The State of Illinois this month released its Comprehensive Annual Financial Report for the 2017 fiscal year. It’s basically the audited actual financial results for the year — 383 pages worth.
The bottom line is what’s called “total primary government net position.” It’s basically the concept of net worth — assets minus liabilities — and reflects the gradual accumulation of losses from year to year.
The state lost $9.9 billion in 2017 by that measure, falling to negative $137 billion. For a little perspective on how much that is, the state’s total revenue is about $38 billion, so it sustained a loss for the year equal to over a quarter of its income.
It’s nothing new. This chart shows the plummet into the abyss over the past ten years:
Four things you should remember about this:
1. It’s not just the state government. Towns and cities across Illinois are sinking, too. The chart below shows The City of Chicago, Cook County, the Chicago Public School District and the state over a ten-year period, which we published last year. We are working on compiling these numbers for other major Illinois municipalities.
2. It’s much worse than other states. As reported by The Bond Buyer,
[Illinois] runs away with the title for the highest negative net position figure among those reviewed by the auditor, with Massachusetts next at a negative $63.4 billion, then Connecticut at negative $45.4 billion, Kentucky at negative $16.5 billion, Maryland at negative $10.6 billion, and Hawaii at negative $3.4 billion. Delaware and Rhode Island also have small deficit positions. The remaining states are all in positive territory with Texas at $101.9 billion.
3. A booming stock market didn’t help. Growing unfunded pension liabilities comprised much of Illinois loss over the last ten years. Markets boomed in 2017 and the state’s pensions earned over 12%, which is unusual, yet unfunded pension liabilities stayed basically flat and the state still hemorrhaged.
4. It shows why government budgets mean little. In all those years when Illinois suffered huge losses, budgets were “balanced” under the phony accounting standards used for government budgets. Actual results show a vastly different story.
5. It shows why the public in Illinois remains in the dark about the severity of our crisis. Where in the Illinois press were these new numbers covered? Nowhere that we can find. At least two national sources, however, saw the importance and wrote about it immediately, The Bond Buyer and Reuters. The Illinois media likely will cover the budget battle extensively. They usually do. That misleads Illinoisans into thinking the state comes at least within a few billion dollars balancing its books each year, when in fact things are far, far worse.
Correction: 3/28/17. Corrected the 2017 returns for Illinois pensions from 15% to 12%.