By: Ted Dabrowski and John Klingner
Illinois politicians are once again touting a “balanced” budget. Gov. Pritzker says his proposed 2026 budget would be his administration’s seventh balanced budget in a row.
One problem. Calling the budget “balanced” completely ignores the fact that Illinois is underpaying its pension funds by the billions – same as it has every year for a long time. We’ve been warning about this for more than a decade.
Fortunately, two years ago the Illinois legislature’s independent number crunchers – the Commission on Government Forecasting and Accountability – began publishing the difference between what the state should be paying into the pension funds versus what the state is actually paying. That’s helped make the nonsense of lawmakers’ “balanced” claims far more obvious.
The difference in contributions in fiscal year 2026 will be $5.1 billion.* The state’s statutory payments to Illinois’ five state-run pension funds will be just $11.7 billion, but the funds’ actuaries calculate the state should be paying $16.8 billion – what they call the Actuarially Determined Contribution.
That payment shortfall is why we consistently say the state’s budgets are unbalanced. It’s also part of the reason Illinois is in a perpetual financial mess.
It’s not just the pensions. There’s also likely a shortfall in state contributions toward government-worker retiree health care costs, which in past years has been shorted by the state by anywhere from $1 billion to $3 billion annually. The Pritzker administration stopped providing data previously reported under the Rauner administration, so today we can’t calculate any new numbers with confidence.
The consequence of all these shortfalls is that Illinois is no closer to paying down its enormous official state-level pension debts – $144 billion. By underpaying, politicians continue to stretch the state’s crisis out decades into the future.
The bottom line is this. When you hear lawmakers say the budget is balanced, know that it’s simply not true.
*Of the $11.7 billion in 2026 state contributions, $10.7 billion, or 90%, will be made by the state’s General Fund and another $1 billion by other state funds.
Appendix.
Read more from Wirepoints:
- Beyond the Nazi accusations. What you should know about Gov. Pritzker’s budget address
- Wondering how Illinois’ projected $3.2 billion budget deficit disappeared?
- This one graphic explains why Illinois is such a financial mess
- Illinois lawmakers shouldn’t burden taxpayers with Tier 2 pension “fixes” until they know what they’re doing
- Illinois pension debts hit $144 billion in 2024, make a mockery of politicians’ decades of ‘balanced budgets’
Audio and summary 
If this bill passes, say goodbye to local control over all Illinois parks and expect to see open drug and alcohol use, needles, no sanitation and fire hazards, but no ordinary park users.
If these were 401(k) plans, and the state underpaid contributions every year, everyone would know this is theft from the employees.
But as they are defined benefit plans, and “but you promised!” and “it’s in the state constitution!”, it’s blithely assumed that words on paper will protect the employees.
Good luck with that.
I think cold, hard cash is a better guarantee that the promises will be kept.
$5.1 billion equals about 0.5% of total personal income for the state, using figures from the BEA. Given that the state will probably go for a progressive tax, the shortfall is equal to about 0.7% of those households making more than $85,000, or 1.0% of households making more than $130,000.
You are correct. If we want to have a true balanced budget and are unwilling to cut expenses, we would need to raise the income tax rate from 4.95% to about 5.45%. All the people that say fulling funding pensions is impossible because of math refuse to actually do the math. While I prefer cutting spending our current spending requires a hike in taxes.
Your dead wrong, again. The goal posts will be moved. It’s the corrupt behavior running IL that’s the main problem.
Raising the income tax rate from 4.95% to about 5.45% solves *today’s* deficit but doesn’t solve tomorrow’s deficit, which will require a 7.0% tax. Other surrounding states are living within their means, especially when adjusted for per capita, some using two year budgets instead of one year budgets to control expenses, but not in Illinois.
I agree that it only solves today’s deficit but that’s the cost if we don’t want a deficit and refuse to cut spending. If we raised taxes every time we spent too much money maybe the electorate will finally be forced to decide that not every spending program or initiative is necessary. Until then the voters are told they can have their cake and eat it too.
Jack, I agree that current elected leaders will want more and more taxes for more and more spending. My comment was more directed to the people that claim our debt can’t be paid based on MaTh. Math isn’t causing our fiscal problems but rather voters being totally clueless and voting for politicians that promise more spending and the “other guy” is going to pay for it. You can call it corruption to make you feel better but voters want the our current fiscal state. Otherwise they would vote differently.
How about just writing bad checks to everyone and let the courts sort it out?
There is no need to do that Poor Taxpayer. The state has over 50 billion every year to spend. They just need to spend it on what’s required (Bonds, Pensions, K-12 Education, Medicaid, etc…) and what’s left they spend on their other feel good initiatives. If there isn’t enough money left for the feel good initiatives they will need to learn to live with the cuts or raise taxes. Pretty simple.
Is there 5.1 billion in discretionary spending? Probably not, so taxes will need to increase. No need to right bad checks.
You keep forgetting the rich private sector job creators are moving out of state.
Illinois ranks 48th for people moving out, loses over 56K residentsOne day there will be no one to tax. The Public sector pensions will have destroyed Illinois for good. Nothing but farmers will be left.
Here’s why this matters: Pritzker and the Leftist Democrats have cozied up to the public employee union bosses and are granting huge never before seen compensation increases, but are refusing to pay for them. Of course IL taxpayers are on the hook for all of it.
Pritzker and Leftist Democrats are telling bald face lies about the budget – it’s total malfeasance.
This is the largest generational theft in the history of the world. The rich job creators continue to leave the state being replaced by poor immigrants. Sooner or later the sorry State of Illinois will run out of money. I doubt the Federal Government is going to help out. Lots of people will not end up getting paid or get services they have paid for. This will not end well for anyone.
It is going to get real interesting when the city and / or state start cutting essential services, and try to prioritize pension payments to members of corrupt government employee unions. Already happening in Chicago with 50% of 911 calls going unanswered, and fire trucks and ambulances way beyond their replacement date. I hope suburbanites will be less tolerant of this bs than citizens in the city seem to be. They seem to like being abused by their politicians and paying 2X normal costs for everything.
Pritzker is a can kicker, and he’s shown a proclivity for it since he took office. Almost as soon as he was elected he advocated shorting pension contributions, but the revenue from a strong Trump economy actually rescued him. He was similarly rescued by the epically disastrous Biden term of terror, when the Covid blue state bailout and record setting inflation resulted in increased state revenues. If it weren’t for the complicit media in Illinois, he’d be in hot water up to his chins. Instead, the media shills trumpet the “balanced budget” mantra as if it actually has meaning. All… Read more »