Illinois Financial Crisis: Eight Things You Need to Know

Submitted on Tue, 06/07/2016 - 15:54

 

FPC-Voices_Logo.pngThe following is a blog post from the Fiscal Policy Center at Voices for Illinois Children.

The legislative session is over, and Illinois is about to enter its second year without a budget. Where does all of this leave the state?

Voices for Illinois Children’s Fiscal Policy Center offers eight takeaways to put matters in perspective and lead the way to a solution that gets Illinois back to making the public investments needed for the state to flourish.

 

  1. Illinois is Dismantling the Foundations of a Prosperous, Compassionate State. As the Fiscal Policy Center haschronicled, the lack of a fully-funded state budget is devastating for communities across Illinois. Our higher education system, an essential part of creating a strong workforce, is falling apart. Service providers are shutting down, and our safety net is collapsing. Survivors of sexual assault can’t get needed counseling; homeless youth are kept out of shelters; and the families of children with autism spectrum disorder are denied services that help their children thrive.
  1. Public Safety is Jeopardized. Violence in our communities has many causes and requires many solutions. Now, just when Illinois needs a coordinated, public health-centered approach to violence that plagues many communities, we are going in the opposite direction. Illinois has cut mental health and substance abuse treatment, after-school opportunities for youth, and programs like Redeploy that rehabilitate youth in their communities.
  1. Lack of Resources Drives This Crisis. Political posturing aside, the real problem is Illinois doesn’t have the money it takes to meet public needs. Illinois could be a thriving state, with opportunity for all, if it could make the public investments that have been impossible since the 2015 income tax cut. To return to the level of services of the 2015 fiscal year — the last year with a full budget — without adding additional debt, Illinois needs more than $7 billion in new revenue a year. Our state is way beyond the point where its financial problems can be solved by further cutting spending.
  1. Delay In Raising Revenue Means More Debt. Since the enormous income tax cuts of 2015, Illinois is racking up debt even with deep cuts in spending. This is because the state must still pay for a variety of things mandated under state and federal law. Every day lawmakers and Governor Rauner fail to agree on raising critically needed revenue, Illinois’ finances worsen. “Solutions” that fail to raise revenue aren’t really solutions at all. (Note: If public schools are simply not funded at all next school year, that would “improve” the budget picture on paper, but would have devastating effects.)
  1. Debt = Less Investment in Future. Increasing the state’s backlog of unpaid bills not only means unfair payment delays to people providing goods and services. It also restricts what Illinois can do in the future. Debt must be repaid using future revenue, taking resources away from schools, transportation, public safety, and other building blocks of broad prosperity.
  1. Without More Revenue, Increases to PreK-12 Education Funding Crowds Out Other Investments. Investments in preschool and K-12 education are some of the most important investments that our state can make. We absolutely need to be increasing these investments to create opportunities for our children and create a brighter future for Illinois. Without new revenue, however, the large increases to PreK-12 education that Democratic legislative leaders and Governor Rauner want mean that the state will further increase its debt (which will reduce future services and investments) and be forced to cut a range of services for children and families that support children’s healthy growth and development. We cannot continue to pit education against human services — children and families need both to succeed.
  1. Short-Term “Emergency” Budget is Not a Solution. At best, a six-month emergency budget to get elected officials past the November elections only slows the deterioration of our higher education system and our social safety net. Much of any emergency six-month budget would likely just fill existing holes and would not sustain critical services into next fiscal year. For example, under the outlines of the Governor’s emergency six-month budget plan, Illinois would provide no tuition-assistance (MAP grants) this fall for college students from families struggling to make ends meet.
  1. Governor Rauner Has Bill on His Desk that is Part of His Desired Six-Month Budget. The legislature passed by large bipartisan majorities Senate Bill 2038 to provide urgently needed funds to service providers owed $700 million by the state. The money sits in state accounts, unable to be spent until Governor Rauner signs the legislation he received nearly three weeks ago. More than 220 organizations, including Voices, have urged him to sign this bill.

To avoid further damage to our state, lawmakers and Governor Rauner must come together to enact a fully funded budget that raises billions of dollars in new revenue to support critical services and public investment in Illinois’ future. Anything else falls far short of strengthening our state.