Data contradicts complaints of runaway Illinois spending

  • Ralph Martire

    Ralph Martire

 
By Ralph Martire
Guest columnist
Posted10/26/2021 1:00 AM

Although the election isn't until November 2022, the race to determine who will be the next governor of Illinois is already heating up -- as is the specious rhetoric about the state's budget woes. Indeed, nothing is quite as predictable as a candidate for governor misrepresenting Illinois' fiscal problems in an effort to gain votes by playing on widely held misconceptions. Case in point: recent comments made by former State Sen. Paul Schimpf, who is seeking the Republican nomination for governor.

During a recent interview, Schimpf lamented the state's ongoing General Fund deficits. Hard to argue with that. According to the Comptroller's Office, Illinois has run a deficit in its General Fund for the last 17 consecutive years. This year the deficit is projected to exceed $6 billion. It's going to be significantly worse in a couple of years when the federal pandemic relief money that's propping up the current budget runs out. These ongoing, worsening deficits are a real cause for concern, since over $9 out of every $10 of General Fund spending on services goes to the four core areas of education, health care, social services, and public safety.

 

Unfortunately, Schimpf blames these deficits on Illinois' inability to get its spending under control, claiming that while taxes are an issue, "state officials need to focus on the spending problem first," by either cutting service expenditures, or at least "holding the line" on them.

Sure, that's great posturing which will appeal to most Republican primary voters. It also happens to not be supported by the facts. Worse, it continues a long-running, spurious trope about state spending in Illinois somehow being profligate that has consistently frustrated legitimate efforts to actually solve the problem.

Let's start with the claim that spending on services is the cause of the state's ongoing deficits. The data are completely at odds with this contention, and instead show that Illinois has cut real General Fund spending on nearly every core service since FISCAL 2000. Indeed, after adjusting for changes in inflation and population, General Fund spending on services in the current fiscal year is scheduled to be at least 20% less than it was two decades ago in FISCAL 2000. That's a meaningful cut in spending -- which might be justifiable if Illinois were a profligate spending state. But it isn't.

According to the National Association of State Budget Officers, Illinois ranks 33rd among all states in spending on services per capita, despite having the sixth largest population of any state. Meanwhile Illinois ranks 43rd in spending on services as a percentage of state GDP, despite having the fifth largest economy of any state. In fact, no matter how you slice the data, when it comes to investing in public services, Illinois is a low-spending state that has been cutting its real spending for decades.

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So how's it possible Illinois continues to run huge General Fund deficits, given it's long-term, real cuts to core services? Again, the data make the answer clear. First and foremost: the state's tax policy is so flawed in design it doesn't work in the modern economy. Hence it regularly fails to generate the revenue growth needed to cover the cost of providing the same level of services from one fiscal year into the next. This is known as a "structural deficit," and it means even when no public service programs are added or increased, the state's deficit grows annually.

Second, to make matters worse, elected officials in both parties approved the irresponsible practice of underfunding the actuarially required contributions owed to the state's pension systems for decades. They did this to maintain some of the spending on services which revenue growth was not covering because of the structural deficit. Effectively, this meant the state was borrowing from the pension contributions to pay for services.

Bottom line: Illinois can't afford more groundless rhetoric. It needs political leadership that's willing to face facts and reform tax policy in a manner that raises enough revenue to eliminate the structural deficit and support current service expenditures.

• Ralph Martire, rmartire@ctbaonline.org, is executive director of the Center for Tax and Budget Accountability, a fiscal policy think tank, and the Arthur Rubloff Professor of Public Policy at Roosevelt University.

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