Illinois Comptroller, Judy Baar Topinka has projected that the state of Illinois will be in deficit by $8.3B by the end of its fiscal year, June 30, 2011, despite raising the individual income tax rate by 67% and the corporate tax rate by 45%. The tax increase has already been spent.
Ms. Topinka says that the state has over 208,000 bills outstanding totalling $4.5B, that are owed to hospitals, schools, social agencies and businesses for past services. There are $3.8B in bills due this current fiscal year and the state usually makes it through by borrowing and postponing bills to the next year, but Ms Topinka says that the state can no longer kick this can down the road.
With all the talk of increased gambling in the state to raise more revenue, do you want to bet? Illinois owes over a billion in corporate tax refunds and other debts. The income tax increase only reduced the debt by $1B, so the state hasn’t been made fiscally sound due to the tax increase.
The state has the worst pension funding percentage in the U.S. at 51% funded. The state is already selling the assets of some pension funds because their investments have lost money, except IMRF. The IMRF pension is the reason the average funding is over 50%. Some of the pensions are funded at just over 40%.
The state has even skipped pension payments while promising workers even bigger benefits. To make up for funding deficiencies, the state is investing in more risking private equities and foreign investments to make up the shortfall in their pension funds.
Illinois also owes 100′s of millions to the federal government for unemployment compensation – the state has even had to borrow the money from the federal government in order to pay the unemployed workers.
Governor Pat Quinn didn’t tell voters the whole story during the election, but when did the last governor of the state tell the whole story to its citizens? He needed to cut the budget but has actually wound up increasing spending.
Quinn’s spokesperson for the budget office, Kelly Kraft, says that, “Illinois has a structural deficit that has been created over decades of fiscal mismanagement.” Hope she is including the current occupant of the governor’s mansion.
The spokesperson was also quoted, “There’s simply not enough money to go around.” Now that sounds a bit closer to the truth - but the truth doesn’t always cut both ways – it didn’t cut spending $1B more than last year by our newly elected governor!