Illinois’ Bottom Line: Debt
The state of Illinois had nearly $7.5 billion in unpaid bills as of Wednesday, according to the Illinois Comptroller’s Office.
Three weeks ahead of Election Day, Ralph Martire, executive director of the nonprofit research think tank Center for Tax and Budget Accountability, joined Morning Shift to explain the state’s debt obligations and how the backlog got so high.
What bills does Illinois owe?
Ralph Martire: What we project is that by the end of the current fiscal year — we’re in fiscal year 2019, which started July 1 — the backlog of bills will be approaching $10 billion. And $10 billion is pretty significant because if you look at it like a percentage of what the state spends on current services, it approaches 40 percent.
So that means right now, Illinois spends about 95 percent of its general fund money on just four things: education, health care, social services, and public safety. Roughly 40 percent of that spending, we don’t have the money for. We’re deficit spending and it’ll carry forward into the next year. That’s pretty significant and not necessarily sustainable.
How do other states compare?
Martire: No one’s really dealing with something similar because Illinois has kind of created a unique situation for a couple of reasons. Reason 1: We are one of three or four states that have an absolute iron-clad constitutional guarantee of pension benefits. So most other states, when they find themselves in a bad position with public employee pensions, have options we do not. And those options include looking at the benefits side of the ledger. Illinois has got to pay what it owes to the systems, and we really don’t have the capacity to do that.
The second reason we’re relatively unique is this is really a problem the state created for itself over years by intentionally underfunding the pension system because politicians, in both parties, didn’t want to deal with tax policy. Tax policy is very hard to communicate to the general public in a thoughtful way. So rather than deal with the fact that every year, tax revenue growth in Illinois — and this is for the last 30 or 40 years — just wasn’t enough to maintain the same level of public services. Just adjust for inflation and population growth. So even when no new program was added or no service was expanded, the bottom line is we had a little bit of a deficit.
This interview has been edited for brevity and clarity. Click the “play” button to listen to the entire interview, which was adapted for the web by Arionne Nettles.