Illinois’ massive stack of unpaid bills will nearly triple to $22 billion within five years unless lawmakers act to curb pension and Medicaid costs, according to an analysis released by the Chicago-based Civic Federation. […]
While still in the red, the state’s five-year fiscal outlook has significantly improved since last year when the same watchdog group projected a $35 billion backlog. The better forecast this year is largely due to $1.6 billion in Medicaid cuts signed into law by Gov. Pat Quinn last June. […]
The potential explosion in unpaid bills would represent a roughly 178 percent increase from the state’s current level of $7.8 billion and would mean funding for already suffering programs in areas like education and health care would likely be strained further. […]
Without meaningful reform, pension costs will continue to overwhelm the state’s budget. Total pension payments – including contributions and debt service on pension bonds – would increase nearly 30 percent from $6.7 billion this year to $8.6 billion in fiscal year 2018, the Civic Federation warns.
If that scenario were to play out over the next half-decade, the state’s total pension payments would eat up nearly one-third of state-generated revenue, whereas today the payments consume about 22 percent.
Not mentioned in that above excerpt is the impact of the income tax hike expiring. From the Civic Federation’s press release…
Illinois is headed for a substantial loss of revenue beginning in 2015, after the partial rollback of the temporary income tax increase enacted in 2011. On January 1, 2015 the personal income tax rate is scheduled to decline from 5.0% to 3.75% and the corporate rate will decline from 7.0% to 5.25%. The first full budget year under the lower rates will be FY2016. With the resulting decline in revenues and growing annual pension costs, the State’s operating deficit is projected to increase dramatically to $4.2 billion in FY2018, compared with a modest surplus in FY2013.
The full report is here.