* Bloomberg’s Elizabeth Campbell…
As Illinois prepares for Governor Bruce Rauner to unveil a proposed budget next week, the worst-rated state is already awash in billions of dollars of red ink, according to Comptroller Susana Mendoza.
Lawmakers and Rauner will have to contend with deficit spending in the current fiscal year as they work to craft a spending plan for next year, according to Mendoza, a Democrat whose office is charged with paying the state’s bills. She outlined the shortfall in an interview at her office in Chicago:
* $2.3 billion of deficit spending in the form of unappropriated liabilities held at state agencies as of Dec. 31
* $8.4 billion of unpaid bills as of Feb. 7
* $1.03 billion of late-payment interest fees incurred as of Dec. 31, 2017 - Note: At least $143m has been paid
* $1.7 billion general fund deficit, according to the governor’s office of management and budget
Rauner on Feb. 14 is scheduled to present his spending plan for the fiscal year that begins July 1. The Republican, who is up for re-election this year, has pledged to roll back an income-tax hike enacted by the legislature in July over his veto. That revenue boost ended an unprecedented two-year budget impasse, which had threatened to send the state to junk-status. Lowering taxes even just a quarter point would shave an estimated $1 billion off the state’s projected revenue, according to the comptroller’s office.
* The Bloomberg story was published before the governor’s budget director testified yesterday with some updated numbers. Monique Garcia and Bill Lukitsch at the Tribune…
[Budget director Hans Zigmund] said the lawmakers’ budget plan was nearly $1.7 billion out of balance, but that number has been whittled down to $600 million through a combination of spending cuts, borrowing from specialized accounts and more revenue coming in than expected.
So, the budget passed over the governor’s veto is $600 million out of whack, which isn’t gigantic.
Then [Zigmund] detailed looming problems, including the state’s roughly $8.3 billion pile of unpaid bills. Of that, $1.1 billion is tied to what Zigmund called “unappropriated liabilities,” or money the administration spent without permission from lawmakers as it sought to keep the prison system and Medicaid program afloat during the impasse.
Zigmund said Rauner would propose a way to address the combined $9 billion shortfall next week.
Zigmund’s unappropriated liabilities number is less than half the comptroller’s, so I’m not sure what’s going on there.
* The SJ-R’s Doug Finke explains those “unappropriated liabilities”…
The state did not have a budget in place for the 2017 fiscal year but kept spending money through a variety of court orders, consent decrees and automatic spending.
About 85 percent of the supplemental spending request is for expenses for Corrections and for Medicaid.
Sen. Heather Steans, D-Chicago, who chairs one of the Senate Appropriations committees asked how soon the money to operate Corrections will run out if a supplemental bill isn’t approved.
“Very quickly,” Zigmund replied. “Right now, we are having to very actively manage (the bills) that are going over to the comptroller, to do things like make sure the prisoners are fed, make sure the garbage is taken out, make sure the water and lights are running.”
“Unappropriated liabilities” also includes running up the state’s tab by signing contracts without authorizing appropriations.
* And none of this includes GOMB’s previously projected $2.15 billion deficit for FY 2019, which starts July 1.
However, not all of those unpaid state bills are actually overdue. A few billion or so are likely within the normally acceptable bill-paying cycle. So, the hole, including next fiscal year’s projection, is maybe somewhere around $8 billion. Hooray!
* Keep all that in mind when the Illinois Policy Institute claims it has a balanced budget proposal. The institute says it has found $2.173 billion in alleged savings, some of which are impossible to accomplish with Democrats in charge and some are fiscally iffy to say the least.
Either way, the plan addresses only next fiscal year’s problem while seemingly ignoring the carry-over from this fiscal year.