Just calling for balanced state budget isn't enough - or realistic

 
By Ralph Martire
Posted11/18/2016 1:00 AM

Last week, Gov. Rauner called for a meeting with the four legislative leaders to negotiate a General Fund budget for Illinois. Normally, that wouldn't generate headlines or news coverage. Of course, nothing's normal when it comes to state budgetary matters, given that 18 months have transpired -- including one full fiscal year -- without a comprehensive General Fund budget having been passed by the General Assembly and signed by the governor.

Which explains why calling for what's tantamount to standard operating procedure generated significant media attention. Indeed, numerous editorial boards, columnists and talking heads immediately chided state elected officials for their collective failure to pass a final General Fund budget last fiscal year -- and urged them to pass a "balanced" budget for the current fiscal year -- which only has six months remaining.

 

And while this near unanimous exhortation may seem like simple common sense, in reality it's only half right. Here's why.

Certainly, the governor and General Assembly should come together and enact a comprehensive General Fund budget. After all, doing so is the very essence of their responsibility to the public, given that over 90 percent of General Fund spending on current services covers the four core areas of education, health care, human services, and public safety.

Oh, it also happens to be their constitutional obligation, so there's that. Moreover, based on what happened last year (FY2016), failing to enact a General Fund budget generates numerous consequences, none good.

For starters, even with no final budget, $21.4 billion in General Fund spending on current services was authorized for FY2016. However, only $7.1 billion of that, or one-third, was the product of the normal budgeting process. You know, where public hearings are held, followed by on-the-record votes by legislators specifying how much to appropriate to (or cut from) the four core services covered by the General Fund, and ultimately culminating with the governor also going on the record either to sign those appropriations into law or veto them.

The remaining $14.3 billion, or fully two-thirds, of FY2016 spending on current services wasn't voted on by anyone -- and instead was authorized by court orders and consent decrees. This left total spending around $3 billion less than in FY2015, with huge cuts to areas like social services ($508 million) and public safety ($467 million), that no elected official had to go on record to support.

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Not surprisingly, eliminating transparency and accountability from the budget process didn't improve Illinois' fiscal condition. Indeed, the accumulated General Fund deficit actually grew from $5.97 billion at the end of FY2015, to at least $9.44 billion for FY2016, a jump of over 57 percent, despite significant cuts to core services. The net result: over 44 percent of all FY2016 spending on current services was deficit spending.

Which is why media pundits were only half right -- sure, it's incumbent on electeds to deliver a comprehensive General Fund budget for Illinois. However, a "balanced" budget is neither rational nor immediately obtainable.

The size of the deficit means spending cuts alone aren't an option, since cutting current services by over $9 billion would be horrible public policy, given Illinois has the fifth-largest population of any state, but ranks at or near the bottom nationally in funding each of the four core service areas.

Indeed, all the data show Illinois' current funding levels aren't adequate to meet demographically driven needs for basics like public education or mental health. Slashing already inadequate spending by over 44 percent makes no sense.

Even if electeds did what the evidence indicates is the right thing and raised taxes, the revenue would take time to come in, so balancing the budget this fiscal year still wouldn't be possible. Which makes the real bottom line clear: Illinois needs a bipartisan, public budget process that ultimately results in both a General Fund with the capacity to meet demographically driven needs for core services -- and becomes balanced over time.

Ralph Martire is executive director of the Center for Tax and Budget Accountability, a bipartisan fiscal policy think tank. rmartire@ctbaonline.org

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