Gov. J.B. Pritzker presented his first state budget to the Illinois General Assembly on Wednesday.
Below are the key points from the governor’s combined Budget and State of the State address, which covered the new 2020 budget year starting July 1.
It’s almost entirely comprised of exactly the kinds of measures that broke the state. It’s only balanced under phony government budget accounting. Pritzker said it’s just a “bridge,” the ultimate solution to our fiscal crisis being a progressive income tax panacea.
Here’s a quick look at what’s in the budget:
- A pension can-kick. Pritzker proposes extending the pension funding ramp by seven years into 2052. That buys the state short-term relief by reducing next year’s pension payment by about $800 million. But because interest accrues on the unfunded pension debt, the long term cost of pensions will increase by billions. The precise cost was not been released in the budget proposal. Read more.
- Borrowing more to pay off debt. The state will borrow $2 billion pension obligation bonds, with the money going into the pension funds. Another $1 billion of “pension acceleration bonds” will go towards the pension buyout program previously authorized (a program we believe will save the state almost nothing). Finally, a $1.5 billion bond will be issued to pay off some of the state’s backlog of unpaid bills. All of this just moves Illinois’ debts from one credit card to another. Read more.
- $1.1 billion of new taxes and fees. The majority of the $1.1 billion in new revenues is from one-time licensing charges for marijuana ($170 million) and sports gambling ($200 million), which will be legalized. In addition, managed healthcare providers would be charged an assessment to help cover Medicaid costs, apparently totaling about $390 million. There’s also new taxes on e-cigs, video gambling and plastic bags. Pritzker shouldn’t count on sin taxes to bring in all he expects. Read more.
- More spending on education. Pritzker calls for an additional $100 million for Early Childhood education and an additional $375 million to K-12, plus other miscellaneous amounts. In all, that’s an additional $500 million on education, despite the fact that Illinois already spends more on education per student than any other Midwest state. In the most recent national comparison, Illinois spent 44 percent more per student than Indiana and 24 percent than Wisconsin. Read more.
In all, the 2020 budget will increase to $38.9 billion from this year’s estimated $38.7 billion. Complete budget documents are linked here.
Another year, another bad budget
Those are the major items readily apparent, but the budget is no doubt full of nasty, if smaller, surprises that will be discovered as it’s further examined. For example, the budget sends more state taxpayer money to Chicago pensions. Retailers will face a reduction in the amount they are refunded by the state as a cost of collecting sales taxes. And the budget proposes taking the $100 million cap on donations to the Invest in Kids private school scholarship program and cutting it down to $50 million. That’s tragic, because it was among the few bipartisan successes in the last few years.
Pritzker has also appointed a task force to look into gifting public assets to the pension funds. The particular assets and their value remain unidentified, but speculation has centered on the Illinois Tollway, the Illinois Lottery and government office buildings. That would just move public assets from one government entity to another, and like the bonds above, it will fix nothing.
Maybe it’s a waste of time digging through it all, because the budget will probably go down as it always does. It will be revised and presented to the General Assembly hours before they vote on it, along with a thousand pages or so of budget implementation and other matters The contents will only be examined days, weeks or months afterward.
Budgets are nearly meaningless, as we often explain, because they ignore growing debt, especially pension debt that will now grow faster as a result of the can-kick. Measured in a way you would find sensible, this budget is probably around $6 billion short. Rest assured that financial statements completed after the year ends will show, once again, that the state sank billions of dollars further into the red.
Perhaps most importantly, Pritzker again asked Illinoisans to rely on the promise of a progressive income tax as the real solution to the state’s crises. “To get to fiscal stability and eliminate our structural deficit, there’s no quick fix,” he said. “A fair tax system will allow us to eliminate the structural deficit that has plagued our state for nearly two decades.”
But once again, he offered not even hint about how much revenue a progressive tax would raise, whom it would burden or by how much.
In other words, Illinoisans will just have to trust him.