Illinois Budget

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. 

Analysis of Illinois’ FY2020 Enacted General Fund Budget

Release: October 31, 2019

In his first year in office, Governor J. B. Pritzker signed a General Fund budget that the General Assembly passed into law — something it took his predecessor four years to accomplish. And while both the General Fund budget for fiscal year (“FY”) 2020 and the Governor are new, the fiscal problems which continue to afflict the General Fund are not. In fact, these problems are both longstanding and structural.

Impact on Illinois' Structural Deficit

Release: October 21, 2019

The state of Illinois faces a significant structural deficit into the future. The report highlights the nature of the structural deficit and identifies two key causes: the state’s historically flawed  tax policy and the plan devised for repayment of Illinois’ pension debt. CTBA proposes both the adoption of the Fair Tax and a reamortization of the pension debt as described in the report titled: Addressing Illinois’ Pension Debt Crisis With Reamortization. Doing so would allow the State to ensure full funding for the Evidence Based Funding Formula while also improving the status of Illinois’ public employee pension system and eliminating the State’s structural deficit by 2042.

Cutting Taxes for the Middle Class and Shrinking the Deficit: Moving to a Graduated State Income Tax in Illinois

Release: April 30, 2018

This report makes the case for a graduated rate state income tax in Illinois, and illustrates two possible rate structures that would accomplish each of three major objectives:

Illinois on Autopilot, the Reality of FY2016

Release: February 16, 2016

In both magnitude and meaning, state elected officials have no greater obligation than passing a General Fund budget into law. Consider magnitude first. Last fiscal year the General Fund budget provided for the expenditure of $35 billion. No question, that constitutes a sizeable expenditure of taxpayer money. It is also meaningful. While nearly $11 billion was targeted for Hard Costs like debt service and other legally mandated payments, over $24 billion was invested in current services across communities statewide. In fact, over 90 percent of FY2015 General Fund expenditures on services covered education (35 percent), healthcare (30 percent), human services (21 percent), and public safety (7 percent). To be clear, it is those services which provide for the basic health and well-being of the citizenry, and go to the very heart of why we elect a Governor and General Assembly in the first place.

By failing to pass a General Fund budget for FY2016, elected officials are basically punting the following difficult, but fundamental, responsibilities to: 

  • Make decisions about how to allocate scarce resources among the aforesaid four service priorities;
  • Identify which of, and by how much, those services will be cut, despite their high priority, if the state’s current woeful fiscal condition is not addressed; or
  • Raise the tax revenue needed to fund those core services to the amounts needed to satisfy demographically driven demand.

 

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