The State of Illinois has been a budget basket case for years. The state has runaway pension problems and is billions behind in paying creditors. State legislators can’t seem to stop the bleeding.
The state’s budget deficit will top $3 billion and its pile of overdue bills will hit a new record high by fiscal 2025 if the state’s “unsustainable” tax structure remains in place, according to a five-year forecast released on Wednesday by the governor’s budget office.
The economic and fiscal policy report said the state’s general fund annual deficit will reach $3.2 billion by 2025, with the unpaid bill backlog ballooning to $19.2 billion. Annual pension contributions will climb to $9.65 billion in fiscal 2025, up from $8.1 billion in the current fiscal year.
Illinois has the lowest credit rating of any state because its pensions are underfunded by a whopping $133.5 billion.
Governor J.B. Pritzker has proposed what he calls a “fair tax” plan that would replace Illinois’ flat income tax rate with graduated rates that tax higher earners more to generate $3.6 billion in additional annual revenue.
Pritzker said in a statement:
“Without structural changes like the fair tax, Illinois will continue to struggle to make ends meet, pay our bills on time and deliver vital services, like public education and public safety.”
Clearly he missed the memo on his state’s finances. They aren’t “struggling to make ends meet,” they’re failing miserably and not paying creditors.
State lawmakers earlier this year took action to place a constitutional amendment for graduated tax rates on the November 2020 ballot. If voters reject the move, Illinois would have to cut spending on many essential services by about 15% or increase the flat income tax rate, according to the report.
For fiscal 2021, which begins July 1, state agencies were asked for options to reduce spending by 6.5%, along with ideas to improve efficiency and consolidate programs, the report said.