Illinois Budget: Even With Cuts, Deficit Will Still Grow $5 Billion, Watchdog Group Says

A new report released Monday by the Civic Federation says that, even though the state has made some serious cutbacks and increased its income tax rate, it will still face a shortage of about $8.3 billion by the fiscal year's end next June.

According to an AP report, Illinois will likely be left with $5.5 billion in unpaid bills and $2.8 billion in backlogged Medicaid, employee health insurance bills and business tax refund payments by mid-next year, according to the report. The nonpartisan watchdog group's findings can be viewed in their entirety here [PDF].

In a statement announcing the report, Laurence Msall, Civic Federation president, described the state's recent budget process as "somewhat improved" over recent years, as the annual gap between revenue and expenses was significantly reduced -- from $3.9 billion to $454 million. Still, that news comes with an important caveat -- that "the State's finances have not been fixed," according to Msall. The state's pension obligations are particularly daunting.

"This budget plainly demonstrates the need for further pension reform by the State of Illinois," Msall said. "Neither dramatic increases in revenue nor painful cuts to appropriations were enough to offset the increased costs imposed on the State by its underfunded pensions."

Responding to the report, Illinois Governor Pat Quinn (D)'s budget spokeswoman Kelly Kraft said the state is working to address its budgetary crisis through pension and Medicaid reforms, according to the Chicago Tribune. Kraft admitted, however, that more work lies ahead in that arena.

Quinn's plan to address the state's budget deficit by borrowing cash to help pay down its debt and address its overdue bills has been consistently trashed by the state's Republican leadership. As of mid-August, Comptroller Judy Baar Topinka said her office was facing 190,000 outstanding bills totaling almost $4 billion. Topinka and other Republicans have called for additional cuts to the state budget beyond the cuts the governor has already made.