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Today’s number: 28 percent

Monday, Jun 16, 2014

* From the Center for Tax and Budget Accountability

In real terms, Illinois has been significantly cutting its investment in services over the last 15 years.

In fact, in FY2015, spending on the core services of education, healthcare, human services, and public safety - which collectively account for $9 out of every $10 in General Fund service spending - will be 28 percent less than in FY2000 after adjusting for inflation. [Emphasis added.]

Why? Mainly because the state has been paying its pension obligations and the Edgar payment ramp has kicked into high gear.

Also, notice that “healthcare” is included on Martire’s list. Total healthcare costs are growing a net 0.8 percent this coming fiscal year. A bit less griping about Medicaid by the screamers would be appreciated.

- Posted by Rich Miller        


33 Comments
  1. - Fed up - Monday, Jun 16, 14 @ 2:25 pm:

    Let’s get real. They are using the numbers for an expired income tax anyone who believes those are the final numbers probably believes Quinn’s violence reduction plan was about violence.


  2. - Paid - Monday, Jun 16, 14 @ 2:31 pm:

    Wouldn’t “service” spending exclude pensions? So this isn’t a calc of pension crowd out.


  3. - Rich Miller - Monday, Jun 16, 14 @ 2:34 pm:

    ===Wouldn’t “service” spending exclude pensions? So this isn’t a calc of pension crowd out. ===

    You contradicted yourself. Pensions aren’t service spending. Pension spending has gone up. Service spending has gone down.

    And, Fed up, I don’t understand your point at all, either.


  4. - Anon - Monday, Jun 16, 14 @ 2:35 pm:

    Aren’t pension costs considered part of “spending on the core services of education, healthcare, human services, and public safety?” Are we really spending less, or are we just spending more on different categories of expenditures?


  5. - VanillaMan - Monday, Jun 16, 14 @ 2:39 pm:

    There is a lot in that general statement.

    It assumes apples-to-apples as though Illinois state government in 2000 is the same thing in 2015. There has been an incredible revolution in state government since Y2K.

    We have an entire generation, the world’s largest generation, retiring. That leaves everyone else holding the bag, and there are a lot fewer of us than there were Boomers.

    In 2000, some agencies still used typewriters and land line phones. Fax machines! The techies were trying to convince Boomers to switch from mainframes to PCs. We had hundred of offices filled with thousands of file cabinets, filled with millions of files, filled with billions of pieces of freaking paper!

    In 2000 - there were secretaries!

    It was an entirely different world. Ask any of the old timers out on contract right now.

    So we’re comparing 2000 to 2015, based on…

    Yeah - Mr. Martine. There has been a decrease in spending. Now tell us how the work is being done with a fraction of the state workers?

    Sorry, but I just can’t accept this simple little accounting analogy as more than an interesting tidbit. You cannot get a complete picture without recognizing the radical transformation which has taken place within state government, thanks to technologies and generational retirement.

    It is not apple-to-apple at all.


  6. - Fed up - Monday, Jun 16, 14 @ 2:52 pm:

    Rich do you honestly believe the income tax is going to expire and the budget isn’t going to change


  7. - Rich Miller - Monday, Jun 16, 14 @ 2:55 pm:

    ===do you honestly believe the income tax is going to expire and the budget isn’t going to change ===

    I think the budget will change. I don’t think the budget will rise by more than 28 percent.


  8. - Eugene - Monday, Jun 16, 14 @ 3:00 pm:

    Vanilla Man, regardless of changes in technology, the cost of educating a child has not decreased, but funding in real terms has decreased. Technology has driven the costs of health care up, not down. The takeaway is that when it comes to spending on services that most people want and expect from state government, spending in real terms has gone down. And we are devoting so much money to paying off pension debt because for years the politicians would not be honest with the public about the cost of services, so they deferred pension payments - ultimately an extremely expensive way to deal with the problem.


  9. - Eugene - Monday, Jun 16, 14 @ 3:02 pm:

    Fed Up, spending on services has gone down substantially even if you look at FY 2014 for comparison.


