved the state’s long-term problems. Rather, the governor said in a statement that it brought Illinois closer to a balanced budget than it had been in years:
“We started this year’s budget process with the common-sense goals of a full-year balanced budget and no new taxes. With this budget, we can come as close as any General Assembly and Governor in Illinois have in a very long time. It’s a step in the right direction, though it does not include much-needed debt paydown and reforms that would reduce taxes, grow our economy, create jobs and raise family incomes. The Fiscal Year 2019 budget is the result of bipartisan effort and compromise. We worked together to provide a budget to the people of Illinois that can be balanced, with hard work and continued bipartisan effort to deliver on the promises it makes. I’ll be taking action quickly to enact the Fiscal Year 19 budget into law.”
Rauner also said that balance was “in reach” and that the plan gave him an opportunity to “manage our way into balance,” which is a reference to the governor’s executive authority to reduce spending on his own. The fiscal year 2018 budget was initially $1.7 billion out of balance, but the governor was able to manage that amount down to an end-of-year cash balance estimated to be $590 million in the red.
On the same day the General Assembly passed the spending plan, Moody’s Investors Service warned that the state needs to address its pension liabilities and unfunded bill backlog sooner rather than later. “A failure to adopt mitigating strategies soon will greatly increase the state’s risk that these rising costs will become unaffordable without severe public service cuts,” the Moody’s report stated.
A better path forward
Even supporters of the new spending plan seem to be in agreement that the bill does nothing to address the long-term challenges of the state – including the bill backlog and unfunded pension liabilities – but argue that this plan is better than having no budget.
Luckily, taxpayers don’t need to settle for a false choice between bad budgets and no budgets at all.
Illinois lawmakers have already proven they cannot exercise fiscal restraint on their own and have skirted the existing balanced budget requirement in the state constitution. To fix this problem, Illinois should adopt a spending cap amendment to the Illinois Constitution that ties lawmakers’ ability to spend money to taxpayers’ ability to pay for it.
A spending cap is a commonsense solution that received bipartisan support in the General Assembly this year. Proposed amendments would cap annual increases in general funds spending to the 10-year average growth rate in the state’s per capita GDP.
While it is too late for constitutional amendments to save this year’s budget, lawmakers can always voluntarily adopt a spending cap as a budgeting principle for next year. In the long run, a spending cap could help the state get out of debt, build a rainy-day fund to save for recessions and eventually cut taxes.