By: Mark Glennon and John Klingner
Gov. JB Pritzker, Senate President Don Harmon and House Speaker Chris Welch wrote an op-ed in Crain’s Tuesday headlined “Here’s what’s on our agenda as the General Assembly gets back to work.”
In one segment with just two sentences, they managed to include three of the most dishonest and regularly repeated claims Illinois politicians make. Here’s the segment:
After we worked together to achieve a balanced budget in 2019, our state, like all the others, was hit last year by an unprecedented global pandemic that has threatened the health and safety of Illinoisans and strained our state coffers. COVID-19 temporarily interrupted the progress we were making to undo the damage left behind by Gov. Bruce Rauner, who saddled state residents with massive additional deficit spending and caused the state to suffer eight credit rating downgrades in just four years.
Name the three whopping fibs contained in that segment.
Don’t know? The falsehoods are huge and fundamental.
Here’s the short answer and details follow.
- The actual 2019 financial results were far from balanced.
- Blaming Rauner is nonsense. Illinois’ fiscal crisis long preceded him and persisted after he left for reasons he has little to do with.
- COVID is no excuse. It turns out that state revenue is ahead of where it was in 2019, the last pre-pandemic year, not counting billions coming in from the federal government.
Here are the details on those three fibs:
2019 Budget.
The actual results for 2019 are contained in audited financial statements in the CAFR, the Comprehensive Annual Financial Report. Here’s it’s bottom line, which is government’s language for net loss: “FINANCIAL ANALYSIS OF THE STATE. The State’s combined net position decreased $3.678 billion or 2.0% during the current fiscal year.”
That’s for the entire state (not just the general fund), which is what matters. The CAFR itself says what CAFRs routinely say: “Over time, increases and decreases in net position measure whether the State’s financial position is improving or deteriorating.”
Aside from that, the reason budgets, as opposed to real financial statements, usually appear to be balanced is that they count borrowed money and asset sales as income and ignore growing debts including unfunded pension liabilities.
That fundamental deceit is currently the subject of hearings being conducted by the Governmental Accounting Standards Board, which we wrote about here. It might be literally correct to say a budget was “balanced,” but it’s only true in the fantasy land of government budget accounting.
Illinois’ books haven’t been truly balanced since 2001. Since then, losses have been horrendous, as shown on this chart of changes in net position:
Illinois’ collapse began long before Former Governor Bruce Rauner arrived – he bears little blame for where the state is today.
Yes, Rauner handled the budget impasse badly, but during the impasse taxes were still collected and revenue came in without interruption. He faced a supermajority in both houses of the General Assembly that said no to everything he tried. The budget impasse was resolved when his opposition got the solution they had demanded all along — a tax increase with no reforms.
And Rauner inherited what was already a fiscal disaster. The state had already suffered 13 credit downgrades and had the worst rating in the nation. From one of our earlier articles about where things stood when he took office:
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- Illinois’ negative Total Primary Government Net Position—basically, its negative net worth—had dropped by a staggering $106 billion from 2006 to 2015, reaching negative $121 billion.
- The state’s unfunded pension obligations tripled from $35 billion in 2003 to $105 billion the year before Rauner took over.
- State budgets had never balanced since 2001, even under the state’s phony budget accounting that ignores growing debt.
- Rating agencies had issued 13 credit downgrades on the state since 2009. Illinois’ credit rating was already the nation’s worst.
- Illinois’ population loss, now five years running, had already begun.
- The state’s unpaid bill backlog was about $6.6 billion and had already begun ticking back up, despite the temporary tax increase then in place.
- Social service providers were already reeling. Illinois ranked No. 1 in the country in the percentage of nonprofit groups facing payment delays, an Urban Institute survey found. “We are basically bankrolling the state. It’s a ridiculous situation,” said one provider. “It’s just absolutely awful and there seems to be no end in sight.”
COVID and the lockdowns didn’t harm state finances – the state has come out ahead.
The economy held up surprisingly well thanks to trillions in federal cash sent to individuals and businesses, so state revenue ended up unimpaired. Revenue is actually up since pre-pandemic 2019 when the economy was roaring. And there are billions in additional federal money coming to boot.
