Thursday, October 25, 2012
New Study Drills Down On State Budget Problems
A study released Wednesday blames Rod Blagojevich for the state’s current budget mess. The study from the State Budget Crisis Task Force, is a follow-up to a report put out by the task force in July headed by Richard Ravitch, the former lieutenant governor of New York, and Paul Volcker, the former chairman of the Federal Reserve.
Wednesday's report indicts the usual suspects: growing pension and Medicaid costs. It also cites stagnant revenues, borrowing and shoddy accounting tactics as culprits in the state’s recent budget crisis. However, the report says that that tactic of selling bonds to cover pension costs — 2003, 2010 and 2011 — has been the primary contributor to Illinois having one of the highest debt rates per capita of any state.
The study says that the 2008 economic collapse was part of a perfect storm that sunk the state budget. “But unlike other states, Illinois was effectively insolvent," the report read. Worse,
"Illinois’ government became essentially dysfunctional with the federal investigation of Governor Blagojevich and his removal from office."
The study lauded efforts to put the state back on secure footing. Those included an income tax increase brought in new revenues, and lawmakers agreed on spending caps, cuts and sweeping Medicaid reforms. “There is, of course, nothing ‘encouraging’ about cuts in education, medical care and human services from the point of view of recipients or advocates," the authors commented.
Nor is the outlook for further improvement very good, according to the report. "(Illinois) cannot simultaneously continue current services, keep taxes at current levels, provide all promised (public employee) benefits, and make needed investments in education and infrastructure.”
You can read Jamey's full report at: http://illinoisissuesblog.blogspot.com/2012/10/new-study-drills-down-on-state-budget.html