Reports

Illinois FY 2021 Enacted General Fund Budget Analysis

Release: August 19, 2020

If the Illinois FY 2021 Enacted General Fund Budget proves anything, it is that no matter how much things change in the world at large, the structural revenue problems in the state’s budget remain the same. Consider that, not even accounting for the impact of COVID-19, Illinois would nonetheless still have a General Fund deficit—meaning the state would not have had enough current revenue to cover some spending on public services this year—even if the pandemic never happened.

Despite the poor performance of the state’s revenue system over time, many commentators and editorial boards still try to blame the state’s historic, recurring deficit problems on overspending for services. The data, however, have simply never supported that canard, which is explained at length in this Report. The long-term structural deficit in Illinois’ General Fund—which will certainly become worse over the next few years as the impact of the COVID-19 pandemic on the economy is projected to drive revenue down significantly in all 50 states—is a real cause for concern.

A structural deficit like the one in Illinois’ General Fund, which is demonstrably driven by an underperforming revenue system, cannot be eliminated without raising taxes. In fact, Governor Pritzker has worked with the General Assembly to pass a tax reform package—known as the “Fair Tax”—predicated on replacing the flat rate individual income tax Illinois currently imposes with a graduated rate income tax. Recognizing the difficult political battle that will be waged over the Fair Tax, Governor Pritzker introduced two different General Fund budget proposals for FY 2021. But all of that happened before COVID-19 devasted the economy and drove down tax revenue in all 50 states, including Illinois. 

So, as expected, the economic downturn created by the COVID-19 pandemic has significantly worsened the state’s fiscal condition. That said, the analysis in this Report makes it clear that, even if the coronavirus had never happened, the fiscal shortcomings that plague Illinois’ General Fund are long-term, material, and structural, and cannot be resolved without comprehensively reforming the state’s tax policy. 

Fully Funding the Evidence-Based Formula: 2020 Update

Release: August 4, 2020

Fully Funding the Evidence-Based Formula: 2020 Update” is an update to the “Fully Funding the Evidence-Based Formula: Four Scenarios” report from 2019. The updated 2020 report highlights three different funding scenarios, identifying for each scenario how long, and how much money would be required to fund an adequate and equitable education as identified by the Evidence-Based Funding Formula. 

The Impact of Underfunding the Evidence-Based Funding Formula

Release: June 24, 2020

Beginning in 2017, Illinois decision makers replaced one of the least-equitable K-12 public education funding formulas in the country with the Evidence-Based Funding for Student Success Act, or EBF. The EBF commits to implementing best practice in school funding by investing a year-to-year increased Minimum Target Level of $300 million each fiscal year.  Illinois met the Minimum Target Level for increased year-to-year state funding of K-12 education in each of the first three fiscal years—FY 2018, 2019, and 2020—during which the EBF was implemented. That streak now stands to be broken, however, as the FY 2021 General Fund Budget, which recently passed, does not increase K-12 funding under the EBF, but rather holds it level with FY 2020.

The Impact of Underfunding the Evidence-Based Funding Formula report analyzes the steps the EBF takes when the Minimum Target Level is not satisfied and how limited or no new Tier funding would impact districts by Tier, income level, race, and geography. The report also analyzes how state funding would be allocated if the state is unable to hold funding level with the prior fiscal year, resulting in a reduction in funding for the EBF.

A Case Study on Economic Development Agreements

Release: May 16, 2020

CTBA, commissioned by the Daily Herald and ProPublica, performed an analysis of the 1989 economic development agreement (“EDA”) entered into by Hoffman Estates with Sears, Roebuck, and Company (“Sears”). The purpose of the analysis was to determine how effective the EDA proved to be and to quantify the impact the resulting development had on Hoffman Estates. The results of the analysis were utilized in a series of articles published by the Daily Herald and ProPublica.

Using a difference-in-differences model, the following report compares the economic performance of Hoffman Estates to a control group in order to isolate and identify the impact of development as a result of the EDA. The results suggest that the impact of the development generated by the Sears EDA was temporary, with a short-term spike in property values but no lasting impact on the growth trajectory of property value in Hoffman Estates, while failing to generate the job growth promised by the EDA.

Potential Impact of a Property Tax Freeze on School Funding

Release: May 13, 2020

Illinois’ overreliance on property taxes is a result of historic shift of funding K-12 Education from the state-level to the local-level.  While many would benefit from a temporary property tax freeze, there are also costs associated with a property tax freeze—particularly when it comes to funding an adequate education for millions of Illinois school children. A property tax freeze could pose substantial costs to students across the state by limiting the amount of funding districts could receive compared to the current law in which there is no property tax freeze. Using 2019 Illinois Report Card and average year-to-year growth in: (i) K-12 funding under the EBF; (ii) property tax revenue; and (iii) funding of mandated categoricals, the short report, Potential Impact of a Property Tax Freeze on School Fundinghighlights some of those consequences that a property tax freeze could have, not only on school funding, but along racial lines, as well.

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