  10. - Commander Norton - Monday, Jun 16, 14 @ 3:09 pm:

    Spending on benefits, including pensions, shouldn’t be immune from scrutiny, but certainly paying competitive wages and offering competitive benefits are important components of providing services.

    How many times have I heard complaints about teacher quality come out of one side of a mouth while complaints about excessive teacher benefits come out the other?


  11. - Fed up - Monday, Jun 16, 14 @ 3:23 pm:

    Eugene 2014 is a much more appropriate comparison.


  12. - Rich Miller - Monday, Jun 16, 14 @ 3:24 pm:

    ===Eugene 2014 is a much more appropriate comparison. ===

    Then go start your own group. lol


  13. - Demoralized - Monday, Jun 16, 14 @ 3:33 pm:

    @Fed up:

    I think you’ve completely missed the point of the comparison, which is, in simplistic terms, to note that spending on the large budget drivers has gone down when you adjust for inflation. It is what it is. Trying to spin it is asinine.


  14. - Steve - Monday, Jun 16, 14 @ 3:45 pm:

    Many Illinois taxpayers make less than they did in the year 2000, on an inflation adjusted basis. Although, I like where Ralph’s logic is: from now on if someone is doing financially worse on an inflation adjusted basis they shouldn’t have to pay higher taxes .


  15. - wordslinger - Monday, Jun 16, 14 @ 3:54 pm:

    Not surprised at all. They’ve been whacking at the non-pension portion of the budget pretty good the last five years or so.

    Really, VMan, there’s been a “revolution” in the delivery of state services since 2000? Are you a part of that?


  16. - Steve - Monday, Jun 16, 14 @ 4:10 pm:

    It’s nice to do studies on things that haven’t kept up with inflation but the bond market doesn’t care and courts don’t care. Illinois public pensions are not only a big part of government spending they are more special: they are enshrined in the Illinois state constitution. Calling something an investment doesn’t make it more worthy than something protected by the constitution.


  17. - steve schnorf - Monday, Jun 16, 14 @ 6:50 pm:

    Students, you have to learn the difference between pension “costs” and pension “spending”. Pension costs are not up much at all and in fact are down over the past several years, the reasons for which include the diminished (relatively) costs for Tier 2. Pension spending is up substantially, but only because of what are effectively interest costs on past unfunded liability, which we are paying more of each year. We haven’t yet reached the point where we’re actually starting to pay down principle.


  18. - Assess - Monday, Jun 16, 14 @ 6:55 pm:

    The number of state workers has been cut by almost 25% sinc 2002-03. Such facts don’t matter to those whose premise is that IL has a spending problem, even tho IL is one of the lowest spending states per capita.


  19. - steve schnorf - Monday, Jun 16, 14 @ 6:56 pm:

    Oh, and spending is still down even if you don’t adjust for inflation: notice the 14-15 numbers, down nominally, and we know the 15 numbers can’t be funded. The only thing I disagree with Ralph on is his statement that it would be impossible to cut $2.2B from the 14 budget: it wouldn’t. However, no on wanted to own that mayhem in an election year, just like the GA didn’t want to own the “tax increase” this year either.


  20. - Johnny Utah - Monday, Jun 16, 14 @ 7:10 pm:

    The Illinois median household income has fallen by 20%, from 63,000 to 51,000 in the same period.

    Private sector payrolls have fallen from 5.1 million to 5.0 million in the same time.

    No job creation -> no income growth -> no government funding.

    Have to deal with jobs before we can have tax dollars to spend.


  21. - By the Numbers - Monday, Jun 16, 14 @ 8:57 pm:

    Johnny Utah
    You need to check your math and your data. Your private sector payroll is close but your median income is baloney. By the way percentage wise Illinois government payroll has fallen faster and further than the private sector over the same period.


  22. - Johnny Utah - Monday, Jun 16, 14 @ 9:30 pm:

    By the numbers:

    Wrong on private sector payrolls, overall government payrolls, and median income.

    Since Dec’99, private sector payrolls are -197k, overall gov’t payrolls are +1.8k. IL gov’t payrolls are -14.3k, Feds in IL are -16.5k, but locals in IL are +32.6k.

    Inflation-adjusted median household income was $63,843 in 1999, $51,738 in 2012.

