In fiscal year 2018, Illinois didn’t have a budget due to the ongoing feud between former Gov. Bruce Rauner and the Democratically-controlled General Assembly. In the months before a tenuous general election, the two sides agreed on a 2019 budget that the nonprofit Volcker Alliance now says was, in some ways, just as bad as not having a budget at all.
The New York-based nonprofit recently released its third annual report on all of the states’ individual budgeting prowess.
In three of Volcker’s five parameters – legacy costs, budgeting maneuvers, and reserve funds – Illinois got the lowest marks given to any state for its fiscal year 2019 budget.
All three of those measures were the same as the group's assessment of Illinois 2018 continued appropriations.
“The biggest question for Illinois continues to be the overhang of pension and [other post-employment benefits] debt,” said William Glasgall, Volcker senior vice president.
The low marks in Volcker’s “legacy cost” grading largely represent the state’s $137 billion in unfunded pension liabilities, but also took into account the $7 billion backlog of bills the state left untouched.
“Among the eight states deferring recurring expenditures each year in fiscal 2017–19, Illinois was unquestionably the most extreme case,” according to the report. “It has routinely delayed vendor payments for many years, with unpaid bills reaching a high of $16.7 billion in November 2017.”
High public pension debt is seen as a deterrent to businesses looking to relocate or expand in a state because it represents a risk that local officials will eventually look to them to shoulder that cost. Investor Warren Buffett referenced this in an interview about his businesses.
One area where Illinois excelled was on transparency in budgeting, according to the report. Glasgall said two factors, the state’s online presence that outlines budgetary and procurement data and the Rebuild Illinois infrastructure plan shining a light on the cost of the deferred maintenance. Illinois was one of only five states to get Volcker’s top grade on transparency.