Here are the specifics as shown in a report prepared just last month by COGFA, the state’s Commission on Governmental Finances and Accountability: Total base revenues dropped in 2020 by $1.1 billion – 2.9% – from 2019. But this year revenue is coming in particularly well, which COGFA projects for the full fiscal year, will increase by $3.5 billion – 9.3% – over 2020. The state is therefore well ahead of revenue pre-pandemic, net-net.
In addition, the state got $2 billion from the Federal Reserve Bank in 2020 that will effectively be free money. The latest round of direct federal cash grants to the state will be used in part to pay off that loan.
For the 2022 fiscal year, which will start this July 1, COGFA does predict a drop in total base revenues of $1.2 billion – 2.9%. But that would still leave state revenue for that year $1.2 billion ahead of pre-pandemic 2019.
And now, under the new American Recovery Act, Illinois will get another $5.5 billion in direct cash grants beyond what’s needed to pay back the Fed loan. All told, Illinois and its municipalities will get a total of over $25 billion in that new bailout.
Take what politicians say at face value if you want. We don’t.
With $162 billion more from taxpayers, couldn’t you deliver a few bond upgrades, too
Audio and summary 
A largely unasked question is becoming glaring: Is Illinois doing all it should to use artificial intelligence to make government cost less and work better? So far, the evidence says no.
If Governor Flintstone really wanted to help Illinois he would resign immediately.
The compound interest on unfunded pensions, unfunded retiree healthcare, bonds, and past due bills since the pension and retiree healthcare “protection” clause was approved as part of the Illinois state constitutional re-write on December 25, 1970 is a a big part of the State’s negative net position.
Ditto many local units of governments in Illinois.
And thus ditto overlapping Federal, State, and local debt.
Choices have consequences.
But don’t worry.
The Central Planners have another plan.
Pritzger, Harmon and Welch. Our lips are moving, we are lying. Sadly, demoncrat voters in Cook/County/Chicago will have a 90% vote for these fools no matter how much they lie, cheat and steal. The toilet fiasco should have nailed Pritzger’s coffin shut but I would bet that a vast majority of the Cook/County/Chicago voters even knew about it. Uniformed and uncaring voters are why demoncrats get elected.
It doesn’t matter. A complicit press will not challenge them, and if it does, they will be shunned or silenced
They lost me at *balanced budget*…
Actually, I did such a severe eye roll, it took 5 minutes for my vision to return to normal…
As soon as they said ‘Rauner’, the rest was pointless to read.
The fourth big lie concerns the states credit rating, its a lie of omission. The states credit rating gets better only when more misery is inflicted upon taxpayers. So you see as the peoples misery gets worse the credit rating gets better, because we pay the bill. So basically Pritzker is saying we need to improve the credit rating, but he neglects to say that the only way left to do that is to reach into your pocket. But I’m sure Moodys gave him his marching orders so their institutional investors can still make high yields on enslaving us further… Read more »
They say completely dishonest things like this because they know they have a built-in voter’s advantage: public employee unions all vote and they vote hard for democrats. They know who butters their bread, and they know that the unions will cynically look away at anything these miscreants say, and the unions will demand more compensation before, during and after the election. The only real thing holding these people back is the sheer fiscal ability to deliver as much money as the bond market will allow. There is no political will to “balance” anything, much less tell a union that it… Read more »
As Pensions Paid First says, Democrat voters in Illinois clearly side with Pension Pilferers, regardless of the consequences…
It becomes white noise. What’s worse is they know it. I have heard similar nonsense my entire life from elected officials because they can, because they aren’t held accountable and because they do not respect us. We are held hostage by the ignorant who are swayed by the sound bite.
totally agree Laurie,so used to the politicians spewing nothing but b.s and always passing blame on thier opponents,just more blah blah blah,nothing seems to ever change with these lieing hacks!!
Truly frightening. Now try to get article published in Trib in Opinion section – good luck with that!
Great summary, Wirepoints. This little speech by those three puts the spotlight on exactly what the major problem is in Illinois– the Democrats can get away with saying whatever they want with no repercussions. The general print and broadcast media are too lazy to analyze a statement like that. And the Illinois public is so poorly educated and uninformed they likely don’t even know about the comment, more less understand it.