Illinois Budget Outlook Not Good: New Report Shows Need For More Cuts, Borrowing

With billions of dollars in unpaid bills and a more than $500 million budget deficit this year alone, it's hard to imagine Illinois's finances getting much worse. But, according to a three-year budget projection released by Governor Pat Quinn's office Tuesday, the outlook is not good.

“Our revenue growth is not enough to keep up with pensions and Medicaid. It creates a squeeze for everything else,” Quinn’s budget director, David Vaught, told the Associated Press. Despite repeated calls by watchdog groups for the state to reform its pension programs, the projection shows the cost of pensions rising significantly each year.

The solution? More cuts. Quinn said Tuesday that nearly all state operations should expect to cut their budgets by 9 percent -- but the governor wants to avoid further cuts to healthcare and education.

“These will be painful cuts,” Vaught told the State Journal-Register. “You don’t cut 9 percent out of budgets that have already been cut just by finding a little extra here and there. It’s going to be real cuts that affect real people.”

Vaught also told SJ-R that unions may not have much luck with collective bargaining due to the state's dire situation, and human service programs -- which have already been suffering -- may be reduced by an additional $350 million. The Associated Press reports that public safety funding could be cut by 8 percent, and Quinn's projection calls for keeping education spending at $8.9 billion for the next three years.

In cash terms, sure, we’re behind, and we need to catch up,” Vaught told the Chicago Tribune, adding that the state is dealing with a "hangover" due to costs from the last budget. Quinn reportedly wants to pay off the more than $6 billion in unpaid bills by borrowing money, and he hopes the General Assembly will approve that plan.

Illinois Republicans used Quinn's budget projection to encourage more communication between the two parties.

“We will be there for any sincere discussion on bringing spending under control, revisiting how services are delivered and restoring some fiscal stability to Illinois,” Senate Minority Leader Christine Radogno said, according to the AP.

The three-year budget projection, called "Budgeting for Results," [PDF] was meant to help control state spending by budgeting based on available funds -- not looking for cash after the fact. But, as the Capitol Fax blog pointed out in their coverage of the report, the forecast shows Illinois in a terrible fiscal situation by 2015.

"Even with these cuts, Illinois will have an $818 million deficit in Fiscal Year 2015, when most of the tax hike expires," Rich Miller writes.

Check out the budget forecast here.