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GOMB: State needs another $3+ billion a year to stay even

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Illinois

The Illinois Governor’s Office of Management and Budget (GOMB) has released its five-year budget projections. The forecast, not surprisingly, is alarming. Spending continues to outpace revenues by a large margin.

Despite last year’s 32 percent tax hike ($5 billion yearly), GOMB expects Illinois to maintain average budget deficits of about $3 billion over the next five years.

Click here for the GOMB projection.

* A couple of caveats before beginning. This is the economic forecast used for the revenue estimates…

The pessimistic forecast assumes economic growth grows to 3.1 percent to 2019, before contracting by 0.7 percent in 2020, with a recession from fourth quarter 2019 to second quarter 2020.

There’s also some editorializing by the Rauner-controlled office…

Barring the passage of meaningful economic and political structural changes, Illinois’ anemic employment and economic growth is expected to continue to underperform the nation over the next five years.

Does that “meaningful economic and political structural changes” phrase mean “right to work and term limits”?

* Despite the governor’s repeated claims during the campaign that the first budget he signed into law is balanced, his GOMB is projecting a deficit at the end of this fiscal year of $546 million, plus maybe another $500 million more if Rauner loses his AFSCME step increase case.

The projection for FY20 (Pritzker’s first full fiscal year) includes an overall resources decrease of about $100 million, due mainly to a $400 million disappearance of interfund borrowing and a super-anemic projected state tax revenue increase of just $331 million (1 percent). GOMB projects a spending increase of about $2 billion, driven mainly by pensions ($1.1 billion), K-12 education ($400 million) and healthcare ($400 million).

* Looking more long-term, of that grand total of $16 billion or so in projected structural budget deficits racked up over the next five fiscal years, about $2.3 billion of that is due to pensions. Another $1.8 billion is for K-12 education, $1.3 billion for AFSCME step increases, $1.1 billion for healthcare, $459 million for human services, $334 million for employee group health insurance and $181 million for public safety.

Not to mention that the state’s projected bill backlog at the end of the current fiscal year is $7.8 billion.

posted by Rich Miller
Tuesday, Nov 20, 18 @ 2:29 pm

Comments

I don’t know if I’ve ever seen a budget projection assume that there will be a recession (unless they’re modeling several scenarios, including both a recession one and an optimistic one.) The decision to use an optimistic projection through 2019, and then pessimistic afterwards is a strange move and seems politically motivated. More evidence that our state badly needs a consensus revenue estimating process.

Comment by PoliChi Tuesday, Nov 20, 18 @ 2:41 pm
=Yes, I know you will blame Rauner for at least another two years, into the 2020 election =

That’s not how this works, this isn’t the President. In Illinois our memories are short, Bruce Rauner will be forgotten weeks into the Spring Session of 2019. Dem House, Dem Senate, Dem Gov. 2020 will be predicated on what they do with that trifecta.

Comment by Iggy Tuesday, Nov 20, 18 @ 2:46 pm
I am glad former governor Edgar is on the transition team. It is going to take a forward thinking conservative to help the new governor navigate these troubled times.

Comment by Blue Dog Dem Tuesday, Nov 20, 18 @ 2:47 pm
“plus maybe another $500 million more if Rauner loses his AFSCME step increase case.”

Rich, curious about the usage of the word If, hasnt he already lost?

Comment by Seats Tuesday, Nov 20, 18 @ 2:50 pm
With the budget woes why did employees get new I phones when their flip phones worked fine? Why were new laptops issued when the one people had were less than 17 months old? How much did the DO IT department spend without budgets?

Comment by I have to ask Tuesday, Nov 20, 18 @ 2:55 pm
Seats - that’s what I was about to say. At this point, the labor is allowing Rauner to calculate the pay steps and back pay, though I doubt Rauner is actually going to do that. He is just going to dump it on JB when he leaves office

Comment by Ike Tuesday, Nov 20, 18 @ 2:58 pm
I want to hear from the Rauner Department Directors as to what cuts they would make now that their boss has lost and there will be no ramifications.
I also want to hear from the Raunerites who said they want to roll back the income tax to 3%. Oh yeah I almost forgot: Waste, fraud and abuse.

Comment by don the legend Tuesday, Nov 20, 18 @ 3:01 pm
Correction: labor board

Comment by Ike Tuesday, Nov 20, 18 @ 3:01 pm
It looks like cannabis tax revenue of $500 million to $700 million a year is timely. Too bad Rauner did not do what is right and help legalize it earlier.

Comment by Illinois Resident Tuesday, Nov 20, 18 @ 3:03 pm
Wait, I thought Bruce Rainer said he needs another two months to calculate what afscme workers are owed. That’s what he told his appointed board at the ILRB last week. Surely he didn’t tell a small fib did he? The number is exaggerated and he needs to start following court orders instead of thinking he is above the law. Legalize weed and sell bad debt and make money and pay your vendors on time instead of at 7% interest on late fees. See how easy it is?

Comment by Thanks for the info Tuesday, Nov 20, 18 @ 3:03 pm
I don’t believe a word out of this administrations mouth.

Comment by Glengarry Tuesday, Nov 20, 18 @ 3:09 pm
JB is a wunderkind, he will figure it out.

Comment by Anonymous Tuesday, Nov 20, 18 @ 3:12 pm
“see what happens when you pick the wrong guy? Stagnation and full on recession.”
-fake GOMB

Comment by Duke of Normandy Tuesday, Nov 20, 18 @ 3:20 pm
I think Rauner could have got mild concessions on steps and health insurance had he remained bargaining with AFSCME. But in his arrogance he wouldn’t go for the small wins and wound up losing the steps case at the appellate court and ILRB. Then he lost the impasse case, which like the steps case was sent to the ILRB.

Comment by Grandson of Man Tuesday, Nov 20, 18 @ 3:22 pm
Time to start taxing federally taxed retirement income.

That’d do a lot to close the gap.

Comment by Anon Tuesday, Nov 20, 18 @ 3:34 pm
I can only come up with about $350million per year in cannabis tax in California. What am i missing? If i extrapolate for population,Illi ois will only net $100 million or so. Good but not enough.

Comment by Blue Dog Dem Tuesday, Nov 20, 18 @ 3:38 pm
Welcome to reality

Comment by Mockingjay Tuesday, Nov 20, 18 @ 3:52 pm
Hey let’s start a new social service program we can’t pay for .

Comment by Blah Tuesday, Nov 20, 18 @ 4:03 pm
=I can only come up with about $350million per year in cannabis tax in California. What am i missing? If i extrapolate for population,Illi ois will only net $100 million or so. Good but not enough.=

Blue Dog, California is having massive issues with their legal cannabis program. The main issue is the taxes are too high (which I never thought was possible) and a complicated state & local licensing system incentivizing the illegal market. A better analogue for a working system would be Washington State. This comes out to about $551.8 million a year using Illinois’ population.

Comment by SpfdNewb Tuesday, Nov 20, 18 @ 4:05 pm
Blue dog democrat- Colorado collected $247 million in cannabis tax in 2017. Illinois would be north of $550 million adjusted for population. Either way, it will be more then we are collecting now. Plus it will create lots of jobs.

Comment by Illinois Resident Tuesday, Nov 20, 18 @ 4:09 pm
Illinois Resident. Illinois is corn country. You ought see the pot you can integrate into highly fertilized corn fields. Just sayin. I imagine most pot workers will already had positions elsewhere.

Comment by Blue Dog Dem Tuesday, Nov 20, 18 @ 4:14 pm