Tuesday, June 1, 2010
Experts See Dire Time For Illinois Budget
Budget experts don’t have a rosy outlook on the state’s financial situation heading into a new fiscal year. State lawmakers sent Gov. Pat Quinn a spending framework before departing for the holiday. But lawmakers did not address the fundamental problem afflicting state finances: state expenses are far outpacing the money the state is receiving.
Quinn has advocated a 33-percent tax increase to help backfill the budget gap, while Republican lawmakers want more scrutiny and reductions in spending.
Sheila Weinberg, CEO of the watchdog Institute for Truth in Accounting, said the budget package passed by lawmakers is not only irresponsible, it’s illegal. Illinois has about $6 billion in overdue bills to state vendors, according to the state Comptroller’s office. “Bills have to be paid year to year, and those are being carried forward,” Weinberg said. “We do not believe that borrowing money is an available revenue source that they can use. The Constitution does require a balanced budget.”
Ralph Martire, executive director with the Center for Tax and Budget Accountability, said lawmakers are more concerned with their political futures than they are with fixing the state’s fiscal crisis. “No elected official in either party is willing to solve these problems in this election year.” he said.
A preliminary CTBA analysis indicates that if Gov. Pat Quinn signs into law the budget framework approved by lawmakers, the state would be more than $7 billion in the red. That figure is based on the difference between recurring revenue and recurring expenses, as well as $3 billion of revenue expected only for this fiscal year, such as fund transfers, borrowing against proceeds from a multi-year tobacco settlement, funds from the federal stimulus bill and a proposed tax amnesty program.
“No one who is running for government, any office, is being honest with voters if they say they can solve these problems without raising taxes. That is dishonest and it can’t work mathematically,” Martire said.
The $7 billion deficit figure does not include one of the bigger pieces suggested for the budget puzzle.
On Thursday, the Illinois Senate did not vote on a proposed $4 billion borrowing plan with proceeds going to the state’s five public employee pension systems. Lawmakers don’t have to borrow funds to make the pension contribution, but using $4 billion from state revenues to go towards state pensions would cause serious cash-flow problems in other areas of state government, such as education and human services. Lawmakers could also opt to skip the pension payment, but the pension systems would then have to sell interest-earning assets and could lose out on tens of billions of dollars over a number of years.
Weinberg said Illinois state government needed to fundamentally change the way it handles its finances. “Would you consider your budget balanced if you borrowed to pay your current bills?” she asked. “And would you consider your budget balanced if you just hid your current bills in the drawer and didn’t pay them?”
You can read Kevin's full report at: http://illinois.statehousenewsonline.com/3101/experts-see-a-dire-time-for-illinois-budget/