Report: Illinois fiscal health again 2nd worst in U.S.
Each Illinois taxpayers owes $52,000, thanks to politicians spending more than they already take in. On Nov. 3 taxpayers will be asked for even more.
Only New Jersey has a worse fiscal position than Illinois, although Illinois has about $36 billion more in unpaid debts. Kentucky is the only neighboring state rivaling Illinois’ poor fiscal health, at sixth worst, but its taxpayers owe less than half of what an Illinois taxpayer is responsible for eventually paying.
Illinois earned an F grade in the report and designation as a “sinkhole state,” with each taxpayer being responsible for $52,000 in order for the state to pay off its bills. The state needs $226 billion to do that
The report notes the majority of Illinois’ debt comes from state worker benefits. The state has $56.1 billion in retiree health care debt and $144.2 billion in public pension debt, although Moody’s Investor Services pegs pension debt at $241 billion using more conservative estimates of investment returns. Illinois was also the second-last state to submit its Comprehensive Annual Financial Report – 298 days after its due date.
Truth in Accounting analyzed Illinois’ finances prior to the onset of the COVID-19 pandemic. Illinois will likely come out of it in a far worse situation. The report estimates the state will lose $16 billion in revenue as a result of the pandemic.
Instead of working to address the problem, Gov. J.B. Pritzker blamed the state’s financial issues on the pandemic, in April saying Illinois would have had a budget surplus if not for COVID-19. That is false. His current budget is based on federal aid that may never come and a progressive tax that voters may not approve.
As dire as Illinois’ finances appear to be, there are solutions outlined in the Illinois Forward report compiled by the Illinois Policy Institute. Public pensions can be saved with an amendment to the Illinois Constitution that would protect both retirees and taxpayers. State lawmakers can end 20 years of deficit budgets by linking spending to economic growth and by strengthening the requirement that the budget be truly balanced.
Illinoisans for the first time in 50 years have a chance to stop state leaders from trying to tax their way out of their spending problems. Pritzker’s counting on his “fair tax” to pass, but an analysis by the Illinois Policy Institute found it would not generate the revenue he wants.
It would allow state lawmakers with a simple majority vote to target different income groups, such as retirees, whenever they need revenue. The referendum amends the Illinois Constitution to eliminate the flat tax protection, so state lawmakers will no longer anger all voters when they hike taxes and can identify income groups that can give them the revenue they want without the political backlash they fear.
Illinois needs to stop being the nation’s financial juvenile delinquent. Voting “no” on the progressive tax will tell lawmakers it is time to act like responsible adults.