The Commission on Government Forecasting and Accountability (COGFA)
- the Illinois General Assembly's independent budget analysts - projected that
total state spending for the current fiscal year (FY2017) which began on July
1, will ultimately be $39.5 billion, but that revenue would only come in at
$31.8 billion, leaving nearly a $7.8 billion deficit.
On Wednesday,
Rauner's administration disagreed maintaining the budget deficit would be
$5.4 billion. Budget Director Tim Nuding said the commission didn't factor in
several key sources of revenue, including the full amount of federal
reimbursements to the state for Medicaid anticipated for FY2017.
What's really troubling is that both of these projections of
the General Fund deficit only compare anticipated, year-in FY2017 spending
to FY2017 revenues. Neither are factoring the accumulated deficit left over
at the end of FY2016, and thus both COGFA and the Governor's Budget Office
understate the true General Fund deficit in Illinois. (The "General
Fund" is the part of the state budget that pays for the services
that affect most people's education, healthcare, public safety, and human
services.)
HERE'S WHY:
At the end of FY2015, the state's General Fund deficit was $5.97
billion. CTBA's analysis shows that the accumulated deficit grew by
some $3.13 billion over the course of
FY2016, to a total of $9.1 billion.
In other words, Illinois began FY2017 with $9.1 billion in
unpaid bills. That means that even if we balanced this year's revenue
with this year's expenses, we'd still have a $9.1 billion
deficit.
Of course, that means both deficit projections quoted in the Sun-Times
article understate the true accumulated deficit by $9.1 billion. After this carry forward deficit is included, the projected FY2017
General Fund deficit balloons to either $14.5 billion, using
the Governor's estimates, or $16.9 billion using
COGFA's.
Another way to look at the General Fund deficit is [to think of it] as a
percentage of General Fund service appropriations. CTBA's analysis projects the
state to spend $24.69 billion on General Fund services in FY2017. Using the
Governor's projected FY2017 deficit figures, 58.7 percent of all General Fund
service appropriations aren't paid for by FY2017 revenues. Since COGFA
projects the FY2017 deficit to be even greater, using its numbers, that
figure is 68.4 percent.
What does this all mean? The state's financial condition
continues to deteriorate due to a lack of revenue. Whether the General Fund
deficit is $14.5 billion or $16.9
billion, it's definitely unsustainable. Between 59 percent and 68
percent of FY2017 spending is deficit spending. And Illinois will
continue on this deficit spending path until it increases revenue. But in
order to do that, the state needs to fix its flawed tax policy in order to
generate additional revenue (see "It Is All About Revenue: A Common
Sense Solution for Illinois' Fiscal Solvency" for CTBA's
suggestions to fix the state's revenue problems). Until then, the trend of
growth in the accumulated deficit is likely to occur past FY2017.
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