The Illinois State Budget: How Bad Is the Picture, and What Can You Do About It?

Abstract

State finances work much like your finances at home. The state has income (revenue) and expenses (sometimes called expenditures). It also has a bank account of sorts (called a fund balance). Each year, the state comes up with a budget for the year, and then tries to stick to that budget throughout the year. Recently, the State of Illinois budget has been operating in a way that would be much like having a personal budget with massive credit card debt and no money in your checking account, but you kept writing checks anyway and had no plan to deal with the debt. The beginning of 2011 saw Illinois facing a harrowing fiscal situation. The State had billions in unpaid bills, and a 2011 budget gap estimated at $11 billion. If the budget were balanced with only cuts, 26% cuts would be required across the board. Beyond cuts, the State had few options to deal with this problem. Among the potential solutions: accumulating bills, issuing debt, and raising revenue. It could also enact a combination of these options. If someone offers a budget solution that sounds too good to be true, it probably is. Quick fixes are likely not real options. Illinois is not likely to be out of its fiscal crisis for at least several years (IGPA projects 2019, even under the most optimistic of scenarios) IGPA projects that taxes need to remain at their current levels for budget to balance. Cutting certain programs may also be a wise budget move, but some programs cannot be cut or cut quickly. Ultimately, doing nothing and waiting for the economy to grow is not an option. By telling your lawmakers that you understand the complete budget picture and want to see the budget fixed in an honest and responsible manner, you are encouraging them to tackle difficult and unpopular problems.