    Once again, this is a jobs problem. Government service spending cannot increase with negative private sector payrolls and collapsing median incomes.
    Check for yourself:
    http://data.bls.gov/cgi-bin/dsrv?sm

    http://research.stlouisfed.org/fred2/series/MEHOINUSILA672N


  23. - JI - Tuesday, Jun 17, 14 @ 12:55 am:

    The “healthcare” lines are true only if you ignore the fact that the vast majority of Medicaid spending now occurs outside GRF and the state has regularly shifted more and more Medicaid spending to special funds over the past several years.

    GRF + related funds saw 16.5% increase in FY15 over FY14. And that’s a 55% increase in GRF + related funds since FY07.


  24. - Precinct Captain - Tuesday, Jun 17, 14 @ 3:39 am:

    US real median household income
    1999: $56,080
    2012: $51,017

    Sounds like a national problem, not an Illinois problem.

    http://research.stlouisfed.org/fred2/series/MEHOINUSA672N


  25. - Johnny Utah - Tuesday, Jun 17, 14 @ 7:39 am:

    Precinct captain,

    So the US median income fell by $5,000 in the same time that the Illinois median fell by $12,000. Explain to me how that is not an extraordinary Illinois problem.


  26. - Demoralized - Tuesday, Jun 17, 14 @ 8:13 am:

    @Johnny:

    I believe the point was that it’s a national problem, not just an Illinois problem. Can you explain to me how you don’t come to the same conclusion?


  27. - Johnny Utah - Tuesday, Jun 17, 14 @ 8:45 am:

    It is a national problem, that Illinois has 2.5x worse. It’s worse in Illinois because Illinois has negative job creation.

    That’s where it becomes an Illinois problem, which was the point all along.

    There can’t be growth in gov’t services when there are fewer jobs, dramatically lower median incomes, and massive out-migration.

    This is a jobs/business environment problem.


  28. - wordslinger - Tuesday, Jun 17, 14 @ 8:48 am:

    – Explain to me how that is not an extraordinary Illinois problem.–
    -
    Explain how it is.

    Is Illinois some self-contained economic system?

    Are the corporate campuses on Lake-Cook Road part of the same economy as the light manufacturers downstate?

    Are the financial services industry and the health-care services industry somehow related?

    Homebuilding and farming?

    Tourism, hospitality and restaurants linked to heavy equipment manufacturing?

    The idea of a “state economy” is silly. It has no basis in reality. There are many economies at work in Illinois and some of them have little or no relationship to each other or state government at all.


  29. - Demoralized - Tuesday, Jun 17, 14 @ 8:51 am:

    ==That’s where it becomes an Illinois problem==

    And that’s where I’ll somewhat disagree with your analysis. It’s obviously a problem nationally. Illinois doesn’t exist in a vacuum. Saying it’s somehow a “special” Illinois problem simply isn’t true.


  30. - Demoralized - Tuesday, Jun 17, 14 @ 8:55 am:

    ==Illinois has negative job creation==

    That’s not true either. According to Pew, while our job creation is paltry, it is positive.


  31. - Johnny Utah - Tuesday, Jun 17, 14 @ 10:16 am:

    Wordslinger: I already explained how it is an Illinois problem. Illinois’ income fell by 12k while the national fell by 5k. That’s 2.5x as bad.

    Illinois is a self-contained tax system and regulatory system. That’s a big deal. When a govt sets tax and regulatory rules for the state, you have a state economy. Welcome to Econ 101.

    Are you saying that states don’t compete, and that Illinois isn’t losing to just about everyone? News flash buddy: people are voting with their feet and leaving.

    Demoralized: As I wrote above, since 1999, Illinois has lost 197k private sector jobs on net. I provided the link so you can search it. At least read what you’re responding to before you respond.


  32. - wordslinger - Tuesday, Jun 17, 14 @ 10:28 am:

    –Welcome to Econ 101.-

    Let me know how the second day of class goes. I’m pulling for you.


  33. - Johnny Utah - Tuesday, Jun 17, 14 @ 10:35 am:

    Second day was great, but you missed class again. Had to give you a demerit.

    But that’s ok. It’s tiring taking you to school all the time ;)


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