Monday's inauguration of J. B. Pritzker as Illinois' governor is, according to his Democrats, a refreshing spring shower that will extinguish the state's raging fiscal inferno.
So pardon me for pointing out that the blaze is so out of control that it will take more than the new Democratic supermajority in the Legislature, a Democratic governor and a Democratic-controlled Illinois Supreme Court to quench the fire.
Perhaps no state has ever faced the kind of existential challenges that Illinois faces. Things are so bad that more than a few Illinoisans are seriously wondering if the U.S. Constitution allows a state to declare bankruptcy by turning its sovereignty over to a federal bankruptcy judge.
For all practical purposes, Illinois is bankrupt. Billions in unpaid bills. At least $14o billion, possibly as much as $200 billion, owed to public employee pensions funds. Rotten credit ratings. A Legislature run by government employee unions. A government in the grip of power-hungry House Majority Leader Mike Madigan. A fleeing population and business base. High taxes about to get higher. Corruption. And more.
The first big test will come rapidly for new Gov. Pritzker. His budget for next fiscal year is due in February. But what he ought to do first is fix this year's budget. That's the one that was approved last summer by Democrats and some Republicans who overrode departing Gov. Bruce Rauner's veto.
That budget is a disgraceful sham that only enlarges Illinois' fiscal problems. The state itself had to admit to bond buyers that the budget was out of balance by $1.2 billion. The Illinois Policy Institute observed that the deficit was even worse--$1.5 billion--but what's a few hundred million dollars here or there?
Because the General Assembly never adopted a revenue estimate – as required by the Illinois Constitution and state law – and because the budget is out of balance despite a constitutional balanced budget requirement, the measure should not really be considered a budget: It is simply a spending plan.
Lawmakers also took no action to address the two primary factors leading to the state’s near-junk credit rating: a massive backlog of unpaid bills, which stands at nearly $8 billion as of Aug. 20, and roughly $130 billion in unfunded pension liabilities.
To make the budget appear balanced on paper, lawmakers relied on a number of common but deceptive budget gimmicks, including:
- Ignoring a potential $412 million in automatic raises for government union workers resulting from a contract dispute between Gov. Bruce Rauner and the state’s largest employee union, the American Federation of State, County and Municipal Employees
- Counting on $300 million in revenue from divesting the James R. Thompson Center – planned for the third year in a row – despite no concrete signs of progress in selling the building
- Sweeping and borrowing $800 million from other state funds, in violation of good budgeting practices
- Using accounting methods that mask the true size of deficits
- Counting on around $422 million in pension savings that are entirely speculative.
Of course, nothing will be done to fix this year's ersatz budget. The test will be whether Pritzker's new budget will be real. From that, we should know quickly whether the heralded "new day" that partisan Democrats have predicted will be, in fact, real.
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