The Long-Term Harm of the Budget Crisis

Submitted on Wed, 08/24/2016 - 16:25

The Long-Term Harm of the Budget Crisis

By Dan Lesser

In the last 13 months, we’ve seen an acute crisis unfold in Illinois as Governor Rauner and lawmakers failed to fulfill their most basic duty and enact a fully funded, year-long budget with enough revenue to support vital public investments that make Illinois strong. The “stopgap” spending plan, passed and signed into law on June 30, has done little to alleviate this crisis. The immediate, direct impacts persist, and as my colleague Jennifer Cushman discussed in a previous post, providers are still mired in uncertainty, unable to plan for the future. 

But our Governor and lawmakers’ continued failure to enact a budget is harming our critical infrastructures and economies in broader, sometimes indirect ways that will hobble Illinois long after a budget and revenue package is finally passed.

Take the local economy in a college town. We know that at many campuses, student enrollment is declining and faculty members are leaving, signaling a loss of confidence in Illinois’ higher education system and the loss of the talent that makes universities strong. But the damage extends farther than that. As this NPR-UIS story illustrates, student and staff decreases at Eastern Illinois University and Western Illinois University are causing an economic ‘ripple effect’ in which surrounding local businesses and markets reel from the weakening of these institutions. Less people enrolling at Western Illinois University means that, for example, a coffee shop gets less business, and has to lay off or cut hours for student workers who might rely on that income to help cover tuition. And, increasing uncertainty around the strength of universities deters job seekers from searching for jobs in college towns, ultimately causing a decline in the housing market. Often, these ‘ripple effects’ linger and hamper local economies long after the acute crisis is resolved.

Further, Illinois’ budget crisis is exacerbating Illinois’ vulnerability to the next recession, as a report by S&P Global Finance shows. The Governor and lawmakers’ failure to enact a budget and raise enough revenue to fully fund critical infrastructures has left Illinois with an enormous spending deficit and backlog of bills that grows each day. And, Gov. Rauner and lawmakers completely drained Illinois’ rainy day fund to help pay for the stopgap spending plan, leaving nothing behind to compensate the decrease in revenue that would accompany a recession. If nothing changes, Illinois won’t have the resources to bolster spending and maintain baseline investments in vital services and institutions during the next recession, which will undoubtedly lead to more harmful cuts.

Governor Rauner and lawmakers’ continued failure to fulfill their most basic duty of governance has exacerbated our state’s economic weakness. Without corrective action, the impacts of this failure will become more long-term and the consequences more severe. Families, communities and small businesses need lawmakers to pass a fully funded, year-long budget with enough revenue to fund critical public investments, not just to end the current crisis, but also to lessen the harm that will extend into the future. It’s the only way to repair the damage, prevent further harm, and build the foundation for a thriving Illinois. 

Dan is the Director of Economic Justice at the Sargent Shriver National Center on Poverty Law and Coordinator of RBC.