* Two weeks ago today, we discussed my newspaper column about a mid-November revenue and spending forecast from the Governor’s Office of Management and Budget.

The column, based on subscriber-only stories from November 20th and 22nd, talked about how GOMB was forecasting a $422 million net surplus for this fiscal year (even after factoring in the $160 million in new money for asylum seeker care) and an $891 million deficit for next fiscal year, with increased deficits in future years.

The column was partly about how the pandemic had thrown a monkey wrench into budget forecasting, requiring large changes even every few months. The conclusion…

So, again, can the latest projection be trusted? Not completely, but it should still be heeded. After a period of being mostly careful not to drastically increase the state’s base spending, and instead using much of the unexpected revenue bonanzas for one-time items, the legislature and the governor added a ton of money to base spending last spring. If revenues do fall off next fiscal year, base spending will likely have to be cut.

The governor’s budget address is three months away, so the budget-making process is about to begin. We’ve seen countless forecast adjustments during the past few years, so maybe this one will change, too. But, in the meantime, everyone should prepare themselves for some belt-tightening in the months ahead.

* Capitol News Illinois now has a story out that covers pretty much the same ground, but does include some quotes from the governor. You can read that story by clicking here, but this is what the governor said last week…

Well, it’s very hard to project, let’s start with that, any future years. They do their best, they use basically a set percentage increases in spending, a set percentage increase in revenues in order to come up with these numbers for future years, because it’s just so hard to predict.

You’ve even seen during the course of a budget year, where as we get closer to the end of a budget year we’re coming up with new estimates for the following year because things are changing as we go. So just as background. Why are they coming up with deficits projected for future years? Just like in the past years, if you look at the projection for last year, in the year before in the report, nobody projected a billion dollar surplus for this year.

Last year, I think the surplus there was actually a deficit projected for this year. If again, if you go back to that five-year plan, and that’s what you’re looking at.

So that five-year forecast we look at as a guide for how careful do we need to be as we move forward in the budget year Thinking about FY25. Hard to say about the rest of the years that are projected.

But I think it’s a signal to everybody. We need to be careful in Illinois, we have to balance our budget. We have to make sure that we’re making expenditures meet revenues. And so you know if that requires us to reduce the increases that may occur in certain programs, maybe that will be necessary.

But again, I think you’re gonna see different projections as we go forward just because the economy is changing. Heck, yesterday, I think, sorry, maybe this morning, we saw that interest rates have now been halted. At least the uptick of interest rates has been halted by the Fed. That’s already affecting the values on the stock market and affects whether people want to invest in things. You’re going to borrow money to buy a business, borrow money to buy a house. And projections on Wall Street that we’re going to see a down turn of interest rates that will help everybody that’s looking to buy a home I think, again, helps businesses decide that they’re gonna expand etc.

So it just kind of tries to tell you that you can look at the five year projections more as an indicator of how careful do we need to be, not as an exact number that we need to follow.

Please pardon all transcription errors.