The report paints a gloomy picture of a deeply problematic FY2015 state budget that Statehouse insiders have known about since the budget was passed in late May. Bottom line - the FY2015 budget was a sham budget full of gimmicks and short-sighted financial provisions. Kudos to the Civic Federation for its detailed analysis of a very political budget designed to allow legislators to get out of Dodge and face voters without having taken controversial votes to either make the current income tax levels permanent, or implement the massive cuts necessary to align spending with actual revenues. Go read the whole Civic Federation report here.
Anyway, the Tribune held nothing back in its assessment of the situation:
We've all known since the General Assembly's spring session that lawmakers passed a bogus budget, although we didn't know just how bogus. We wrote at the time that fraidy-cat lawmakers had neither made their temporary income tax hikes permanent nor passed a budget that realistically matches spending to revenues after those tax hikes start to roll back Jan. 1. Profiles in cowardice.
Springfield's foolish insistence on spending tomorrow's dollars today is one reason that all three major bond rating agencies rank Illinois as the nation's least creditworthy state. Each agency also attaches a negative outlook to Illinois, meaning all three may downgrade the state's harmful credit rating even further:
Standard & Poor's warned on July 23 that this current budget "is not structurally balanced and will contribute to growing deficits and payables that will likely pressure the state's liquidity." That's what happens when politicians don't want to lose revenue from a tax increase — and make no provision for the tax rollback that they wrote into law.
Here's how my organization described the budget in early June:
The budget appropriation bills include a total of $35.7 billion in spending for FY2015. This budget has been referred to as a “middle-of-the-road” budget because it establishes spending levels between the $38 billion budget that was proposed with the assumption that the existing income tax rates would be made permanent, and a proposed “doomsday” budget that would have reduced spending levels to $34.8 billion.
The budget approved and sent to the Governor includes spending in excess of available revenues and marks a return to the practice of using gimmicks such as inter-fund borrowing, dubious revenue growth assumptions, and insufficient payments to reduce bill backlogs. Without an extension of the income tax rates prior to January 1, 2015, the budget will spring a $2 billion hole that would necessitate service cuts and layoffs.
It's certainly a more diplomatic assessment, but reveals the same unfortunate reality. And that $2 billion hole may be on the low side. Things will get interesting at the Statehouse in January of 2015. The elections will be over, but the hangover will just be getting started.
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