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No Magic Bullet: Constructing a Roadmap for Illinois Fiscal Sustainability

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posted on 02.08.2021, 16:27 by David MerrimanDavid Merriman, Chuanyi GuoChuanyi Guo, Di Qiao
The state of Illinois finally ended its two-year budget impasse in July 2017 but continues to face a structural fiscal imbalance. We use comprehensive data supplied by the Illinois Comptroller to construct a time series showing Illinois state revenue and expenditures on a consistent basis since FY1998. We find that during this period Illinois’ expenditures have grown faster than its revenue and the state has had large budgetary gaps, with spending significantly exceeding sustainable revenue, since FY2000. In FY2016, when no budget was in place, the budgetary gap shrunk primarily because the state failed to reimburse medical providers for state worker healthcare, cut payments to universities and human service providers and made other unsustainable cuts. In FY2017, the state expenditures soared compared to FY2016 despite little change in revenue. FY2017 spending exceeded revenue by $13.5 billion.

Despite these significant fiscal challenges, objective assessments show that Illinois has substantial economic resources that can enable it to flourish. Illinois must embark on a multi-year plan that restrains spending growth and enhances revenue growth if it is to attain a fiscally sustainable path. To do this, Illinois elected officials and residents will need honesty, commitment, compromise and cooperation.

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