Why a budget won’t fix Illinois
Pension costs alone now consume a quarter of the Illinois state budget.
Did you feel it?
As 2016 expired at midnight Dec. 31, so too did Illinois’ stopgap budget. That six-month spending plan pushed our state, already the least creditworthy in the nation, further into debt and decay.
But its end looked more like the Y2K bug than a fiscal cliff – nothing really happened. That’s because, even as Illinoisans constantly hear calls to “just pass a budget already,” Illinois already has something of a budget. And it’s not a good one.
It’s true that Illinois does not currently enjoy a traditional budget. The General Assembly hasn’t passed a spending plan that Gov. Bruce Rauner signed. And odds are slim that politicians will agree to a full-year budget in the final legislative session of the 99th General Assembly next week.
But state government is still paying out at a breakneck pace through a mishmash of autopilot spending, court orders and consent decrees.
In fact, state government is set to spend a record amount of taxpayer money in fiscal year 2017: nearly $40 billion. That’s a new high for Illinois, and nearly 8 percent more than when the temporary income-tax hike was in full swing, according to the Commission on Government Forecasting and Accountability.
And yet, Illinoisans are still hearing stories of suffering tied to the lack of a formal, full-year budget.
Low-income students at public colleges and universities are uncertain about the status of the Monetary Award Program, which helps with the tuition costs necessary to invest in their futures. And some social service providers that aren’t funded by court order are barely scraping by.
State spending is breaking records, so one would think Illinois could help these residents in need. But it’s not. How can this be?
Look to the state’s priorities for an answer.
There is plenty of funding to go around. There is more than enough spending growth. And Illinoisans have paid their fair share into the system. But the state’s spending priorities are out of whack.
Here are some key state spending categories and the percent change in each from 2000 to 2015. Note that total state revenues over this time increased a healthy 57 percent:
- Spending on culture and the environment decreased 59 percent
- Spending on higher education decreased 8 percent, excluding pensions
- Spending on human services increased 10 percent
- Spending on public safety increased 12 percent
- Spending on K-12 education increased 35 percent, excluding pensions
- Spending on Medicaid increased 141 percent
- Spending on state-employee insurance increased 166 percent
- Spending on state-employee pension benefits increased 586 percent
Some of these things are not like the others.
Pension costs alone now consume a quarter of the state budget, suffocating spending on core services such as higher education, human services and public safety.
What residents are witnessing now with human services is not a new phenomenon. Even when Illinois had full-year budgets and one-party rule, social service providers still got stiffed. In 2009, an Urban Institute study ranked Illinois worst in the nation in paying its nonprofit vendors on a timely basis.
Why? Priorities. The current fight over higher education funding is another perfect case study.
College was once affordable in Illinois. But Illinois’ public colleges and universities hiked tuition between 74 and 112 percent over the last decade. Now, college is too often out of reach for many students without them taking on debt and receiving help from the government.
This jeopardizes the future of our state, as young Illinoisans seek opportunity elsewhere. The Land of Lincoln is losing more millennial taxpayers on net than all other states except New York, according to data from the Internal Revenue Service, taking a net loss of more than 80,000 millennial taxpayers during the four tax years between 2011 and 2015.
“Just pass a budget already,” is a common response to this problem. But Illinoisans must first think about the state’s priorities.
Students have received the short end of the stick in this state, budget or not.
For every dollar the state puts toward higher education, half goes to pension costs. Illinois’ system of higher learning is no longer a ladder up to the middle class for students. It is retirement program for those it employs.
But surely that rise in tuition dollars went to ensuring access and affordability. Let’s look at the numbers. Between 2004 and 2010, student and faculty populations in Illinois grew less than 3 percent. The number of university administrators grew by more than 30 percent.
How’s that for access?
A full-year budget without major reforms simply serves to set warped priorities in stone. Before relenting to appeals for any budget at all, Illinoisans would be wise to consider what’s been done before, and why unwavering calls for change are so necessary.