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* This is a not-great analysis from Capitol News Illinois…
While Illinois has recently experienced a prolonged stretch of good financial news, a new state fiscal forecast notes that if spending continues to grow at its recent pace it could lead to future budget deficits. […]
In the highest-spending scenario outlined in the three-year forecast from the Commission on Government Forecasting and Accountability, the state could once again face a bill backlog as high as $18 billion. That estimate assumes spending growth at its five-year average of 7.1 percent.
“This example shows that spending patterns seen in the past few years cannot continue without a comparable increase in revenues which is not seen in the commission’s current estimates,” the report from the legislature’s nonpartisan forecasting commission noted.
Well, duh. Trouble is, that particular COGFA scenario is pure fantasy, likely included merely as a “what if.” Nobody is advocating that. Revenue and spending in that five-year average included huge amounts of one-time federal money to deal with the massive COVID pandemic, which is no longer with us. The spending also included billions of dollars in one-time approps to pay down gigantic amounts of debt, including for pensions and the unemployment insurance trust fund, rather than put the money into the spending base.
* Back to the “analysis”…
If the state keeps spending growth at 1.8 percent – the most austere scenario outlined by the commission – it could maintain an accounts payable balance of $1.4 billion, the same as it was at the end of Fiscal Year 2022.
Even in that scenario, state spending would outpace revenues in the upcoming Fiscal Year 2024 that begins July 1 – although Gov. JB Pritzker has proposed decreasing state spending in FY 24.
That “austere” scenario predicts FY24 spending of $50.9 billion. Pritzker’s proposed FY24 budget is $49.6 billion, which is $1.3 billion below the COGFA scenario and $800 million less than COGFA’s own revenue projection. How does he do that? Because, as mentioned above, the state didn’t put most of those pandemic dollars into the spending base. By far the largest revenue increase this fiscal year is a one-time $1.2 billion bump to the state’s Refund Fund, which has been anticipated for quite some time. And why did he not propose spending it all? Because there’s possibly a recession on the horizon, not to mention that money needs to be put in reserve to deal with future revenue issues.
Using COGFA’s own numbers, if (big “if”) Pritzker’s proposed spending levels are enacted, FY25’s projected revenues will be 2.7 percent above FY24’s spending. And FY26’s revenues will be 5.3 percent above FY24’s proposed spending.
Now, that is indeed lower than the 20-year average annual growth of spending of 3.5 percent, but using out-of-context scare quotes from purely hypothetical scenarios to declare: “Report suggests state spending will soon begin outpacing revenues once again,” is not what you’d expect from the self-declared grownups in the room.
* All that being said, if COGFA’S revenue projections hold (and that’s also a big “if” because nobody knows if they will or won’t, nor which direction they might go), this is still manageable. It’s not ideal, by any means, because some very real base spending needs are much greater than current reality permits (subscribers know more, but also see the new ad at the top of the page for just one example and click here for another).
Democrats may end up wanting to increase taxes, but if they manage things right, they won’t need to do that to keep the lights on.
Bottom line: Using purely academic scenarios to make real-world predictions is unwise. Things are iffy enough if we stick to the real-world stuff.
posted by Rich Miller
Monday, Apr 17, 23 @ 11:07 am
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Welcome back, your analysis and insight was missed.
Throw in some “Henny Penny, the sky is falling” nonsense about pensions and this CNI piece would read like something from Center Square.
Comment by Anyone Remember Monday, Apr 17, 23 @ 11:21 am
–spending growth at its five-year average of 7.1 percent–
I remember reading this when it came out, and this stuck out as a rather significant lapse in journalistic standards to not even mention the influx of money during the pandemic.
Including a larger window than the past 5 years would have been a much more accurate metric to use - if your goal wasn’t to try to claim the sky was falling.
Comment by TheInvisibleMan Monday, Apr 17, 23 @ 11:35 am
Although I disagree with JB on nearly all his actions on social issues, I have been pleasantly surprised how he has handled his fiscal responsibilities.
Comment by Blue Dog Monday, Apr 17, 23 @ 11:41 am
CNI is a free content provider.
Sometimes you get what you pay for.
Comment by The Ghost of Dennis Conrad Monday, Apr 17, 23 @ 1:00 pm
why vilify the reporter. all he/she did is quote from the COGFA report.
Comment by jim Monday, Apr 17, 23 @ 2:58 pm
–all he/she did is quote from the COGFA report.–
Including the 3-yr average growth in expenditures, without also including the 20-yr average growth in expenditures **also contained in the report**, is why the reporter is being vilified.
The only reason to do such a thing is when the slant of the story was determined before the story was written. Including the 20-yr average gives a completely different picture and allows the reader to easily come to a different conclusion based on a totality of the evidence, than what has been presented by this story.
“While the new report illustrated that lawmakers may have to tighten their belts in the coming years”
The report only illustrates that if you leave out the 20-yr average. This is an editorialization by the reporter, not a factual statement. It’s a statement that can only be made by leaving out data in the report.
Does that answer your question?
Comment by TheInvisibleMan Monday, Apr 17, 23 @ 3:18 pm
===all he/she did is quote from the COGFA report. ===
lol
OK, whatever.
Comment by Rich Miller Monday, Apr 17, 23 @ 3:24 pm