Illinois proves an amendment doesn't guarantee balanced budget

SPRINGFIELD — As part of the historic debt ceiling deal, Congress is set to eventually vote on a balanced-budget amendment to the Constitution, a measure intended to cap government spending and avoid big deficits in the future.

Before it does, it may want to learn from the experience in Illinois.

Illinois — where the financial picture is among the worst in the country — is among a handful of states that already have in their constitution a provision intended to require balanced budgets. Kind of.

“The Illinois experience is cautionary,” says state Sen. Matt Murphy, a Palatine Republican.

The caution, Murphy and others point out, has to do with language in the Illinois Constitution that appears to call for a balanced budget but stops short of ensuring the state's general checkbook is balanced at the end of the year.

Nearly every year in Springfield, as the controversial state budget is being debated, lawmakers raise the specter of the Illinois Constitution. But, though it requires expected expenses and expected incomes to match in the budget, that document doesn't require what the state actually ends up spending in a year to match up with how much it actually took in.

In essence, what it says is this: Lawmakers must not plan to spend more than they estimate they'll take in during the year.

Sometimes, estimates are too optimistic, whether the state is hit with an unforeseen financial problem or whether lawmakers purposely make higher revenue estimates than the state will take in.

Longtime Statehouse observer Charles N. Wheeler III, a political analyst at the University of Illinois at Springfield, points to 2001, when lawmakers approved a budget in May at the end of the session, as they often do. Then, months later, the Sept. 11 terrorist attacks happened, leading to a nationwide recession. As a result, the state took in less money than expected, and a deficit was born.

Over the years, lawmakers approved what may have met the state constitution's definition of a balanced budget. But unpaid bills at the end of each previous year increased. Today, they total billions of dollars, and Wheeler notes the state constitution doesn't require lawmakers to consider them when they're approving a new “balanced” budget.

For years, lawmakers managed budgets by failing to include the delayed payments in their budgeting, and because of that, the state's actual financial condition worsened.

“Delaying payments is not the same as cutting expenses,” said Rep. Fred Crespo, a Hoffman Estates Democrat who helped craft the newest state budget. “It gets to the point where it catches up.”

Wheeler adds that some reforms have helped make Illinois budgets a truer picture of the state's financial situation. For example, lawmakers now must agree to a fixed number representing anticipated revenues, and they cannot authorize expenditures above that number. It's also harder for them to change the revenue number over the course of the year.

As this year demonstrated — with the House and Senate each settling on different revenue numbers — that figure is open to all sorts of interpretation, but it now has to be set at the beginning of the process, which hasn't always been the case.

Other reforms require lawmakers to pay the state's loan and retirement-fund payments before weighing other state programs. This helps keep these mandatory payments from simply getting added to the deficit at year's end.

Wheeler says “the changes that have been made to the process in recent years are really significant,” because they help ensure more accurate estimation of income and expenses as well as more control over both sides of the budget.

Lots of states have some kind of requirement for balanced budgets. But deficits loom in state coffers across the country because of years of slow economic growth and rising retirement and medical expenses, not to mention lawmakers' unwillingness to tackle the political risks of either raising taxes or cutting costs.

In Washington, conservative lawmakers, in particular, want political leaders to face up to those risks through a balanced-budget amendment to the U.S. Constitution. The debt ceiling agreement requires a vote take place on a balanced-budget amendment, and GOP congressmen throughout the suburbs — including Reps. Peter Roskam of Wheaton and Randy Hultgren of Winfield, both of whom went to Washington directly from the state legislature — support it.

“A balanced-budget amendment to the constitution is exactly the kind of systemic fix to help get our country back on a sustainable fiscal path,” Hultgren said. “It will help to hold elected officials accountable and force all future Congresses to prioritize expenses and end the massive overspending that has plagued our country for decades.”

U.S. Rep. Joe Walsh, a McHenry Republican, has introduced balanced-budget legislation. His proposal caps spending as a percentage of the country's gross domestic product.

Some opponents worry that a strict cap on spending could cause problems in a national emergency, tying the hands of the federal government when it needs to spend money.

But Walsh argues that it's important for the federal government to have a stricter budget provision than most states have.

“Illinois' is just flooded with loopholes and openings,” he said.

Walsh's proposal is far from the only one on the table in Washington, and the debt ceiling agreement doesn't stipulate what shape a federal balanced-budget amendment proposal must take.

That, Walsh says, could be one of the next fights federal lawmakers will wage.

“There will be much negotiating and elbowing,” he said.